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Laboratory Purchasing Trends 2011: Encouraging News for Lab Personnel, Vendors

The North American Survey of Laboratory Trends 2011 that was released to SLAS members at LabAutomation 2011 shows that the decreases in spending and hiring seen over the past couple years are turning around, according to Clark Mulligan, president and CEO of the Laboratory Products Association. "Labs are hiring again, workloads are increasing and spending in most product categories is going up," says Mulligan.



What the Numbers Say about Hiring

The 246-page report was sponsored jointly by LPA and SLAS and conducted in January 2011. The data therein, compiled by K.C. Warawa of K.C. Associates, is based on 856 responses from throughout the United States and Canada. A total of 31% of these respondents said they were increasing their laboratory personnel staff, a "sharp turnaround" from 2010, when only 19% reported an increase. In 2011, 56% said the number of laboratory personnel would stay the same, while 13% reported a decrease, according to the survey. For the first time since 2008, fewer than half (46%) of those surveyed said their companies weren't hiring.


Among the laboratories that were hiring, 24% said they were replacing personnel, while 25% said they were actually increasing their staffs—more than double the percentage of companies that reported increases in 2010 (12%), and well ahead of increases reported in 2009 (14%) and 2008 (17%). Respondents from the biotechnology segment (52%) were hiring replacements or increasing staff more frequently than other segments.

More labs were hiring to manage increases in workload, according to the survey. In January 2011, close to half (45%) of companies that experienced a workload increase reported that they also increased staff, compared with 28% just a year ago. Labs may be more willing to decrease staff when workloads decrease, however, 60% reported in the current survey that they did so, compared with 54% in previous years.


What the Numbers Say about Spending

As Mulligan indicated, laboratory product spending in 2011 generally is projected to increase or remain the same as last year. In the chemicals, reagents and solvents category, for example, 44% of respondents indicated they would increase their spending and 49% said spending in this category would stay the same; only 7% said there would be a decrease.


A similar spending pattern was documented for glassware and plasticware (32% increase/56% remaining the same). Also encouraging were reports of increased expenditures in the consumables excluding chemicals category, which "jumped from 32% in 2010 to 41% in 2011," Mulligan said.

Labs also reported in the current survey a projected increase in spending under $2,500 and over $2,500 also increased in the 2011 survey compared with 2010. For the most expensive products (laboratory instruments costing more than $5,000), purchases were expected to increase in 2011 for 35% of the respondents, up from 27% in 2010. This increase was the highest since the study started in 2002. In addition, the number of labs reporting projected decreases in expenditures was the lowest since 2004. For 86% of respondents in the current survey, spending was anticipated to remain the same or increase.


"Tying into increased spending for supplies, we see that in 2011, the budgets for both capital and non-capital equipment are also increasing, so we anticipate more spending in both those categories, as well," Mulligan observes.



What the Numbers Say about Green Products

As in many industries and markets, "there's a clear shift within laboratories to focus more on purchasing environmentally friendly products, a trend our analyst feels will continue in the near future," says Mulligan. The shift is apparent when one compares percentages between 2008, when the question was first included in the survey, and 2011, the second time that question appeared.

In 2011, 16% of respondents said they were encouraged to buy green products as a "first" choice, compared with 12% in 2008. Overall, 27% (compared with 20% in 2008) said they were encouraged to buy green products if performance and price are equal to non-green products; 21% said they were "allowed" to purchase green products (compared with 15% in 2008). The issues deemed most important when considering the purchase of green products were: reduces/eliminates the use of toxic chemicals; reduces/eliminates toxic emissions from the product; uses less energy; and/or generates less waste.

Strikingly, 49% of respondents in 2008 said the purchase of green products was neither encouraged or discouraged (i.e., the issue wasn't discussed) while this was the case for only 32% of respondents in 2011. Only 3% of respondents were required to buy green products (same as in 2008), whereas 1% said they were discouraged from purchasing such products (down from 2% in 2008).



Looking Ahead

When asked what SLAS members can anticipate going forward based on current trends, analyst K.C. Warawa said cross-tabulations of data in the report indicate that the biotechnology sector is growing. Companies in that sector said they were likely to have more projects and add personnel in 2011. Most industries envision non-capital spending remaining the same, "39% of the biotech respondents said they would be increasing their capital expenditures, as compared to 36% for chemicals, 33% for both environmental and pharmaceuticals, 30% for clinical and 20% for basic research (universities and government)," Warawa notes.

Both biotech and pharmaceutical companies will be refurbishing new labs (28% each), as will entities involved in basic research (29%). "The purchase of new equipment generally occurs for four reasons," according to Warawa.

1. Replacement of old/obsolete equipment

2. Increase in current applications

3. New applications that require more equipment

4. Adding a new technology

"It is not merely a matter of having an entire ‘type of equipment' replaced with a new technology. Many types of equipment and instruments are currently considered to be commodity products. The replacement market is very important," she stresses. ?Warawa also affirms that outsourcing is here to stay, and will continue in non-core portions of all businesses. In addition, R&D is being outsourced in industries where "time-to-market" is essential for new products.

Mulligan adds that changes or bumps in the laboratory products industry typically lag behind the economy in general. "That means that if for some unforeseen reason the economy were to go back into a recession in 2011 or at some point in 2012, that ripple probably wouldn't be felt in the lab products industry until 10-to-12 months later," he notes. "For now, based on the input we have for 2011, I'm optimistic that current trends will continue."

July 6, 2011