Metal forming companies anticipating business decline

According to the October 2008 Precision Metalforming Association (PMA) Business Conditions Report, metal forming companies expect a severe deterioration in business conditions during the next three months. Conducted monthly, the report is an economic indicator for manufacturing, sampling 153 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, metalformers anticipate a sharp decline. Sixty-seven percent of participants reported that activity will decline (up drastically from 31 percent in September), 26 percent predict activity will remain unchanged (compared to 53 percent last month) and only seven percent forecast an improvement in business conditions (down from 16 percent in September). This marks the lowest level of confidence since the January 2001 Business Conditions Report.

Metal forming companies also expect a steep drop in incoming orders during the next three months. Fifty-four percent of companies anticipate a decrease in orders (up from 32 percent in September), 34 percent expect no change (down from 41 percent the previous month) and just 12 percent forecast an increase in orders (compared to 27 percent in September).

However, current average daily shipping levels remained steady in October. Seventeen percent of participants report that shipping levels are above levels of three months ago (down from 20 percent in September), 45 percent report no change (up from 42 percent last month) and 38 percent report that shipping levels are below levels of three months ago (the same percentage reported in September).

The number of metal forming companies with a portion of their workforce on short time or layoff increased to 30 percent in October—up from 26 percent in September and at its highest level since November 2002 when 31percent of companies reported workers on short time or layoff.

"Responses for PMA's October business conditions survey were submitted during the first 10 days of October, so they fully reflect the credit crisis from the lack of liquidity in financial markets and sharp declines in the global equities markets," said William E. Gaskin, PMA president. "Combined with the current severe production cutbacks in the automotive industry, which impacts some 50 percent of PMA members, the outlook for the fourth quarter is not positive for a large percentage of PMA member companies. However, manufacturing in America is resilient, and there are segments of our membership that are experiencing strong orders and shipments. Many attendees at the recent FABTECH International & AWS Welding Show with METALFORM co-located reported strong shipments and orders and were actively pursuing new capital equipment," observed Gaskin.