The 2007 Capital Spending Survey indicates that manufacturing expenditures will grow this year
January 9, 2007
Metal fabricators and formers are expected to spend more than $2.3 billion on capital equipment in 2007. The 2007 FMAC Capital Spending Survey provides more details.
Ask fabricators how they view business in 2007, and you'll likely get for a response, "Cautiously optimistic." In these days of potential terrorist attacks, war in Iraq and Afghanistan, tightening oil supplies, a shallow labor pool, and the constant threat of being replaced by an overseas supplier, fabricators should be looked upon as an optimistic bunch.
The results from the inaugural 2007 Capital Spending Surveyfrom FMA Communications Inc. reveals just that. Despite the fear that impending economic slowdown might be around the corner, most fabricators indicate a desire to invest in new equipment.
What did they say exactly? Figure 1reveals that more than 80 percent of fabricators surveyed said they planned in 2007 to increase or keep capital equipment and machinery spending the same as in 2006. Slightly less than 10 percent indicated a decrease in capital equipment spending.
Spending intentions remain mostly positive for 2007.
When asked to break down capital expenditures for 2007 more specifically, respondents said they planned to set aside 64.54 percent for new equipment, 25.9 percent for used equipment, and 9.55 percent for rebuilt equipment.
According to the 2007 Capital Spending Survey results, fabricators are keen on purchasing metal forming and bending equipment. Approximately $2.3 billion is projected to be spent on metal fabricating and forming equipment in 2007.
Almost $327 million is projected to be spent on press brakes alone. That's followed by almost $221 million for other sheet and plate bending and forming equipment, which includes machinery such as folders, panel benders, roll benders, and other, similar types of equipment not to be confused with press brakes.
But as a whole, more dollars are projected to be spent on cutting equipment than any other equipment sector. That's more than $885 million expected to be spent in this area.
Metal fabricators and formers are projected to spend more than $2.3 billion on capital equipment in 2007.
More than $211 million is projected to be spent on saws, a staple in most fabricating operations. Interest in laser cutting machines continues to grow, as more than $176 million is expected to be spent in this area. Figure 2 offers a complete picture of projected expenditures by type of equipment.
Figure 3provides a clearer picture of which industries are projected to spend the most on capital equipment. The different industry segments are broken out by North American Industry Classification System (NAICS) codes.
As more metal service centers strive to increase the value-added activities they offer to their customers, expect their spending on equipment to rise accordingly.
Fabricated Metal Product Manufacturing (NAICS 332) appears to be the most robust segment heading into 2007, with the industry projected to spend more than $819 million on capital equipment.
Following closely is Machinery Manufacturing (NAICS 333) at more than $762 million. The Transportation Equipment Manufacturing sector (NAICS 336) places third in this list with projected capital spending of more than $185 million.
A close look reveals that Computer and Electronic Product Manufacturing (NAICS 334) is projected to spend only $38 million on capital equipment in 2007. Obviously, this industry has seen many manufacturing endeavors move to the Far East over the last decade.
Interesting to note is that 61.2 percent of the actual dollars to be spent on capital equipment originates from plants in just 10 states:
Figure 4provides a regional breakdown of actual dollar volume of plants planning to purchase capital equipment this year.
The Great Lakes states remain the backbone of manufacturing in the U.S.