FIN Survey: Capital Expenditures Drop After Two Years of Gains

Jason Sandefur

Overall the fastener industry spent less than forecasted on capital expenditures in 2005, with facility and equipment investments decreasing 2.9% to 3.3 in the FIN Survey Capital Expenditure Index. In 2004 the industry had predicted about a 3% increase in investments to 3.5 on the index.
Just under 40% of respondents reported moderate to strong increases in capital expenditures during 2005, while a slightly larger group 42.6% – held investments to 2004 levels. About 14% cut capital expenditures last year.
Distributors outspent their manufacturing counterparts in 2005, with 41.3% reporting increases compared with 35.7% of manufactures that boosted investment during the year. Nearly 46% of distributors kept capital expenditures stable in 2005, while 42.9% of manufacturers left investments unchanged.
However, the distributors” capital investment remained steady at 3.5 on the expenditure index, while the index for manufacturers declined 8.8% to 3.1, well shy of the 3.7 predicted for 2005.
Roughly 56% of distributors forecast boosting their capital budget in 2006, while 34.8% will hold their current investment level steady this year. Among manufacturers, 52.4% predict investment increases, with 35.7% holding the line of future expenses.
A majority of companies 54.3% – expressed confidence in 2006 by predicting a 6% rise in investments to an index level of 3.5. About 34% plan to invest at 2005 levels, while nearly 10% expect to cut their capital budget. \ �2006 FastenerNews.com