Metal formers expect slight improvement

December 17, 2008

According to the December 2008 Precision Metalforming Association (PMA) Business Conditions Report, metal forming companies expect business conditions to improve slightly, yet remain difficult during the next three months. Conducted monthly, the report is an economic indicator for manufacturing, sampling 157 metal forming companies in the United States and Canada.

When asked what the trend in general economic activity will be during the next three months, metal formers anticipate a slight improvement. Six percent of participants forecast an improvement in business (up from three percent in November), 31 percent predict activity will remain unchanged (up from 27 percent last month) and 63 percent reported that activity will decline (down from 70 percent in November).

Metal forming companies also expect incoming orders to continue to improve slightly during the next three months. Fifty-nine percent of companies anticipate a decrease in orders (down from 67 percent in November), 30 percent expect no change (up from 24 percent the previous month) and 11 percent forecast an increase in orders (compared to nine percent in November).

Current average daily shipping levels dropped substantially in December. Seventy-nine percent of participants report that shipping levels are below levels of three months ago (up from 59 percent in November), 17 percent report no change (compared to 31 percent last month) and only four percent report that shipping levels are above levels of three months ago (down from 10 percent in November).

The number of metal forming companies with a portion of their workforce on short time or layoff continued to increase to 54 percent in December—up from 42 percent in November and at a substantially higher rate than December 2007, when only 18 percent of companies reported workers on short time or layoff.

"Business conditions for many metal forming companies are extraordinarily challenging," said William E. Gaskin, PMA president. "Suppliers to the automotive industry have been hit especially hard by production declines due to poor car sales in the fourth quarter, and the outlook for the first quarter of 2009 is only marginally improved. Suppliers to other industries may be somewhat better off; however, production levels in all segments of manufacturing are falling, resulting in the sharp decline in current shipments. The increase in layoffs and reduced work hours from 42 to 54 percent of our member companies is significant and probably conservative in that many companies have reported extended holiday closures to reduce costs and balance production to demand," Gaskin continued.