October 2013 - Today’s metals companies are focused on reducing costs, trimming debt and increasing efficiency. Many are investing in new sources for raw materials as well as breaking ground on investments that help them take advantage of growing markets, such as shale gas.
Recently, Benteler Steel/Tube began constructing its first manufacturing facility in the United States, a new hot rolling seamless steel tube mill in Shreveport, La., the seat of Caddo Parish. The company chose the site from more than 100 possible locations in 13 states because of its proximity to the oil and gas production market in North America.
“This new manufacturing facility—our first in the United States—is an important part of our global growth strategy,” said Matthias Jaeger, president and CEO, Benteler Steel/Tube GmbH, headquartered in Salzburg, Austria, in a statement. “With more than 25 percent of our steel tube products already flowing into the United States and demand expected to increase, this new Caddo Parish plant is poised to play a critical role in supporting the U.S. domestic energy industry.”
Strong markets provide a trickle-down effect, boosting demand in other sectors. The energy market provides a boost to rail, and as residential construction begins to trend upward, appliance will follow.
In addition, steady growth in commercial aerospace and automotive, for instance, is being driven by newer, lightweight materials and replacement demand. Boeing and Airbus have reported strong orders and an uptick in demand for automobiles is helping contribute to growth in the U.S. economy. According to a Reuters report, auto sales rose 17 percent in August to a seasonally adjusted rate of 16.1 million units—the fastest pace since October 2007.
Strong demand bolsters manufacturing optimism
Continued good numbers from major metal-consuming markets means companies are optimistic about upcoming business conditions. Members of Prime Advantage, Chicago, a buying consortium for midsized manufacturers, expressed optimism about upcoming business conditions, revenues and employment in the company’s 12th semiannual Group Outlook Survey. Respondents to the survey included U.S.-based manufacturers in more than 25 different industries including commercial food service, packaging, truck and trailer, material handling, food processing and construction.
Ninety-seven percent of small and midsize manufacturers reported they expect second-half revenues to be better than or equal to the first half of 2013. One out of three companies expect the level of capital expenditures to increase. Forty-two percent anticipate revenues will increase in the second half of 2013 because of a surge in customer demand and launch of new product lines. In addition, 47 percent of responding companies expect to hire in the next six months. Fewer than 3 percent are planning layoffs.
However, the positive outlook isn’t without hurdles. Manufacturers told Prime Advantage that uncertain fiscal policy is affecting business negatively and they expect the impact to continue through the next 12 months. Respondents noted that other barriers to business growth are legislative and regulatory pressures, oil and energy pricing and lack of qualified workers.
A dearth of workers will cause the manufacturing industry to hit a wall in the future, and that’s why it’s important for companies to consider strategies that will help them cultivate future talent.
ThomasNet.com’s Industry Market Barometer, a survey of more than 1,200 U.S. manufacturers, indicated a disconnect between the current growth in the manufacturing industry and the lack of urgency among these companies when it comes to hiring new workers.
“The survey respondents mirror today’s manufacturing workforce, which is heavily populated by employees who are 45 and older,” reported ThomasNet in a press release. “With Generation Y projected to make up 75 percent of the workforce by 2025, manufacturers need a collective succession plan to maintain their momentum. Yet, eight out of 10 respondents report that this generation represents a small fraction of their employee base, and most don’t see that changing soon. In short, despite more opportunity ahead, manufacturing’s biological clock is silently ticking away.”
“As a foundation of our economy, the manufacturing sector remains vibrant, but cracks are coming to the surface,” said ThomasNet president Eileen Markowitz in a statement. “Changes in the workforce demographics and old attitudes about manufacturing as a career threaten the industry’s expansion. It’s time for those who love American manufacturing to double their efforts to engage the next generation.” MM
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