InSight

Exit and Growth Strategies for Middle Market Businesses

Archive for the ‘Metal Fabrication’ Category

M&A News in the Metal Fabrication Industry Sector

By Robert Contaldo | Nov 15, 2017

The report below provides a good overview of the 4th Quarter M&A activity in the Metal Fabrication Industry Sector. M&A activity for North American based target companies in the Metal Fabrication sector for Q3 2017 included 34 closed deals, according to data published by industry data tracker FactSet.

One of the largest deals of the quarter was announced in July when Schneider Electric SE acquired ASCO Power Technologies LP from Vertiv Co, a subsidiary of Vertiv Group Corp, for US$1.3 billion in cash. The acquisition will further expand Schneider Electric’s EcoStruxure Power Platform globally, especially in North America. ASCO Power Technologies manufactures and designs solenoid valves. The company is headquartered in Florham Park, NJ.

Import prices for iron and steel have continued to rise throughout 2017 as businesses affected by the prices remain cautious.

Read more »


M&A News in the Metal Fabrication Industry Sector

By Robert Contaldo | Oct 04, 2017

The report below provides a good overview of the 3rd Quarter M&A activity in the Metal Fabrication Industry Sector. M&A activity for North American based target companies in the Metal Fabrication sector for Q2 2017 included 51closed deals, according to data published by industry data tracker FactSet.

One of the more notable transactions in the sector closed in April when Wieland-Werke AG acquired Wolverine Tube, Inc. for an undisclosed amount. The acquisition enhances Wieland-Werke AG’s international market position and also expands its portfolio of technical businesses. Founded in 1916, Wolverine Tube is located in Decatur, Alabama and manufactures copper alloy and copper tube, rod bar and strip products.

Read more »


M&A Industry News From the Metal Fabrication Sector

By Robert Contaldo | Mar 16, 2017

metal fabrication sectorM&A activity for North American based target companies in the metal fabrication sector for Q4 2016 included 46 closed deals, according to data published by industry data tracker FactSet.  The average transaction value was $62.8 million.

On a global scale, M&A activity in the metal fab sector was stronger in Q4 than Q3, but still lower than in 2015. Total deal value surged by 12% to $12.9 billion in Q4, bringing the total deal value in 2016 to $40.2 billion, still 40% lower than in the year prior.

Global demand for steel is expected to rise 0.5% in 2017 compared to 2016, according to a recent report by The World Steel Association. Key challenges include uncertainties related to the UK’s vote to exit the EU, along with China’s efforts to shift its economy toward services and consumption, with less investment in manufacturing, exports, and construction. Demand in China is forecast to drop 2% in 2017. However, some emerging markets should experience robust growth in steel demand. Amid government investments in infrastructure, India’s steel demand is forecast to increase 5.7% in 2017. Other key pockets of steel demand growth include Turkey (with 4.2% growth expected), Brazil (3.8%), and Mexico (3.2%). In developed markets, steel demand is forecast to rise 1.1% in 2017, led by the US, which should see demand grow by 3%. The EU and Japan are each expected to experience a 1.4% increase in steel demand.

Industry Indicators

  •  US durable goods manufacturers’ shipments of primary metals, an indicator of primary metal production, fell 7.8% year-to-date in November 2016 compared to the same period in 2015.
  • US steel mill product prices, which impacts profitability for primary metal manufacturers, rose 8.7% in December 2016 compared to the same month in 2015.

Posted by Bob Contaldo.

Read the Entire Metal Fabrication 1st Quarter Newsletter Here


Fabricated Metal Industry M&A News

By Robert Contaldo | Oct 27, 2016

fabricated metalUS manufacturing activity, a leading demand indicator for manufacturers of fabricated metal products, grew in June 2016 for the fourth consecutive month, according to the Institute for Supply Management. Among 18 manufacturing industries tracked by the institute, 13 reported expansions in June, including fabricated metal products. Other industries of importance to metal fabrication product manufacturers also reported growth in June, including petroleum and coal products; food, beverage, and tobacco products; and machinery. However, transportation equipment manufacturers, a major demand driver for fabricated metal products, reported a contraction in activity in June. Overall, manufacturers generally reported faster growth in production and new orders in June, and employment gained ground over the prior month.

US industrial production, a demand indicator for metal coating, engraving, and heat treating services, fell 0.5% in July 2016 compared the same month in 2015. Production by providers of metal coating, engraving, and heat treating services fell more than 2%. Although industrial production dropped in July on a year-over-year basis, it saw monthly gains in June and July. The growth in June and July, along with a weaker US dollar and higher oil prices, could signal that the US manufacturing sector is poised for more robust growth, according to The Wall Street Journal.

Industry Indicators

  • US durable goods manufacturers’ shipments of fabricated metal products, an indicator of fabricated metal parts production, rose 1.1% year-to-date in August 2016 compared to the same period in 2015.
  • US steel mill product prices, an indicator of commodity steel costs for fabricated metal products manufacturers, rose 1.1% in September 2016 compared to the same month in 2015.

Posted by Bob Contaldo.

Read the Entire Metal Fabrication 4th Quarter Newsletter Here


Fabricated Metal Industry News

By Robert Contaldo | Sep 15, 2016

fabricated metalFabricated metal products manufacturers with high levels of exposure to markets relating to energy and mining are likely to remain cautious with staffing and production until more concrete evidence of a commodities price recovery emerges. US industrial production, a demand indicator for metal fab products, declined 2% in March 2016 compared to the same month a year earlier. US industrial output has been hurt by low commodity prices and reduced production in the mining and energy sectors, which has reduced demand for machinery and metals. Throughout 2015, a strong dollar made US exports less competitive, and low oil prices hurt demand for machinery and equipment. But so far in 2016, those headwinds have abated somewhat as oil prices stabilized and the dollar weakened relative to some other key currencies, according to The Wall Street Journal. Also pointing to a possible turnaround, the manufacturing portion of the industrial production index rose 0.4% in March year-over-year. Additionally, in April 2016 the Institute for Supply Management reported that March manufacturing activity marked the first increase in six months.

US new orders for manufactured goods, a demand indicator for metal coating, engraving, and heat treating services, fell by 2.3% in the first four months of 2016 compared to the same period a year earlier. New machinery orders were off by 4.8% overall, as construction machinery orders fell 20% and mining and oil and gas field machinery orders declined by 56%. New orders increased in a couple of key markets for metal coating, engraving, and heat treating services, however. Transportation equipment orders rose by 4.5%, and orders for fabricated metal products were up 2.4%.

Industry Indicators

  • US durable goods manufacturers’ shipments of fabricated metal products, an indicator of fabricated metal parts production, rose 0.7% year-to-date in May 2016 compared to the same period in 2015.
  • US steel mill product prices, an indicator of commodity steel costs for fabricated metal products manufacturers, fell 4.6% in June 2016 compared to the same month in 2015.

Posted by Bob Contaldo.

Read the Entire Metal Fabrication 3rd Quarter Newsletter Here


Metal Fabrication Industry M&A News

By Robert Contaldo | May 25, 2016

metal fabricationMetal Fabrication Industry Update 

US shipments of metal fabrication products declined 0.6% in the first 11 months of 2015 compared to the same period in 2014; new orders fell 2.5% during the same period. Demand for fabricated metal products may be dropping due to an overall slowdown in US manufacturing output. US industrial production, a demand indicator for fabricated metal products, fell 1.8% in 2015 compared to the prior year; production of fabricated metal products declined 1.3%. In December 2015 US manufacturing activity dropped for the second consecutive month, according to the Institute for Supply Management (ISM). Fabricated metal products reported a December drop in activity, along with several end-use markets for fabricated metal including machinery; transportation equipment; and electrical equipment, appliances, and components. Economists suggest slower growth in China is contributing to a global economic slowdown. The strong US dollar also makes US goods more expensive and less competitive in export markets. If weak demand persists, fabricated metal product manufacturers may adjust production, staffing, and/or inventory strategies to preserve margins.

US orders for primary metals, a demand indicator for steel service centers and other metals wholesalers, dropped nearly 16% in January 2016 compared to the same month in 2015. Iron and steel mills orders were off nearly 21%, while aluminum and nonferrous metal orders fell more than 10%. New orders for ferrous metal foundry products were down nearly 13%. On a monthly basis, January’s durable goods orders increased 4.7%, and primary metal orders edged up 0.6%.

Industry Indicators

  • US durable goods manufacturers’ shipments of fabricated metal products, an indicator of fabricated metal parts production, fell 0.4% year-to-date in February 2016 compared to the same period in 2015.
  • US steel mill product prices, an indicator of commodity steel costs for fabricated metal products manufacturers, fell 15.8% in March 2016 compared to the same month in 2015.

Posted by Robert Contaldo.

Read the Entire Metal Fabrication 2nd Quarter Newsletter Here


M&A News – Metal Fab Industry

By Robert Contaldo | Mar 31, 2016

Metal Fab IndustryUS shipments of metal fab industry products declined 0.6% in the first 11 months of 2015 compared to the same period in 2014; new orders fell 2.5% during the same period. Demand for fabricated metal products may be dropping due to an overall slowdown in US manufacturing output. US industrial production, a demand indicator for fabricated metal products, fell 1.8% in 2015 compared to the prior year; production of fabricated metal products declined 1.3%. In December 2015 US manufacturing activity dropped for the second consecutive month, according to the Institute for Supply Management (ISM). Fabricated metal products reported a December drop in activity, along with several end-use markets for fabricated metal including machinery; transportation equipment; and electrical equipment, appliances, and components. Economists suggest slower growth in China is contributing to a global economic slowdown. The strong US dollar also makes US goods more expensive and less competitive in export markets.

US industrial production, a demand indicator for metal fabrication, only grew 0.3% in October 2015 compared to the same month a year earlier. However, metal coating, engraving, and heat treating production increased 3.1%. Demand for metal coating services is likely being sustained by healthy demand from the automotive industry; industrial production of motor vehicles and parts rose nearly 11% in October 2015 compared to the same period a year earlier.

US nonresidential construction spending, a demand indicator for architectural and structural metals, is expected to rise 7.4% in 2016, according to a December 2015 report by Associated Builders and Contractors (ABC). The steady recovery of the US economy and strong growth in consumer spending are expected to drive demand for new construction. Projects related to manufacturing are forecast to experience the strongest growth with a rise of nearly 15%, followed by lodging with gains of more than 11%.

  • US durable goods manufacturers’ shipments of fabricated metal products, an indicator of fabricated metal parts production, fell 0.6% year-to-date in November 2015 compared to the same period in 2014.
  • US steel mill product prices, an indicator of commodity steel costs for fabricated metal products manufacturers, fell 19.8% in December 2015 compared to the same month in 2014.

Posted by Bob Contaldo.

Read the Entire Metal Fabrication 1st Quarter Newsletter Here


Metal Fabrication Industry News

By Robert Contaldo | Dec 23, 2015

Metal FabricationNew orders for metal fabrication products declined 1% in the first five months of 2015 compared to the same period a year earlier; shipments rose less than 2%. Some fabricated metal product manufacturers may be seeing reduced orders from key customer groups that are experiencing drops in demand. New orders for machinery dropped nearly 9% in the first five months of 2015; shipments were down nearly 2%. Sharp order declines for nondefense and defense aircraft (25% and 17%, respectively) drove a 4% drop in new orders for transportation equipment. However, motor vehicles and parts remain a bright spot in the transportation equipment sector; motor vehicles and parts new orders and shipments both rose more than 8%.

  • US durable goods manufacturers’ shipments of fabricated metal products, an indicator of fabricated metal parts production, rose 0.5 percent year-to-date in August 2015 compared to the same period in 2014.
  • According to data from the Interindustry Economic Research Fund, Inc. (IERF), an economic research group, revenue for the US manufacturing sector is forecast to grow at an annual compounded rate of 5% between 2015 and 2019, based on changes in physical volume and unit prices.
  • US steel mill product prices, an indicator of commodity steel costs for industrial machinery manufacturers, fell 14.1 percent in August 2015 compared to the same month in 2014.

Posted by Robert Contaldo.

Read the Entire Metal Fabrication 4th Quarter Newsletter Here


M&A News – Metal Fabrication Industry

By Robert Contaldo | Aug 13, 2015

MFIPG-Metal Welding,VerticalM&A activity for North American based target companies in the Metal Fabrication sector for Q2 2015 included 36 closed deals, according to data published by industry data tracker FactSet.  The average transaction value was $39 million.  According a report from the Fabricators & Manufacturers Association, an industry trade group, the industry appears to be ripe for significant consolidation. There is a recent trend among OEMs to limit the amount of shops they work with and instead award contracts to a select group of preferred suppliers. Many mid-size shops are looking to diversify their customer bases and acquire new capabilities to survive in this environment.  Those that don’t follow this trend are likely targets for acquisition.

Industry production continues to improve since a low point following the global recession in 2010. Fabricated metal product manufacturing capacity is at its highest point in more than five years. This has partially been driven by an uptick in U.S. based manufacturing as well as continued depression in the prices of raw materials.

 

Posted by Bob Contaldo.

Read the Entire Metal Fabrication 3rd Quarter Newsletter Here


Metal Fabrication M&A News

By Robert Contaldo | Jun 25, 2015

Metal to metal weldingMetal Fabrication: US industrial production by machine shops increased nearly 5 percent in 2014 compared to the previous year and has continued into 2015. Strong production growth by some key machine shop customer groups may have contributed to the industry’s gains in 2014. US production of motor vehicles and parts rose 8 percent in 2014 compared to the prior year; machinery production climbed more than 7 percent. Manufacturers of metal fabrication products saw production grow more than 5 percent, and production of aerospace products and parts increased 2.2 percent.

US industrial production of fabricated metal products increased about 4 percent in December 2014 compared to the same period a year earlier. Forgings and stampings saw some of the largest gains, with growth of more than 10 percent. Improving US construction spending likely contributed to a 6 percent increase in architectural and structural metals production. Fabricated metal product manufacturers also likely benefited from increased production in some key end-use OEM markets. US machinery production rose 12 percent in December 2014, and production of motor vehicles and parts grew 7 percent. Production of aerospace products and parts increased about 4 percent.

Global demand for machine tools is expected to reach more than $140 billion by 2020 amid a steady rise in manufacturing activity, according to a recent report by Global Industry Analysts. US manufacturers are forecast to continue to re-shore some operations amid higher labor costs in China, high transportation costs, and the difficulties of maintaining far-flung supply chains.

US capital spending for machine tools is forecast to rise 37 percent in 2015 compared to 2014, according to a recent survey by Gardner Business Media. High rates of capacity utilization by machine shops and other heavy users of machine tools, including metalworking machinery, suggest companies may have to invest in capital equipment purchases to keep up with new orders.

Posted by Bob Contaldo.

Read the Entire Metal Fabrication 2nd Quarter Newsletter Here