InSight

Exit and Growth Strategies for Middle Market Businesses

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


Leave a Comment