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Metalformers’ outlook brightens on activity rise

Keywords: Tags  Precision Metalforming Association, business conditions survey, shipments, orders, backlog, hiring, steel supply contracts, steel pricing Corinna Petry

CHICAGO — Metalformers have taken a rosier view on business conditions, with only 8 percent of those surveyed in February projecting a downturn over the next three months while half expect incoming orders to rise, according to the Precision Metalforming Association.

"I hear people—customers and peers—saying orders are up, but I can’t figure out why," one East Coast metal stamper and parts builder said. "We think some of our customers are seeing results of damage from Hurricane Sandy" as electrical equipment and commercial heating, ventilation and air-conditioning (HVAC) manufacturers repair and replace systems.

Although this work won’t appear as "a real surge" because payments on insurance claims are spread out over time, "these companies are forecasting increased demand, some of it storm-related," she said.

Forty percent of the 121 survey respondents said their shipments have risen compared with three months ago vs. 21 percent in January, while those expecting shipments to fall below levels seen three months ago shrank to 23 percent from 41 percent in the same comparison.

Current shipments for one Ohio River Valley stamper are up 5 percent from the same period last year. "The order book is probably similar to last year, but there is lots of quoting activity going on. It looks like this year will be better," he said.

"Our backlog is six months," the Ohio stamper said, noting that his company’s three largest customers are committed to a certain volume of material for the rest of this year. "Those are set in stone, and it means a 2-percent increase in sales dollars."

Half of the metalformers surveyed project an increase in incoming orders over the next three months vs. 44 percent last month. Only 11 percent expect a decline in orders vs. 25 percent in January.

"We are very optimistic about this year," a New England stamper and tooling manufacturer told AMM. "The potential is there if the economy stays stable. We are forecasting 7 percent (sales) growth this year, (but) I don’t see us doing a lot of hiring."

Like the Ohio Valley stamper, he has secured long-term pricing and quantities from steel mills.

"The pricing is lower than last year, and we have to pass the savings along to our customers," the New England stamper said. "But we can forecast our usage, so the mills know us by name now."

The East Coast stamper said things could loosen up if the government just ripped off the bandage: Fix the debt problem, fix the economy. "Let the chips fall where they may. It’s cruel, but it’s real," she said.

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