FMA report shows fabricators, job shops facing uncertainty

Fabricators & Manufacturers Association Intl. (FMA), Rockford, Ill., has released the Q4 2015 "Forming & Fabricating Job Shop Consumption Report." The report looks at small and medium-size job shops and fabricators.

The overall sense of this most recent report is that fabricating shops are facing a lot of headwind and uncertainty, but not enough to cause panic.

Nearly as many participants reported a decline (23 percent) as reported improvement (24 percent) in Q4 2015, although 53 percent indicated they are in a stable position. Capacity utilization for participants was just more than 61 percent.

The demand for new orders is a key indication of what is to be expected in the future, and the numbers here have deteriorated. Thirty-seven percent of participants experienced declines in new order demand—almost twice the number that experienced an increase (23 percent). Forty-one percent reported stable conditions.

Most companies surveyed (68 percent) reported they are planning to maintain their current number of employees. Thirteen percent said they intend to hire, and 19 percent reported they will hire less. Most participants said they have a very hard time finding qualified people, which is a large reason for their reluctance to hire.

Fifty-three percent of respondents experienced stable raw material costs, but 34 percent saw costs drop. Only 13 percent experienced increased raw material costs. For most companies (77 percent), logistics costs remained stable, while 18 percent reported higher costs and 4 percent recorded lower costs.

With a 61 percent level of capacity utilization, fabricators are having a tough time deciding to add capital equipment. Only forty-one percent of respondents said their capital equipment purchase plans are on track. That means most respondents will delay these purchases for a few months, with 28 percent saying they will cancel them.

Most respondents said they believe their companies will grow in 2016. Thirty-nine percent were positive, and 38 percent said conditions are at least stable. Even so, a significant number (23 percent) said conditions are not getting any better.