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Report highlights economic impact of pandemic to metal fabrication job shops
- Updated August 10, 2020
- August 7, 2020
- News Release
- Shop Management
The Fabricators & Manufacturers Association Intl., Elgin, Ill., has released the “2nd Quarter 2020 Forming & Fabricating Job Shop Consumption Report.” Presenting small and medium-size job shops’ and fabricators’ answers to 11 key questions and a year-over-year comparison of business outlook, the report highlights the economic impact of the COVID-19 pandemic and the shutdown-induced recession.
Most respondents indicate they are operating at well under capacity. Ideally, the level of industrial capacity utilization should be 80% to 85%; the survey reports a utilization of 64.7%. The percentage of companies reporting a decline in their capacity use is 33.3, while 45.4% report a stable environment and 21.2% are experiencing an improvement.
Nearly half of the survey respondents report decreasing new orders. Only 17.5% report that new orders are increasing, while 33.3% report that these orders have been stable.
Employment numbers have been less volatile than expected. Fully 59.3% report that their employment numbers have been stable, and only 27.0% indicate they are reducing their workforce numbers. The data even shows that 13.6% are adding jobs.
So far 27.4% of respondents report higher commodity prices, while 16.7% say prices are declining. Most (55.7%) report prices have been stable.
As the lockdown started, there was an immediate reaction in the logistics sector as demand evaporated almost instantly. Sixty-five percent of respondents indicate that transportation costs have remained stable, but 31.9% report that logistics costs are up. Only 3.0% report a drop.
Capital investment plans have been thrown into almost total disarray by the lockdown recession. Only 29% of respondents are on track with their capital spending plans, and 37.2% have put these plans on indefinite hold.
Despite the economic uncertainty, respondents are optimistic about the future. The data shows that 38.3% are expecting a good business outlook, with another 38.6% expecting a stable situation similar to 2019. Only 23.1% expect conditions to worsen—far less than reported in several other sectors.
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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 1970.
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