February 25, 2014

REPORT ON BUSINESS TRENDS

January 2014

Great Report Inaugurates New Reporting System


This report is our inaugural issue of our updated online PMPA Business Trends reporting. As part of our move to the online
system, we have also reestablished year 2010 as our base year. We had been using year 2000 prior. Additional information,
including quartiles for sales performance, will help you make sense of your companys performance compared to that of your
peers.

The PMPA Business Trends Index for January 2014 bounced back to 126, up significantly from December
2013s record 100, and just shy of last Januarys 128, as calculated using members 2010 sales / shipments as the
base year. January is typically a strong month, and Januarys 126 is a great start for this new calendar year.


Looking at our PMPA Members Average net sales chart, we can see that fifty percent of reporting members had
monthly sales of approximately $600,000. The average sales for all 85 respondents, was $930,000 in January 2014.
The top 25% of respondents reported January sales in excess of $1,100,000.

(over)


Sales Outlook (Reporting of Sales Outlook is counts of respondents, not percent)
In January 2014, 35 respondents (42%) expect sales to increase over next three months, while 37 (45%) expect level
of sales to remain the same, and 11 (13%) expect sales to decline over that period. The outlook for sales of
products remains positive with 87% of respondents expecting level of sales to remain the same or increase over the
next three months.

Lead Times, Employment, and Profitability: In January 2014, 16 of 83 or (19%) of respondents expect Lead Times to
increase, 62 of 83 (75%) expect lead times to remain the same, and 5 respondents (6%) expect lead times to
decrease. Ninety-four percent (94%) of respondents expect lead times to remain the same or increase.

Employment: 20 respondents (24%) expect employment prospects to increase over next three months; 62
respondents or 74% expect them to remain the same; and just 2 respondents (2%) expect employment prospects to
decrease. Ninety-eight percent (98%) of respondents expect employment prospects to increase or remain the same
in our industry over the next three months.

Profitability: 23 respondents (28%) expect profitability to improve over the next three months; 54 respondents
(65%) expect profitability to remain the same, and just 6 respondents, (7%) expect profitability to decrease.
Prospects for profitability remain positive according to our latest survey.

The Average Length of First Shift (Hours) reported by our respondents rose to 43.3 hours in January 2014. That is
up 1.1 hour over that reported for December 2013 and up 0.8 hour over January 2013. Fifty (50) of eighty-five (85)
respondents scheduled overtime. That is fifty-nine percent (59%) of responding shops scheduled overtime in
January 2014. Thirty shops of our eighty-five respondents (35%) are scheduling 45 hours or more.

Opinions for the next three months compared to today:
Net Sales: The outlook for sales of products remains positive with 87% of respondents expecting
level of sales to remain the same or increase over the next three months.
Lead Times: Ninetyfour percent (94%) of respondents expect lead times to remain the same or
increase.
Employment: Ninety-eight percent (98%) of this months respondents expect employment to
remain the same or improve.
Profitability: Ninety-three percent (93%) of respondents expect profitability to remain the same
or increase.

Current Environment: This report shows that the precision machining industry is generating strong sales and
positive prospects going into calendar year 2014. Positive levels of hours worked, shipments, overtime and
profitability are great omens for our industry in the quarter ahead. We are hearing of slowdowns in manufacturing
(Richmond Fed and others) but our indicators show strong prospects for the first quarter.

Note: Eighty-five (85) participants this month. Seventy-one (71) reported sales were up, sixty-three (63) reported sales were up
double digits. Fourteen (14) respondents reported sales down in January compared to prior month.

This is our first report using our new online Business Trends Reporting System. Please send your comments,
corrections or ideas for improvement to Miles Free at mfree@pmpa.org.

Miles Free
Director, Industry Research and Technology
PMPA
MKF: cmp