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Metalformers keep buying to a minimum

Keywords: Tags  Precision Metalforming Association, economic activity, raw material purchases, order rates, aerospace, defense, electronics, Corinna Petry

CHICAGO — The Precision Metalforming Association’s latest survey shows very slight movements in sentiment this month vs. October, but members who spoke with AMM were slightly more upbeat than the numbers might suggest.

Nearly one-fifth of members surveyed expect economic activity to improve over the next three months, up from 15 percent in October, but those forecasting a downward shift increased to 36 percent from 30 percent.

One quarter of respondents said shipments this month are above those of three months ago, a slight uptick, and those who are seeing lower shipments narrowed to 38 percent from 45 percent in October. Expectations for incoming orders were little changed.

"Customers told our salespeople they weren’t making decisions until after the election, and then we got some good-sized orders. We don’t know if they would have been larger with a different administration, but now our order rates are the usual up-and-down, up-and-down," a source at an East Coast electronic parts stamper said. On the raw material side, "we are buying cautiously. Is this the first order of more, or not?"

Some customers projected a 2013 increase in finished goods sales of as much as 10 percent, she said, but that would only bring them back to 2010 levels.

"The fourth quarter will be OK, but the first quarter is not going to be so good," a source at a Northeast metalformer told AMM. "The fiscal cliff and tax rate issues are coming up. We do quite a bit of defense work, so our guess is this will all be negative. We just don’t know how much and how soon."

In terms of sourcing, "we aren’t making a whole lot of purchases. We let customers know what material we have on hand, the lead times for mill material and our processing time," he said.

A parts maker in the Great Plains region said October shaped up better than expected. "A number of my aerospace customers are placing orders now for next year, so incoming orders have been pretty decent," he said. Commercial jet engine builders have projected a 6- to 8-percent increase in volume next year, and some have "a full order book for several years to come."

Despite the uptick, "our purchasing strategy hasn’t changed," he said. "We are not bullish about buying raw material, and are buying only what we need."

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