Overall manufacturing business conditions improved in the fourth quarter of 2011 for product manufacturers (buyers) and job shops/contract manufacturers (suppliers) with both reporting increased sales, according to “MFGWatch,” a survey of North American manufacturers and suppliers conducted by MFG.com.

“North American factory activity has increased for the 30th consecutive month and 65 percent are investing in new technology, both very positive signs for expanding growth in the manufacturing sector,” said Mitch Free, CEO of MFG.com, in a prepared statement.

MFGWatch Q4 ’11 Survey reports:

• There is increasing stability in the supplier markets.
• Supply chain disruption drastically decreased to a lowest point since Q4 2009.
• Buy-side product manufacturers have taken measures to mitigate their supply chain risk, becoming less affected by disruptions.
• 3 percent uptick in reshoring back to North America, now at 22 percent.
• Manufacturers researching reshoring increased by 7 percent to 33 percent.
• Fuel prices, shipping costs and intellectual property protection are most important factors threatening sourcing strategies.
• Availability of dependable suppliers stabilizes on a global scale.
• 65 percent of buy-side product manufacturers are aggressively investing in new technology, a positive sign for growth.

Among these highlights, MFGWatch does point out a couple of “troubling trends” that it says could be holding the industry back. Such trends include a sustained increase in concern over access to capital — up from 22 percent in Q2 to 26 percent in Q3 to 35 percent in Q4 2011 — and a low hiring rate that may indicate workforce skills gap, struggle to find qualified labor.

Looking ahead at projections for 2012, the survey found intentions to add capacity in Q1 2012 is a historic high at 45 percent — up from 39 percent in Q3 (for Q4 projections). With that stated, 52 percent of respondents are not considering exporting at this time. Respondents reported more education is needed on the benefits of exporting for small business. In all, the survey predicts operating costs will continue to be a major concern in 2012.

MFGWatch is conducted from a sampling of MFG.com member companies and is intended to reflect projected (intent) and reported (actual) behaviors of companies in the North American manufacturing sector. Industries represented include aerospace/aeronautics, automotive, medical, defense, textiles and consumer products manufacturers.

To view survey results, click here.