Page 33 - MetalForming January/February 2022
P. 33

 2022:
Growth
Opportunities
Ahead for
Metal Formers
...provided they successfully clear some looming hurdles.
BY BRAD F. KUVIN, EDITORIAL DIRECTOR, AND LOUIS A. KREN, SENIOR EDITOR
The end-of-year Institute of Supply Management (ISM) survey of executives finds a generally opti- mistic outlook in revenue and capital expenditures amongst manufacturing companies for the first half of 2022, with continued expansion through the sec- ond half, though at slightly lower rates. That according to Timothy R. Fiore, chair of ISM’s Manufacturing Business Survey Committee. ISM is forecasting an average 6.5-percent gain in revenue in 2022, and notes that executives from 15 of the 18 industries it surveys are forecasting revenue increases in 2022, including fabricated metal products and transportation equipment.
Survey respondents also expect nearly an 8-percent increase in capital expenditures in 2022, and a slight increase in capacity utilization from 88.3 percent (in May 2021) to 88.7 per- cent this year.
That amidst inflation concerns and the rising consumer price index, fueled by rising prices for energy, raw mate- rials, and food, among other factors.
However, industry pundits agree with the ISM survey findings, predicting a positive 2022 manufacturing outlook. Among them: Mike Devereux, CPA and CMP, and a partner with the accounting and business-consulting firm Wipfli. Says Devereux in a recent blog: “Record-setting orders will keep most (manufacturing) sectors busy through 2023, and ongoing expansion is fore- casted for at least the next 18 months.”
Of course, hurdles lie in the path to profitability, and we know them all too well. Chief among them: labor short- ages and supply-chain disruption. To address labor issues, “manufacturers will need to mine nontraditional sources for talent,” writes Devereux. “Some companies are finding success snapping up people from other indus- tries, such as the hospitality sector, that were hit hard by the pandemic. Business owners that look further afield to find the right people—and invest in the training to get them up to speed— will find they have an edge.”
Dealing with a scarcity of materials
seems like the taller hurdle, and here, “just-in-time inventory is being eclipsed by just-in-case stockpiling as compa- nies buy up raw materials and key com- ponents to safeguard production sched- ules,” Devereux says. “Manufacturers will need to invest more time in sourc- ing and stocking the right materials to mitigate delays in production.”
One caveat: suppliers, including those providing steel and aluminum, have begun to base customer alloca- tions on their historical purchases. Steve Ford, executive vice president of Lapham-Hickey Steel, noted as much during a late-October 2021 Wipfli panel discussion on supply-chain issues. Sup- pliers have put measures in place to ensure that their customers don’t pur- chase more than they need. In addition, purchase orders now are requiring a significantly greater percentage of the included items be designated as non- cancelable and non-returnable.
We also see an ongoing push to automate within metal forming and fabricating companies, just one aspect
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