EXCLUSIVE: ISM Chair's Susan Spence & Steve Miller on the Supply Chain Planning Forecast

Louis Weiss: Welcome to Manufacturing Talk Radio, your Everything Manufacturing podcast with host and veteran manufacturing industry expert Louis Weiss and co host Amy Nicholas.

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Amy Nicholas: Now let's get into the episode. Welcome everyone, today for the Manufacturing Talk Radio with, uh, Lou Weiss, myself and Amy Nicholas. And we have the two chairs of the Institute for Supply Management, Susan Spence, who's uh, the manufacturing chair, and Steve Miller, who's the services, uh, chair. And we're going to be doing the. It used to be called the semiannual report. It's now called the uh, supply chain planning forecast. So just to give you a clue on how the report is going to come across, this, uh, this report. Okay. So that we don't go over any trademark infringements. Great report, great report. Uh, Susan, let's start with manufacturing or will have a mix and match with supply chain, uh, and manufacturing services. Go.

Susan Spence: Sure. Uh, so, yeah, indeed, um, let the good times roll. The, uh, optimism that we started to see in December has been surpassed with even more of the same for manufacturing. So as you could see in the report, um, the percent increase our panelists expect to see with regards to things like revenue almost doubled. We're up, uh, expecting an eight and a half percent jump in revenue versus four and a half. Um, the production capacity that we thought would be, that this panelist told us would be up about 5.2 for the year. It's looking more like 9.7. The operating rate likewise up to about 87. Uh, capital expenditure, you know, not as big of an increase but from a three to almost a five. Unfortunately, prices, um, from December to June, the prediction was 5.4. They went up actually 11.9 and are expected to be a total of 14.1 for the year. So it looks like, uh, most of the price increases that have been seen are, are already here and maybe another couple points, um, the employment on manufacturing, it got better, but it's still only a 1.4 up from a 0.4% predicted increase. So, um, while we have maybe fewer industries in these increasing modes, for instance, um, the percent of. I'm, um, sorry, the number of industries reporting a percent in revenue increase in December was 16. It's down to 14. They're about the same or slightly lower, but the percentage jumps are bigger and a number of the top six are there. So indeed, it's a good report reflecting even more optimism and certainly connected to the first five months of this year's monthly report. The orders are flowing. The backlog's growing, um, on manufacturing. As of last month, everything except employment was back into expansion mode pretty much. So it's all good.

Amy Nicholas: It is all good and uh, we're glad to hear that. Uh, by the way, uh, for our listeners, if you enjoy the show, enjoy the content, kindly hit the like button. Uh, it always looks good below. Right below, uh, which is right next to my. Let the good time roll button. Give us a, Give us a thumbs up on that. That being said, uh, we also um, um, we'd like to hear from Steve about services. Um, and at the near the end of our show, we are going to go over the six or seven or eight, uh, special questions, which they always do in this report. And some of that is some of the best information in the report, hearing it from the responders. So Steve, give us a little bit on what's going on with services. Sure.

Louis Weiss: Thank you. Thank you, Lou. Also, good news, services, um, revenues are expected to increase 8.6%. That's almost double what we were saying in December. Operating, uh, rate is at 91.3% of normal capacity, which is pretty hot. In fact, it's the hottest it's been, uh, at least going back to 2020. Not um, a whole lot of capacity available for big orders coming through. In addition to what we're currently handling. Production capacity is expected to increase 7.1% in 2026 and capital expenditures are expected to increase 6.4%. So sounds like a lot of confidence in what we've got going on in the services industry. Prices paid, um, similar to Susan's situation, prices paid are up 7.7% year to date through June, uh, with an overall expectation of hitting 8.9% for all of 2026. So if there's a little good news hidden in that is we're only expecting additional price increases for inbound materials, purchased goods and services to go up another 1.2% for the rest of the year. And services employment, uh, similar to manufacturing, um, is not huge, but is expected to increase and in our case less than 1%. 0.9%, um, which is the average of what we've actually seen over the last three years. So from, from a historical perspective, not a bad number, but people will probably be disappointed to see the 0.9% versus something more kin to 4 to 5.

Amy Nicholas: So it seems as though with all of the not so great news that we hear in the news all the time, it doesn't seem as though that has had a major effect on economic aspects.

Susan Spence: Well, you know, we were talking at the last interview about how resilient the consumer needs to be and Steve has some good data on that that supports it. Um, my concern though is the inflation and it is real and it's tough right now. And it was, it was tough before the Middle east conflict, um, continues to be, although it's calmed down a little bit of late in manufacturing. M But you know what, the economy is growing. Um, the employment number and Steve's and ours, manufacturing is similar. It's stubbornly flat, you know and we think that um, businesses are still being cautious, not knowing, you know, what the next economic policy might mean for them. Although things are more certain now, especially with the legal ah, rulings that have happened of late. Um, but it's, you know, it's encouraging. But um, I feel like some of that is pent up demand that if we can take care of the factors that are preventing people and having them hold back then we really could have something wonderful and you know, not just hovering around a 50 anyway for manufacturing.

Amy Nicholas: So why do you think that employment is flat? Uh, because in manufacturing we've got something like 12 million people in manufacturing and the number that I keep hearing is that what we really need is somewhere is around 15 million. Uh, and the economy is strong and everything is going up. Uh, why is employment flat?

Susan Spence: From my point of view and what the panelists have said, which is informing my point of view, um, last year it was because there was such uncertainty in what was going to happen with tariffs and companies did not know what was going to happen to the price of their cost of goods sold. And so in the face of uncertainty that they might be faced with a 15, 20, 30, 40, whatever percent tariff, um, they basically stopped buying capital and stopped hiring. And the uncertainty I think was worse than you know, once, you know, what a one time pass through is going to be. You deal with it. But because it changed so many times from March, uh, all the way up until, you know it changed a lot between I think March and September and until we had the Supreme Court ruling, folks were just loathe to hire people and spend money because they're sitting there waiting to know if their raw material inputs were going to go up 20, 30, 40%

Amy Nicholas: later on in the report and I'm sure we're going to get to that. But later on in the report you talk about the fact that um, manufacturers have not really raised their prices to their customers, that they've been absorbing a lot of the tariff increases. Mhm. And they're talking about not raising their prices, going six months or a year down the road. So if they're so concerned, why aren't they raising their prices?

Susan Spence: Well, and we could get into the numbers of that later. Um, some of them are. A lot of them are not. And I think the ones that are not, I can only speculate because I don't have survey comments supporting this is if they feel they can't.

Amy Nicholas: Right.

Susan Spence: Um, it's not the case with everybody,

Amy Nicholas: but in any event, don't have a problem.

Susan Spence: Yeah, I know.

Steve Miller: Seems to be.

Susan Spence: Anyway, so, um, you know, and then as soon as terrorists settled down, we had the Middle east conflict come up within a month of that. And um, in some cases for some sectors, there's just too much for them.

Steve Miller: Susan, you mentioned we talked about tariffs a few times here, but um, with the trade policy and tariffs, I mean obviously they're still looming, they're still hanging over our head. Are manufacturers finding workarounds for that? Are they still like a big wild card for what's coming up?

Susan Spence: I think so. And what they've told us in the monthly surveys is up until January, February timeframe, they just weren't getting a lot of new orders. I remember one transportation equipment panelists saying, you know, normally by now our customers would be replenishing the fleet. Now they're doing, you know, only one, you know, one or two vehicles or whatever they can get away with and keep it to a minimum because they're worried that, you know, they're going to order something and then tariffs go into effect or maybe there's another new tariff policy that they hadn't anticipated and now they have to cancel orders.

Steve Miller: Right.

Susan Spence: That was just one example. So, um, there's still uncertainty around that. There's less than there was. But as we've been saying today, the 150 day tariffs that started, you know, within the same couple weeks of the Supreme Court ruling, I think we're about to run out. I think it's July. And so there are investigations that are going on in order to I guess support um, these other tariffs. By now I forget the section. I think it was 232 section tariffs. And so at least it feels like these companies are saying at least it's not 50, 60, 70% and doesn't seem to be. So maybe there's more rules around the type of tariffs that they could have because there is actually a section of the um, of the code that addresses it. And you know, the Middle east effect, certainly complicated, made it even worse. But as you could see with the oil shock questions relatively short lived. Uh, in the meantime on manufacturing and I want to give Steve some time to talk, there's still as of last month, 43 commodities, as you guys know, that were up in price and a whole lot of shortages. So

Amy Nicholas: the uh, US dollar, uh, they're predicting that the dollar is going to continue to strengthen. What is that going to, what kind of effect is that going to have in terms of imports and exports and pricing in general?

Louis Weiss: So one of, one of the positive things in the services industry is that um, is that we've got a lot of the work around AI is going on within the services industry. Um, I think there isn't really much of an option unless uh, you're going, um, unless you're going with China produced, um, open source models other uh, than the US in terms of getting, getting uh, that type of capability. So I think on a portion of the services world it won't be a problem. Um, from an export, from an export standpoint, from an import standpoint, of course that works in our favor. As the dollars get stronger, um, and as our ability to pay for them with uh, oil prices dropping improves, um, that's certainly some, some tailwinds, um, for, for um, the overall services industry. And going to one of the special questions that we'll be talking more about later. You know, we saw some very significant, um, uh, cost impacts. Ah, 55% of respondents said ah, they see a small negative impact or effect from question number five in rising oil prices and 25% were saying a large negative effect. So not only will we have more cash as a result of those prices coming down, which already see oil below $80 a barrel, um, but with a strengthening US dollar that certainly will work well for us from an import standpoint.

Amy Nicholas: You know, it's kind of interesting. Uh, this past weekend I was up in Connecticut, uh, with my family and um, the gas station pricing was about a dollar a gallon cheaper in Connecticut, which is in itself amazing because Connecticut tends to be more expensive, uh, sort of like California, but it was a dollar a gallon less. Uh, I was amazed. I was amazed.

Louis Weiss: Yeah, uh, yeah, it's happening, happening fast. I'm not sure why because supply chains don't work that fast. But, but it was nice to see them come down.

Susan Spence: I think traditionally and you know, this might be off, but for my days buying jet fuel at FedEx, it was about, you know, maybe about six weeks after a published crude pricing before we saw a change in, you know, likewise. I went off to Europe for vacation where I paid $8 a gallon. But I'm not complaining. I drove a hybrid, and it was. I didn't have to fill up much. Um, and then by the time I came back and like, within a week, you know, it was just very different. So it. And that's perhaps why, likewise, Steve said 55% for services, 46% of the survey takers said small negative impact for manufacturing as well. It's relatively quick for that one to drop back. So that can impact transportation costs, certainly. Um, and then there's the other derivative costs. Uh, but aside from that, we still had, I don't know, 25, 30 commodities that were up in price even before the Middle east conflict. So the inflation thing is still a thing.

Amy Nicholas: Well, and some of it is what I've heard called opportunistic pricing, which is another word for gouging price gouging. So that does exist. And, uh, I've actually been in a gas station recently where, while I'm there, they're changing the prices.

Louis Weiss: So I asked,

Amy Nicholas: do I get to pay the lower price or the higher price? He says, it depends on how long it takes me to fill your car.

Louis Weiss: Well, you'll, you'll be happy to see that, um, that also in the survey, um, on the pricing response to oil shock, the question was, our cost will not be affected, or one of the answers was our costs will not be affected by the oil price shock, but we plan to use it as an opportunity to raise prices.

Amy Nicholas: Correct.

Louis Weiss: I saw 0% of manufacturers said yes to that, and 1% of services said yes to that. So it's a good sign. Whether they're telling the truth or not, we don't know.

Amy Nicholas: But, uh, very interesting.

Steve Miller: So let me ask you this. So, uh, one of the things Susan, we talked about, uh, was 82% of manufacturers expect revenue growth, but 17% are still expecting declines, averaging that 12%. Um, can you give us a little more insight into, like, who those companies are and what separates the winners from the ones who are kind of lagging behind.

Susan Spence: So we're never going to tell you who the companies are because it's anonymous, but I can tell you who the sectors are. Right. And that's in the report as well. So if you know who the 18 manufacturing sectors are, um, 14 of them expected, um, increase in revenue. Um, that means four did not. The four that did not expect an increase in revenue. The four sectors, textile mills, apparel and leather products, wood products, all of that makes sense. Petroleum is also in there, and that's one of the big six. So, um, When I think of apparel, leather, wood products, textile, it's not all um, discretionary but you know, apparel might be if, you know, if prices are going through the roof for your basic household expenses, what's the thing that you can maybe wait on? Maybe apparel, uh, that sort of thing. But the good news is that 14 of them did expect to um, increase in revenue and that's good. You could argue maybe petroleum's had their increase in revenue, but it's pretty short lived. Right.

Amy Nicholas: I'd like to touch base, uh, about uh, profit margins because that's kind of interesting. The profit margin. Seemingly the bulk of the people, the bulk of the manufacturer, the bulk of the services, they say that uh, it's going to be the same or better. That's about 70% of uh, the marketplace. Meanwhile costs have gone up. They're not raising prices because of things like oil and tariffs and so on. And yet they're still looking at the coming this second half of the year as uh, increased uh, profit margins.

Susan Spence: You know why that makes sense to me. Look at employment. The employment is flat. So if you're managing a budget. So I haven't, you know, I've been retired for a few years but my single biggest line item in my budget was people and SG&A. Right and um, and benefits. So if I can do without backfilling and preserve that part of my budget, then my contribution to the company is going to be not to cost more. Right. So that's a generic response. But it's the first thing I think about is where else can I save. Well if I can do the work or if I have AI, uh tools that can do the work, we're not there yet in manufacturing, then there's a way to preserve the margin that way. You agree Steve?

Louis Weiss: Because we saw, we're seeing 8% over 8% growth projections for revenue, um, we're seeing a similar number, just slight 8.9% in prices paid. But it's a very, that's a very small percentage compared um, to labor in terms of our total cost of operation. So if a labor is flat, we're projecting 8.9% revenue growth or 8.6% revenue growth for services. Um, we'll have a bunch of that um, in our profit margin. I think that profit margin, those dollars, uh, free cash flow will be put back into capacity increases based on the way we're seeing the numbers come through in the reporting now whether that, whether that capital uh, investment is for AI systems and compute power to be able to run those or whether it's something different. Buildings, retail, uh, outlets, things like that remains to be seen, but I think I know where many are betting based on the special questions around AI.

Steve Miller: Yeah, it sounds like companies are kind of deciding to work a little bit, a little bit smarter, not harder when they're seeing those, those lines show up in their reporting.

Louis Weiss: Yeah, those capacity utilization numbers are continuing to go up. Um, and so there's not a lot of fluff left in that number. So we either need to get productivity really or, um, we're going to end up needing to hire people, which wouldn't be a bad answer.

Amy Nicholas: We have, uh, a lot more to go over in regards to this report. But. So, uh, the point is, stick around and give us a like and you'll get to hear the seven or eight responses to the special questions, which are always very informative. That said, Steve, I don't want to get into specific numbers, but I do. I can't help but notice the prices in restaurants. The prices in restaurants have gone up significantly. Um, not even to mention the fact that it seems like everybody and their mother is now charging 3% and 4% and 5% if you use a credit card. That certainly does help their profit margin.

Louis Weiss: Yes, yes. In fact, a place that I ate at last week had a 3% cost of operations tax added on.

Amy Nicholas: So what happened before they were eating the merchant fee.

Susan Spence: Now they can't anymore or opportunistically, you know, it's some. Remember when bag fees became a thing, that was supposed to be a temporary thing. And then I think, you know, airlines were like, well, folks are used to it. Why would we get rid of this great revenue stream? And that was just a way of life. I don't know. That's my guess.

Amy Nicholas: I managed to tell every restaurant manager how much I resent the 3 to 5% for credit card charges. Considering of my 50 years of eating in restaurants, I never had that. Why now all of a sudden is that a critical thing that they're all doing it and that when he's complained

Steve Miller: about it,

Susan Spence: that's pleasant.

Louis Weiss: By the way, about six years ago, software started hitting the market where you could embed that um, into your bill as an additional charge at restaurants. Um, and so that's, I think that helped, that helped drive it because before you couldn't really add it automatically and show it as a separate charge. Um, the fuel surcharges certainly have had an impact on now, now food in general, um, delivered food higher and significant amount of inflation there. The, um, the fuel surcharges that you would typically have from a uh, fuel distributor coming into restaurants. That's all going into your uh, menu, um, pricing. And be careful about going to those restaurants that have electronic tablets where they can just raise it by changing the number in the panel. You're going to see that comes really fast.

Amy Nicholas: 15, 20, 25, 30% or custom. That's the new one.

Louis Weiss: Yes.

Amy Nicholas: Um, going forward, the second half of 2026 looks even better than the first six months of this year. Any thoughts on that?

Louis Weiss: If we see, you know the, the number that I mentioned just a little bit earlier. If we're seeing 80% of services companies um, seeing increased costs due to fuel search or fuel prices, that's certainly some good uh, tailwinds for uh, for the industry going forward. Um, I was surprised though Lou at just how positive the numbers were. Uh, the numbers are so much better, looking so much better than what uh, we were estimating as a discipline, a supply management discipline back in December. It was a little bit surprising at how big the revenue increase number uh, was projected for 2026 considering no one's

Amy Nicholas: supposedly raising their prices, you know. And um, you know this is your 95th year of producing these reports. I think you started in 1931 accurate. So we got another five more years. Are we going to do something special at 100 years if we're all around retire again?

Louis Weiss: You know. Um, Lou, back to one of the questions you're talking about just in terms of the economy overall and it was a comment that sue made earlier just in terms of some interesting data across the different areas. Retail trade, um, construction, arts, entertainment and recreation, um, accommodation of food services are all coming up repeatedly as very positive on the list from top to bottom. The highest growth, um, industries for increased revenue. Well so mining is there at the top in, in um, which is not a surprise. Right. Um, but retail trade is number two for increased revenue, increased capacity, increased capital investment. Um, above 91.3% of normal capacity. Um, but not. Or sorry but number one rather than number two in employment growth. Um, so very positive on that side of it. Arts, entertainment and recreation is in the top four for increased capacity, increased capital investment and employment. Um, uh, and wholesale trade is in the top 10 for increased revenue rank capacity, capital investment, uh, and employment. So we're seeing. And the last one was construction is number three and increased capacity, increased capital investment and increased employment. Uh, number two. So, um, not on the list, um, until. Or not on the list at all actually for increased revenue. So they're looking at driving uh, additional Business by building capacity and probably being more efficient in how they, they produce. But all very direct, very directly impacting the general consumer in terms of income, um, and behavior in the market, which, which seems to be very positive and a little different than what we saw in December.

Amy Nicholas: So going, going further forward and letting the good times roll. Uh, let's talk about the special questions. Uh, the first one being, uh, regarding, um, AI, so, which is high on the hit parade in terms of technology that we're experiencing in this country. So, um, what, what did the, uh, your question was, um, my supply chain organization uses the following applications and that's basically a yes or a no or a maybe or soon. Um, and I was sort of surprised at some of those numbers. Let's talk about that.

Louis Weiss: Yes, so that one, uh, for, for services, um, 18% of respondents said they don't use AI in their business. If you remember, not, not a year ago, less than a year ago, there was a lot of discussion around, you need a governance system. You need to make sure you have appropriate terms and conditions, controls over data, um, making sure you're not violating IP or giving away trade secrets or things like that through your tools to now, 82% are using some form of AI within their business. That's a really positive message for people in the AI field as well as hopefully a positive message for the kind of impact that we may be able to see in terms of productivity and profitability, um, in business.

Amy Nicholas: Well, what I find interesting is that those who are using it or about to use it, the numbers are really small. Susan Manufacturing.

Susan Spence: Um, I don't. Yeah, um, they're a lot better than they were. So if we're talking about. Let me make sure we're on the same question. I'm on question number eight. I think that's the one you're talking about back in, um, December manufacturing, that 32% of our survey panelists, we're not using anything. That's down to eight. There's, that's down to 18. So, you know, over half now are using some kind of, um, AI chatbot agents. That's a pretty big leap. Um, a number of folks were talking about it and they were studying it and in the pipeline and now some have been rolled out. What we don't know is it back office type of work that the chatbots and agents are using or hard manufacturing. I imagine it's the former or just

Louis Weiss: extra emails which are now longer because they were generated by chat.

Steve Miller: Exactly.

Susan Spence: You know, it's true because someone could say, okay, I'M taking the suggestion of a summary email. I mean, I've started to do that too. It's like this is says it all. It's pretty good. Right? Um, hopefully remember back in college or high school, the Cliff Notes and you try to get away with not reading the book.

Amy Nicholas: Yeah, yeah, yeah, right.

Susan Spence: So, um, you just want to be able to get the content anyway. On manufacturing is not as far as long as services, although the numbers are pretty similar. Similar but relative to December. So smartly companies are studying it, maybe they're going a little slower with the rollout and hopefully being um, careful make sure it works before they deploy because we've all heard the nightmares.

Amy Nicholas: Uh, question number three, uh, regarding the change in quality of work in regards to AI and the question was how is the quality of work or lack of errors change with AI use? And some of those numbers are rather surprising. There's uh, some that are the same. 32% in uh, manufacturing, 27% in services. Uh, and the N A is like 50, 40%, 50%. So it's almost like it's not yet fully being utilized. Comment on that, Susan?

Susan Spence: Um, I want to make sure we're on the right question because we have a different question number three. So make sure we're on the June 2026 report, not the December. I've got both in front of me, so I'll take it.

Amy Nicholas: The question is, uh, how has the quality of work or errors changed with AI? So irrespective of what number that is because.

Susan Spence: Yeah, so Lou, you're looking at the December forecast, right?

Louis Weiss: Yeah, that's the December.

Susan Spence: Yeah, that's the question number three is from the December forecast. So the one, the one in June. Um, the AI questions, just real quick. Um, the questions on AI this time were, um, which of the following AI tools are you using? Um, and ah, that was. The choices were, um, we don't use it at all. We use AI agents, We use AI chatbots. Um, and then there was a question before that. Uh, what has been the overall effect of AI on your employment?

Amy Nicholas: Right, right.

Susan Spence: So last time we put AI questions out for the first time, that was great. And now they're different questions. Questions. So the ones Steve and I are talking to are, um, the AI chat bots and agents. You're right though. In December manufacturing wasn't doing a ton and now, you know, over 50 of them are doing something. So that's pretty impressive in my, uh, opinion. But you're Right, it was 32% in December was doing nothing. That's down to 18. Right.

Amy Nicholas: I agree, I agree. There is a significant change.

Susan Spence: Yeah.

Amy Nicholas: The timing of tariffs in order to raise prices. That was, um, a number six question, I believe. Is that correct?

Susan Spence: That was response to oil price shock, right? Yeah. Not tariffs, but the oil price shock. Are you changing your selling prices in response to that? And that wasn't interesting response on the manufacturing side. 60% of our survey panelists said we're going to pass all. Or some. It took a little while. It's like, no, we're not. We're not. We're going to try to eat it and. But this one was like. We just. It's almost like it's too much on top of everything else. Right.

Amy Nicholas: There seems to be a fair amount of reluctance about raising prices as a result of tariffs. And considering there's a strong reluctance and the fact that revenue has increased and profitability has increased, um, where are the numbers coming from? I guess it has a lot to do with, uh, flat employment.

Susan Spence: Yeah. Well, so if you look, um, and Steve needs to answer this for himself, of course. You know, that question, which, uh, is question number two. Um, back in, um, back in May, and that was what we were in month two or three of tariff chaos, and people couldn't believe what they were seeing. You know, it was a total of 87 said, we're going to pass on. Some are all, you know, still. It's still, you know, it's still like 72% are saying they're going to, um. But, you know, a lot's happened in a year, right.

Louis Weiss: We're seeing inflation creep up just a little bit. And, uh, you know, many companies aren't raising prices because of tariffs. They're raising prices because they want to raise prices. They want to generate more income. Tariffs for services companies are a small percentage of, you know, a small percentage of a small percentage. Really?

Amy Nicholas: Yeah.

Susan Spence: Yeah.

Amy Nicholas: Um, Credit card charge. That annoys.

Louis Weiss: You got it. You got it. Why?

Amy Nicholas: Because, by the way, I want to mention that at the end here, for anyone who wants to be able to, uh, see the report or print out the report, you can click on it and you can come to, uh, uh, download the report if you wish.

Susan Spence: So.

Amy Nicholas: And like I said, you can print on both sides. That way it's only 10 pages instead of 21.

Louis Weiss: That's right.

Amy Nicholas: Okay. So moving on. Um, pick your own poison with regards to the question, because minor. Not in sync with yours. Yeah.

Louis Weiss: So one that I thought was, uh, interesting just looking at the monthly, um, ISM Services report compared to the supply chain forecast was Looking at inventory stock strategies, um, only 10% of services companies said we're requiring higher levels of inventory, um, as a result of global uh, tariff uncertainty. But when you look at our monthly report, we're at the highest, um, inventories number, uh, survey number in the history of the survey. Um, so somebody's putting in higher inventories for some reason. Maybe it's not tariffs, maybe it's oil price protection, you know, to get ahead of any flow through of transportation costs or petroleum, uh, related products. But that one for me was very interesting. And the special questions looking at that versus what's really happening around inventories and the sentiment saying, you know what, a 62.5 isn't a bad number, uh, because we ordered all this stuff to make sure we'd have it price, you know,

Susan Spence: and likewise manufacturing, if you look at that same question, uh, which is topic number one, the flip was in May, which was again month two or three of the tariff, um, saga, lower levels of inventory, not many, 17%. Well now it's 49%. We're just not stocking those high priced goods, um, and you know, because they couldn't afford to. But now that they're seeing order flow, our inventory number likewise is up, but they're seeing order flow. And so perhaps these companies are pricing, you know, their finished product higher to absorb that if that's in fact what their policy is.

Amy Nicholas: Yeah, uh, the question regarding reshoring I found to be rather interesting in the numbers of people who are not necessarily looking at changing their vendors, uh, they are looking to change perhaps countries that they're buying from. Uh, but that, that could actually be, that hole could be filled by instituting tariffs on everybody. Yes. The point is that it seems as though between 60 and 80% of companies are not looking to change their vendors.

Susan Spence: Yeah. And the manufacturing panelists have been telling us, you know, for sure last uh, May and June, you have to look at it, it would be irresponsible not to. But by the fall largely it's like it doesn't make sense. We're not coming back to the us it's still cheaper, um, to go overseas even though it's not as cheap as it used to be. And so the message was the economic policies have not resulted in this big reshoring effort. And that's not just because our survey respondents say so. There's lots of articles I know, I've read you guys probably have too to say it's, it hasn't resulted in it. So, um, yeah, and these survey, you know, back in uh, May of 2025. Yes, we're actively looking and reshoring was 27 looking, but only 15 are looking at it now.

Amy Nicholas: Right, right.

Susan Spence: So they've looked, they study. It's like it makes no sense.

Amy Nicholas: And um, and um, no one's really talking much about it, but I've been kind of tuned into it about the, the import logistics. The cost of shipping goods by, by uh, by ocean has gone up significantly and uh, they're still not looking necessarily to reshore.

Susan Spence: So when um, Covid happened and you couldn't get a shipping container, um. Oh my gosh, I remember just looking at a shipping container company that was going to try to start up in Memphis, Tennessee. And a shipping container is not a very complex product. It's welded, metal. Um, they couldn't make it work. They couldn't hit the price point of China. Even with the doubling of shipping container price and you know how long you had to wait, they still couldn't touch them. Yeah, yeah, not surprised about that.

Amy Nicholas: Well, all in all, uh, we're letting the good times roll. Uh, I want to thank uh, Shirley and Lee for that song. And then uh, uh, Ray Charles of course made it famous at the end of the 50s. Uh, and I'm not Amy, I'm not going to play it again. I don't want to break any trademark rules and regulations.

Steve Miller: Thank you.

Amy Nicholas: Um, do we have any uh, final comments, Steve?

Louis Weiss: Uh, I'd say you know that the um, we talked about chatbots and using AI for anybody who's good at chatbots. Get all the emails and phone numbers of the suppliers who came to you and gave you fuel surcharge price increases and be ready to run that bot to send it all back to them saying give me my new rate card because oil's back under $80 a barrel.

Amy Nicholas: Right, Right. Yeah.

Susan Spence: Ah, Susan, Um, you know, I like the report. Um, it makes me feel better about the month to month optimism. We're. And um, hopefully you know, we're gonna accelerate the expansion with reasonable economic policy. Um, folks just have to listen to the people on the front line, these purchasing managers, they know what's going on because they're living every day. So please pay attention and uh, believe folks when they tell you this is what's driving them or not.

Steve Miller: One last question for you just from the consumer standpoint, um, for the everyday person, maybe someone who's not working within manufacturing, what does this report? I mean it's great hearing all of these positive, all of this positive feedback, but as a consumer, what do you think we should be expecting or looking for? Based on what? On what you guys are talking about and how that's going to affect manufacturing.

Louis Weiss: Yeah, two things for services anyway. Two things that I'd expect. One, you're going to see gas prices come down to a more normal level where they were probably the end of last year. Um, and the second piece is don't expect to see, um, prices for goods and services to go up in the second half of the year, uh, the way they might have in the first half of the year, uh, if they do go to a different service provider or seller because they, the, the survey information that we have is 1:1 to 2% between now and the end of the year.

Susan Spence: But not going back down either, unless, except for oil, which that one goes up the quickest and did back down the quickest, thankfully, because it's very shocking those numbers. Um, but the price increases are, we're still at, you know, 82% for a sub index. So buckle up.

Amy Nicholas: Right to Amy's, to Amy's point about the everyday consumer. All of this news that we're putting out there is all positive, positive, positive. But yet the housewife going shopping, she's spending more, gas is costing more. Uh, even though the gallon, the, uh, barrel price is now down to $80 instead of 115, um, they still have to deal with this issue.

Steve Miller: Well, it's a part time housewife. Myself, I like Steve's answer the best. So we're gonna go with that where we're leveling out not to expect too much more and gas prices should go down. So I'll take that.

Amy Nicholas: Okay. And again folks, um, if you like the show, you can print out the report yourself. Just, uh, hit the button and you can get to the report and print it out. And, um, thank everybody for being here. Great report. Let's keep the good times rolling. Good times roll. Uh, I may wind up listening to that in the car. Going home tonight.

Louis Weiss: I love it.

Susan Spence: Thank you so much, folks. Appreciate the attention.

Amy Nicholas: Thank you. Thank you all. Take care. Bye. Bye.

Susan Spence: Foreign.

Louis Weiss: Thanks again for joining us on another episode of Manufacturing Talk Radio with hosts

Amy Nicholas: Louis Weiss and Amy Nicklaus.

Louis Weiss: Before you head out, make sure to subscribe and leave us a review. For more information about the show and the manufacturing industry, head over to MFGTalkradio.com that's mfg t-a l k r a

Amy Nicholas: d I o dot com. This podcast is a part of the C Suite Radio Network. For more top business podcasts, visit c-suiteradio.com.