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Press Release:
Midsized Manufacturers Continue Their Upward Course with Positive Revenue Expectations and Hiring Plans

Prime Advantage Group Outlook survey reveals 87% of respondents see revenue same or better than 1st half 2011; 79% see capital spending same or better than 1st half.

Contact:
Mike McDonald, Prime Advantage
312.601.3110
mmcdonald@primeadvantage.com
Contact:
Peter Wiltjer, PWMG, Inc.
630.701.3363
petew@pwmginc.com
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CHICAGO, September 13, 2011 — Prime Advantage, the leading buying consortium for midsized manufacturers, announced the results of its eighth Prime Advantage Group Outlook (GO) Survey, revealing the top economic concerns of small and midsized North American manufacturers for the second half of 2011. The findings reveal that most of these companies are counting on continued economic growth for U.S. manufacturing for the rest of 2011, holding on to the confidence that was displayed in the last semi-annual projection done by Prime Advantage in February.

“Very positive to see that the optimism from earlier in the year is carrying through for the balance of 2011,” stated Louise O’Sullivan, founder and CEO of Prime Advantage. “We’re pleased to see solid growth projections for our Members in key areas such as revenue, employment, and capital expenditures. Prime Advantage has an innovative group of company leaders in their respective industries that invested heavily in product development during the downturn, and are now reaping the benefits. 44% stated new products and/or new customers are fueling their growth. Clearly, our responsibility is to make sure Prime Advantage continues to provide them with a World Class Endorsed Supplier base to enable further profitable growth."

Highlights of Findings

Revenue Expectations for 2011 Continue to Show Optimism
Forty percent of survey respondents are expecting revenue increases over the last half of 2011. The leading drivers of this expected increase include new product lines and overall growth in customer demand. Respondents are more positive this year than in August 2010, when 36% of respondents expected revenues to increase in the next 6 months. Another 47 percent believe that revenues will remain the same for the rest of the year, on par with August 2010, where 45 percent felt revenues would remain the same.

Just 13 percent said they predicted revenues would fall in the last half of 2011, with anticipated slowdown in specific markets and overall customer demand listed as main reasons for the decline. This number shows improved sentiment when compared to August 2010, when 18 percent anticipated revenues to decline.

This positive outlook is also reflected in the recent NAM/IndustryWeek Q3 Survey , with an equal percentage of respondents (86%) forecasting revenue increases over the next year.

Capital Spending More Careful
Seventy nine percent of those surveyed stated capital spending such as new purchases of property or equipment, would stay equal to February projections or increase, with 54% staying equal and 24% seeing an increase. Another 21 percent said they would decrease their spending as compared to the first half of 2011, on par with August 2010 (20 percent).

Similar projections were just announced in the NAM/IndustryWeek Q3 Survey , with 82% of manufacturers expecting capital spending to increase or stay the same over the next year.

Employment Outlook More Conservative
Eighty eight percent of the respondents surveyed expect employment levels to either match February projections or increase, with 51% staying equal to and 36% expecting to increase employment in the second half. These numbers show a slight increase over the expectations from August 2010 (when 32% expected more hiring), but the results of the June RSM McGladrey survey reflected slightly more optimism, with the majority of respondents expecting an increase in hiring.

Respondents to the survey also expect a slight increase in layoffs from the beginning of this year (11% of surveyed companies compared to just 3% earlier this year, and 6% in August 2010). This result is far from the levels of January 2010, when 20% of companies expected layoffs.

Top Cost Pressures: Raw Materials and Components, Logistics and Health Care
The top cost pressures that most concern mid-sized manufacturing companies over the next six months include the cost of raw materials (82 percent), followed by the cost of base materials for components (72 percent). Logistics and healthcare nearly tied as the third highest cost pressure concern (43 percent and 40 percent, respectively).

Raw materials and components (such as metals and plastics) have appeared as the top cost pressure in every Group Outlook survey conducted since June 2008. However, this survey’s results suggest the situation is improving slightly over the January 2011 results, when 96% of respondents including it as a top three concern. The recent Beige Book echoes that, with majority of Districts reporting fewer price pressures.

Supply Chain Focus Issues
When asked to rank supply chain focus points for the remainder of 2011, 81 percent said that cost containment and reduction was the top issue, followed by the need to reduce inventory levels (59 percent), managing and reducing supply chain risks (45 percent) and eliminating inefficient processes (44 percent).

Work Culture Changes with Younger Employees
Almost half of all respondents indicated they feel noticeable differences between generations. The following areas were the top three most frequently cited differences:
1. Expectations for having ideas heard and used
2. Willingness to challenge authority/status quo
3. Comfort mixing aspects of personal life and business life

In the past 10 years, Prime Advantage has returned more than $110 million in rebates and discounts to its Members. These real savings are helping U.S. companies gain a powerful competitive advantage.

Methodology: In August 2011, Prime Advantage surveyed executives and purchasing professionals that represent durable goods manufacturing firms, with annual revenues ranging between $10 million and $1 billion, of which the majority ranges between $20 million and $500 million. The survey received a 14 percent response rate from 528 top professionals representing U.S.-based manufacturers in more than 25 different industries, including commercial foodservice, packaging, truck and trailer, material handling, food processing and construction. Prime Advantage has polled its membership for their impressions of current economic conditions on a semi-annual basis since February 2008.

To request a copy of the Prime Advantage 2011 2H Group Outlook Survey visit:
www.primeadvantage.com/groupoutlook/. *Graphics of survey data available upon request.

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About Prime Advantage
Founded in 1997, Prime Advantage is a buying consortium for industrial manufacturers with more than 700 Members and more than 110 Endorsed Suppliers. For more information on Prime Advantage, visit the website at www.primeadvantage.com.