ISM Conducts Survey on Impact of Financial Market Turmoil

FOR RELEASE: January 20, 2009

Media Contacts:
ISM Public Relations
Jean McHale, extension 3143

Lindsey Yentes, extension 3087

Survey finds firms intend to reduce capital spending, production capacity in 2009.

(TEMPE, Ariz.) January 20, 2009 — Capital spending and production capacity is likely to lessen in the coming year, according to a special survey conducted by the Institute for Supply Management™ (ISM). ISM surveyed members with senior-level job titles on how the financial market turmoil has affected their firms' plans for capital spending and production capacity. Of all respondents, 57 percent indicated their firm's primary line of business was a manufacturing industry while 43 percent selected a non-manufacturing industry.

The survey identified:

  • Seventy-seven percent of respondents indicated that their organizations plan to reduce substantially or reduce slightly planned capital spending in 2009. Thirty-five percent indicated they would substantially reduce capital spending while 42 percent would slightly reduce capital spending.

  • Among respondents indicating reduced capital spending plans, 79 percent selected at least one or more of five options as factors. The options indicated as most important factors in the decision were: worsening sales prospects; economic uncertainty; high cost of financing, difficulty obtaining financing and high cost of inputs.

  • More than 42 percent of respondents indicated that their organization plans to reduce substantially or reduce slightly production capacity for 2009.

  • Among respondents indicating plans to reduce production capacity, 90.1 percent indicated that the reduction is expected to be temporary and 9.9 percent responded that the reduction is expected to be permanent.

Respondents were also asked to rank items in order of significance to their operations. The factor that was reported as having the most significant effect on their operations was reduced demand for the organization's products/services.

From time to time, ISM conducts surveys of its members and other audiences to measure the impact of issues or events on the business community and supply management in particular. For the just-released survey results on the impacts of financial market turmoil, responses were collected for several weeks in late November and early December 2008, which resulted in 304 completed responses — a response rate of 14.3 percent.

To view or download a PDF version of the survey report, visit Select Tools, Research Tools, and then ISM Survey Research Results. ISM also offers fee-based customized research through the Research on Demand service of the ISM Resource Center.

As the largest supply management institute in the world, the mission of Institute for Supply Management™ (ISM) is to lead supply management. By executing and extending its mission through education, research, standards of excellence, influence building and information dissemination — including the renowned monthly ISM Report On Business®ISM continues to extend the global impact of supply management. ISM is a not-for-profit membership association serving more than 40,000 supply management professionals in 75 countries. ISM offers credentialing to professionals around the world with the Certified Professional in Supply Management® (CPSM®) qualification. ISM is a member of the International Federation of Purchasing and Supply Management (IFPSM).