Purchasing Management Director Gives Clues to Course of Economy

By Hershey, Robert D. | THE JOURNAL RECORD, November 2, 1989 | Go to article overview

Purchasing Management Director Gives Clues to Course of Economy


Hershey, Robert D., THE JOURNAL RECORD


E. Norquist may not cut much of a figure at the local mall, but he was clearly born to shop.

As worldwide director of purchasing and materials management for the Polaroid Corp. in Waltham, he spends $900 million a year, nearly half the money taken in by the large camera, film and electronics company, with the energy and sophistication of a teen-ager buying clothes or videotapes.

In purchasing everything from gum arabic to advertising to elevator maintenance, Norquist not only has a major impact on the success of Polaroid, but provides clues to the future course of the nation's economy.

His activities and those of his counterparts at other industrial companies are tallied monthly by the National Association of Purchasing Management for its Purchasing Managers' Index.

This seven-year-old index, published the first business day of each month, has gained growing prominence over the past year or two as economists and the securities markets strain for the first glimpse of the next recession.

The sharply increased attention to the purchasing index comes as the manufacturing sector it covers continues to shrink as a portion of the total economy.

Some top economists, however, have long found the index's data on orders, production, inventories, employment and the speed of deliveries by suppliers to be highly useful.

The late Walter W. Heller, a former chairman of the President's Council of Economic Advisers, once described the report as ``the most reliable single indicator and for many years my secret weapon in forecasting.''

``Things are slowing down right now, not precipitously but there are places,'' Norquist said, citing the lack of bottlenecks in the supply chain and the unsolicited price cuts being offered by vendors fearful of losing business.

Although prices are not a component of the index, they are contained elsewhere in the trade association's report and are closely scrutinized for signs of the inflationary pressures that encourge stockpiling.

About half the $900 million that Norquist spends each year goes for materials used directly in Polaroid products; the other half is for things like buildings, equipment, services and goods consumed in production or offices.

There is still no sign of corporate buyers seeking to stockpile goods before prices go up, Norquist said, though certain products, like the titanium oxide Polaroid uses for its film, are in tight supply.

While the purchasing association refuses to identify any of its survey participants, and Norquist will neither confirm nor deny a role, he is widely assumed in the industry to be one of the survey respondents.

Norquist, a 58-year-old native of Jamestown, N. …

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