September 5, 2013
According to the inaugural Forming & Fabricating Job Shop Consumption Report, released in July, business isn’t horrible, but it’s not gangbusters either.
So, how are you feeling today?
“OK, I guess.”
“Well, you know, I’ve been better, but I’ve been a lot worse too. Remember me a few years ago?”
You were a mess.
“Sure was. Don’t want to go back to where I was, that’s for sure. Now, some days are great, others aren’t so great. But overall, I’m just fine.”
This dialogue pretty much sums up today’s business owner, metal fabricators included, and it’s pretty much the mood captured by the inaugural Forming & Fabricating Job Shop Consumption Report. Call it a quarterly physical for job shops and contract metal fabricators in the U.S. Produced by the Fabricators & Manufacturers Association International®, the report gives a periodic snapshot of this nonmonolithic business.
More than half of all respondents have fewer than 20 employees; nearly three-quarters have fewer than 100. When asked what industry represented the largest percentage of a fabricator’s business, respondents gave varying responses—from oil and gas to construction and automotive—and no one sector dominates. Only 9 percent said the automotive sector; 12 percent construction; and 7 percent industrial machinery, itself a category that touches many sectors.
Investors, analysts, and policymakers view business activity from a galactic level, the world of general relativity, where the gravity of GDP, durable goods orders, and the like pull this way and that. But when you get to the small firm, where most business occurs in this country, the economy turns quantum—jumpy, irregular, difficult to perceive. Some weeks are busy, others are slow. Hot jobs come and go, and some work ebbs and flows with the seasons.
Although such diversity and variability make this business tough to pigeonhole, they also make metal fabrication a bellwether of sorts. Fabricators touch virtually all areas of U.S. economic activity, from the tiniest medical device to the largest mining buckets. You name something, and chances are a metal fabricator has added value to it somehow.
Answers from the report, released in late July, paint a beige economic picture. Business isn’t horrible, but it’s not gangbusters either. Most said that operating capacity and new order activity are holding steady, but a fair amount said the level of business has either increased or decreased from the previous quarter.
The fluctuation hints at just how competitive this business has become. This is fueled in part by dynamics of the sectors fabricators serve, in part by variables largely outside the fabricator’s control. This includes shipping expenses and raw stock costs, and many are seeing increases in both.
Only 42 percent said their capital equipment spending is on track, and the remaining said that planned spending has been pushed back at least a quarter. Still, the need is there. The survey asked what fabrication technologies fabricators needed most. Answers spanned the gamut, of course, because
technological needs depend on a shop’s product mix.
But patterns are evident. Upstream machine investments are pushing equipment investments for downstream processes. A good portion of respondents said their greatest need is in laser cutting; close behind is plasma cutting, a hint at how busy plate fabricators are right now. These investments in turn are driving purchases in press brakes, other bending equipment, and, especially, welding. About a fifth of respondents said their greatest equipment need now is welding power supplies and consumables.
The business outlook perhaps provides the most telling response: 43 percent said the outlook is positive; 42 percent said it is stable. Only 15 percent said they have a negative outlook. This may be why the hiring situation is changing.
Since the recession, fabricators have been purchasing equipment at a steady clip, updating old machines, many of which make current employees more productive. But now, with their stable or positive outlook, more are hiring. Nearly a quarter of respondents said they have grown their staffs in recent months, while only 12 percent said they had to reduce their head counts.
This trend isn’t dramatic. After all, most said their employment has remained stable. But the trend is significant all the same, because hiring someone isn’t a casual affair, especially in a very small job shop. If a manager is adding personnel now, he or she is probably pretty confident about the future. Buying the wrong machine certainly puts financial stress on a business, but a machine is an asset that can be bought and sold; it’s just money changing hands. Hiring staff isn’t so trivial, particularly in a sector in which the CEO knows everybody’s name, and perhaps everybody’s family.
To download a free copy of the Forming & Fabricating Job Shop Consumption Report, visit the FMA web store at www.fmanet.org/store, and then search for “survey.” If you manage a U.S. job shop or contract metal fabricator and are interested in participating, contact FMA at 888-394-4362 or via e-mail at firstname.lastname@example.org.
The FABRICATOR® is North America's leading magazine for the metal forming and fabricating industry. The magazine delivers the news, technical articles, and case histories that enable fabricators to do their jobs more efficiently. The FABRICATOR has served the industry since 1971. Print subscriptions are free to qualified persons in North America involved in metal forming and fabricating.