M&A activity in the metal fabrication space has been driven by the growth in employment, construction projects and increased manufacturing. In particular, growing demand for aluminum products across a variety of end markets is driving component sales making aluminum fabricators highly attractive M&A targets to acquirers looking to be vertically integrated.
According to First Research, an industry research organization, 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.
US manufacturing activity, a key demand indicator for industrial supply wholesalers, rose for the 17th consecutive month in October 2014, according to the Institute for Supply Management (ISM). Of the 18 manufacturing industries reporting to the ISM, 16 reported growth in October. Industries experiencing the strongest growth included makers of plastic and rubber products, textile mills, fabricated metal products, primary metals, electrical equipment, appliances and components, and nonmetallic mineral products. Overall, manufacturers reported faster growth in production, new orders, and employment.
Posted by Robert Contaldo.