Report highlights economic impact of pandemic to metal fabrication job shops

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 work force numbers. The data even shows that 13.6% are adding jobs.

So far, 27.4% of respondents reported higher commodity prices, while 16.7% said prices are declining. Most (55.7%) reported 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 indicated 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.

Source: The fabricator www.thefabricator.com