Metal forming companies anticipate weaker business conditions

April 30, 2008

According to the April 2008 Precision Metalforming Association (PMA) Business Conditions Report, metal forming companies expect business conditions to weaken during the next three months. Conducted monthly, the report is an economic indicator for manufacturing, sampling 154 metal forming companies in the United States and Canada.

When asked what the trend in general economic activity will be over the next three months, metal formers expect a slight decline. Only 14 percent of participants reported that activity will improve (down from 19 percent in March), 34 percent predict a decline in business conditions (up from 31 percent in March) and 52 percent expect activity to remain the same (compared to 50 percent the previous month).

Metal forming companies also expect incoming orders to trend downward over the next three months. Thirty-four percent of companies forecast a decrease in orders (up from 28 percent in March), 41 percent anticipate no change (down from 42 percent last month) and 25 percent expect an increase in orders (compared to 30 percent in March).

Current average daily shipping levels were slightly lower in April as well. Thirty-two percent of participants reported that current average daily shipping levels are below levels of three months ago (up from 24 percent in March), 39 percent reported no change (down from 46 percent last month) and 29 percent reported that shipping levels are above levels of three months ago (compared to 30 percent in March).

The number of metal forming companies with a portion of their work force on short time or layoff spiked to 25 percent in April, up from 19 percent in March and at the highest level since July 2003 when companies reported 28 percent of their workforce being on short time or layoff.

"Metal forming companies are faced with multiple issues that are negatively impacting their outlook," commented William E. Gaskin, PMA president. "Not only are major customer markets, including automotive, homebuilding and construction, all contracting, but the labor strikes at American Axle have caused numerous automotive assembly plants to be idled, resulting in canceled orders for stampings and assemblies. Economic damage from rapidly escalating steel prices also is widespread and negatively impacts the outlook for the next three months."