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Laboratory Products Purchasing Trends Take a Step Back for 2012

The Laboratory Products Association and SLAS jointly sponsor the annual North American Survey of Laboratory Purchasing Trends Report. The January 2012 report reflects the overall economy by revealing somewhat discouraging news for those providing products and services to the laboratory science and technology community. SLAS members: use the detailed information in this 304-page report to better understand the road ahead.

 

"Based on the results of our survey, 2012 is the year for sitting tight," expresses Clark Mulligan, C.A.E., Laboratory Products Association (LPA) president.

Mulligan voiced this recommendation as January 2012 North American Survey of Laboratory Purchasing Trends responses show hesitancy across the board to commit to significant spending. Industry, hospital, government, college/university and independent/contract laboratory segments are skittish to invest in the midst of the nation's economic woes.

"This annual study in 2011 showed an increase in purchases when compared to 2010 and 2009, but shows a definite pullback when you compare 2011 report results to 2012," adds K.C. Warawa, president of K.C. Associates Inc., the marketing research firm contracted to conduct the study. "This applies to hiring, purchasing and everything else. In 2011 people were very optimistic; they wanted the recession to be over and they were ready to buy after holding back for two years. For 2012, reality has set in and they are pulling back on everything."

Warawa explains that last year's North American Survey of Laboratory Purchasing Trends results, which were gathered late in 2010 to assess forecasted purchases for 2011, showed respondents ready to buy in 2011 after holding back for two years.

While Warawa describes respondents' reluctance to buy in 2012, she indicates that they do foresee steady but slow growth throughout the year. "They don't see recession but they don't see a barn-buster year either," she states. "And, they believe slow and steady growth is better than no growth."

A Bit of Background

The Laboratory Products Association was founded in 1918 as the Scientific Apparatus Makers Association. Its members are manufacturers and distributors of laboratory products and services including equipment and supplies; instruments; glass and plasticware; and chemicals and reagents used in scientific research and applied science and life science worldwide.

The LPA initiated the North American Survey of Laboratory Purchasing Trends in this marketplace in 2002 in an attempt to understand the market's standing in line with the overall nation's economic downturn.

"Then, when the economy rallied, no one wanted the data any more and we didn't conduct the survey for a couple of years," Warawa notes.

LPA joined forces with the former Association for Laboratory Automation (ALA) to gather data in 2007 and issued its first trends report together in 2008. Both LPA and ALA knew that the true value of such studies is their ability to show changes over time, so they have continued to conduct and issue the purchasing trends survey report annually since then. When ALA merged with the Society for Biomolecular Sciences and became SLAS, this meaningful work continued.

"Trending is the most powerful part about doing market research," Warawa explains. "Because if you can see that something is changing, then you can react to it. If you do a standard survey, it's just a snapshot in time. Yes, it's good to know that information but it doesn't tell you what your marketing plans or your business plans should be two years from now because it doesn't tell you where you've been or where you're going."

For this 2012 member-only report, K.C. Associates Inc. issued its 23 survey questions in December 2011. Warawa reports 1,128 responses were received, achieving a very comfortable 95% ±3 confidence level. Key to this study, Warawa notes, is that it is conducted at the end of the calendar year. Respondents have the benefit of almost a full year's activity and likely have gathered ample information to make many of their coming year projections.

The products included in the study are listed in nine categories:

• Chemicals, reagents, solvents

• Glassware, plasticware

• Consumables excluding chemicals

• Laboratory equipment <$2,500

• Laboratory equipment >$2,500

• Laboratory instruments <$5,000

• Laboratory instruments >$5,000

• Laboratory furniture

• Laboratory automation

The report shows full data gathered in each category and the reasons offered for those spending decisions. Data is then cross-referenced by specific product/service areas – basic research, biotechnology, chemicals, clinical, environmental and pharmaceutical. They also are further charted comparing 2012 results to previous years to provide the all-important trending information.

Forty-nine percent (49%) of the respondents were lab managers/directors /section/corporate managers with another 41% listing their job function as scientist. The distribution of the respondent organizations was:

• Industry 52%

• Hospital 7%

• Government 11%

• College/university 19%

• Independent/contract lab 11%

Research was the most frequently identified respondent department, followed by central service laboratory, development and QA/QC, respectively.

So, What are the Trends?

"One of the things I found most interesting in this year's report, and possibly most disturbing, is the number of people who are either doing no hiring or those who are going to fire people if the workload goes down," Warawa offers. "If the workload decreases, 68% said they would reduce their workforce."

This compares with 60% in the 2011 report and 54%, 52% and 54% in 2010, 2009 and 2008 respectively.

Beginning in 2009, the SLAS/LPA study began tracking "laboratory automation" and this category has remained pretty constant. For those purchasing in this product area, 72% stated their purchases would be the same in 2010 as they were in 2009. The year before, 69% said their 2009 purchases would remain the same as in 2008. In 2010, 9% of the respondents said there would be a decrease in expenditures and 19% said spending would increase. In 2011, only 8% indicated a decrease in spending and 21% said there would be an increase. In 2012, 17% will see an increase in spending which is down from last year's 21%. Nearly three quarters of the respondents (74%) will see no change to the spending with an additional 10% stating there will be a decrease.

In another question, the respondents were provided a list of possible outsourced activities including:

• Research

• Development

• Production

• Human resources/facilities

• Finance functions

• Information technology

• Purchasing

A total of 128 respondents identified information technology as the top function currently being outsourced. Research was second with 121 responses and development was third with 99. Production was seen as being increasingly outsourced by 161 respondents. Development (134) and research (126) were next with information technology (100) fourth.

Outsource Usage in the Next 12 Months

This Year's New Topic: Social Media

In addition to tracking what's happening in the laboratory with hiring, workload, purchasing, operating budget, building/refurbishing laboratories and outsourcing, it has been the LPA's practice to add "special topic" areas arising that may affect members. In 2010, it was the economic environment and the American Recovery and Reinvestment Act (stimulus package). In 2011, it was green products in the laboratory. For 2012, the association decided to add several questions on laboratory personnel use of social media.

"LPA always attempts to identify the changing needs of members in this fluid business environment," Mulligan explains. "With the explosion of social media sites over the last three years, we felt it important to begin to track its use in the laboratory."

The results showed strong use of LinkedIn first, followed closely by Facebook. These two were well ahead of other social media sites like Google+, YouTube, Twitter, MySpace or blogs. Almost no one reported using social media sites to obtain personal product information and even less for laboratory products or activities.

Editor's note: LinkedIn is also the SLAS member's first choice for social media, with more than 3,000 participating members of the Society's group.

While social media sites as information sources appear to have come up short, Mulligan and Warawa caution writing them off.

"In the mid-1990s, I clearly remember the overriding thought in association management was that the Internet was a fad, that it would fizzle out and not go anywhere," Mulligan laughs. "They were really wrong!"

"If you were on the bandwagon for the Internet in the first couple of years in 1995-1997, you were just like social media is right now because almost nobody was there," Warawa adds. "Early users were getting their feet wet, but there really wasn't much value. Once more people started getting onto the Internet, it became valuable. And, now, it is an absolute necessity. If we go back and look at social media in a couple years, the survey results may be very different."

Warawa says this is another benefit to tracking trends for business purposes and to anticipate – and test – the possible game changers.

"We've looked at the industry over a long period of time, and it's important that people understand it's a different world now," she states. "For example in my presentation of study results at SLAS2012, I commented that research shows about 50% of the people have their instruments repaired by someone else. Manufacturers need to know that they have to get parts and service information out there to meet this need. Decades ago, manufacturers wouldn't even have thought about that as they issued manuals with the sale and they all repaired their own equipment. When this study reveals the number one means of getting information is a manufacturer's website, that provides you with actionable information."

What's Ahead?

While the survey responses paint a tough scenario for 2012, Mulligan and Warawa believe that knowing the climate ahead can help those in the industry prepare themselves and chart an appropriate business plan. SLAS Chief Executive Officer Greg Dummer, C.A.E., agrees.

"Knowledge is power," Dummer states. "SLAS members are encouraged to review the 2012 North American Survey of Laboratory Purchasing Trends and gain the insight and detailed information it offers to give them a step up on what is coming around the pike."

Only SLAS members can access the full 304-page .pdf file housed on SLAS.org. Contact slas@slas.org if you need help with your membership login information. Not yet an SLAS member? Join today to read this report, and take advantage of other SLAS membership benefits.

"Unfortunately, everybody is dependent upon the overall economy," Warawa muses. "It's like we're sitting on jello; we don't have a solid footing on anything. We have huge debt, wars and threats of wars and fear of dirty bombs – all terrible things that could affect your business without you doing a thing. But, if you have deep knowledge of your industry's performance, you will be as prepared as possible."

SLAS will once again partner with LPA to conduct the next iteration of the North American Survey of Laboratory Purchasing Trends. The survey will be conducted in December 2012 with reporting of results at SLAS2013, the Second Annual SLAS Conference and Exhibition, January 12-16, Orlando, FL.

April 27, 2012