InSight

Exit and Growth Strategies for Middle Market Businesses

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


Leave a Comment