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So says the latest NAM/Fortune Manufacturing Index, a quarterly poll of 336 members of the National Association of Manufacturers.
NAM said the bullish outlook is based on continued strong sales expectations. "Fully three quarters of survey respondents indicated that they expect their sales to increase over the coming four quarters," said NAM president John Engler, in a statement.
Although the data show a modest sequential decline, when 90% of large and 87% of small companies were positive, the improvement is dramatic when compared to the period of Q3 2000 to Q2 2003, when less than two-thirds of NAM members were optimistic.
"This report confirms our belief that the economy is gaining strength and will continue to expand throughout this year and next," Engler said. "This is equal to the average of the prior two quarters and 10% above the response given a year ago."
Large firms expect sales to rise 6.1%, the strongest response since the fourth quarter of 1997, when the poll was begun. Smaller companies expect sales to grow by 4.4% over the coming year.
Fifty-five percent of respondents expect to increase capital spending over the coming year. Large and small firms expect to increase employment in the coming year.
The net loss included a $36.8 million valuation allowance for deferred tax assets, and $3.8 million in restructuring and impairment costs. The company cited higher-than-expected startup costs for its facility in Penang, Malaysia, and the closing of its Bothell, WA, plant.
The company guided for revenue growth of 15 to 18% in fiscal 2005.
For the year Plexus reported a net loss of $31.6 million on revenues of $1.04 billion. The company reported pro-forma net income of $13.5 million, excluding one-time items.
In 2003, Plexus had sales of $807.8 million and a net loss of $68 million.
"As we look to fiscal 2005 our primary objective remains to increase profitability," said president and CEO Dean Foate, in a press statement. "We expect to achieve this goal with improvements in capacity utilization and operating efficiencies through a combination of moderate revenue expansion and lean manufacturing and inventory management initiatives."
"For first fiscal quarter, we are initiating revenue guidance of $280 million to $290 million," Foate said.
Gordon Bitter, Chief Financial Officer, added, "Despite higher .
The China currency issue has become a political football because of manufacturing's insistence on a substantial revaluation and the Bush Administration's stated reluctance to hold China's feet to the fire. Hoping to capitalize on the issue's high profile in the November elections, U.S. labor, textile, and steel groups on Sept. 9 filed a petition known as a Section 301 seeking a formal investigation into China's currency policy. Hours later, administration officials denied it.
On Sept. 30, one Republican and seven Democratic senators joined nearly 20 House Democrats in refiling the petition. While a spokesperson said the Administration would meet with Congressional members, there is no indication any punitive actions against China would be taken.
A coalition of trade groups known as the Fair Currency Alliance has spent the past year pushing for a steep revaluation of the Chinese yuan. The FCA wants 40%, a number arrived at that because, according to one FCA member there are data to justify it and it gave some room to negotiate.
However, disagreement in the ranks prompted the FCA to redraft the petition but the actual refiling was left to the AFL-CIO. The FCA, whose members include the National Association of Manufacturers and IPC, operates on unanimous consent, IPC spokesperson John Kania told Circuits Assembly, and there was "heated debate" among its members as to whether to proceed with the filing. The AFL-CIO, steel and textiles industries advocating filing and NAM was strongly against it, according to Kania. While not saying the IPC was against filing, Kania said the group didn't want to alienate the Bush Administration. (Kania, who doubles as IPC's liaison to the SMEMA Council, a group of assembly equipment makers, said the council supports the petition because it affects customers.)
China's currency policy has for years rankled many U.S. economists and trade groups. China has said on several occasions it plans to comply with WTO currency rules but has yet to move in that direction. Says Kania, "The view of the Administration is that the Chinese knows they have a problem. They need to slow down their economy. Inflation is rampant, but to control it they need to raise interest rates." And China needs 8% annual growth just to absorb the crush of new workers, Kania says.
Kania expects that a Kerry presidency would mean more action, at least. "He's going to have to do something for manufacturing. Labor really backed him."
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