BONITA SPRINGS, Fla. Despite some positive
developments in the U.S. economy, including a resurgent
residential housing market and improved consumer confidence,
metal fabricators are worried about the impact that increased
government regulation and changing health-care laws could have
on their businesses.
There is a big concern about whats happening or
not happening in Washington, Karen Kurek, partner and
managing director of assurance, tax and consulting firm
McGladrey LLP, told Metals Service Center Institute (MSCI)
Tubular Conference attendees in Bonita Springs, Fla., citing
results from the companys 2013 manufacturing and
distribution monitor report.
The report gauged sentiment from more than 1,000
manufacturers, including nearly 200 metal fabricators, Kurek
Part of the problem is that regulations arent
uniformly applied, she said.
For example, a metal fabricator with two domestic facilities
reported having someone from the Environmental Protection
Agency come to both of their plants, and the outcome in each
case was totally different, Kurek said.
Meanwhile, manufacturers expect health-care costs to rise by
more than 10 percent this year due to the implementation of the
Affordable Care Act (ACA), she said.
Only 19 percent of metal fabricators polled for the survey
described their business as thriving during 2013,
down from 41 percent the previous year, according to the
Chicago-based McGladrey attributed the decline to low or
stable energy prices, cuts in defense spending and a slowing
Metals fabricator should benefit from reshoring despite
these lower numbers, with large companies like Benton Harbor,
Mich.-based Whirlpool Corp. and Caterpillar Inc., Peoria,
Ill.attracted by low energy costs, a shrinking wage gap
and customer demands for short lead timesrelocating
manufacturing facilities to the United States from China.
Customers are demanding not a six-week lead time, not
a seven-week lead time, but they want it in two weeks,
About 18 percent of respondents to McGladreys 2013
manufacturing survey are looking to reshore some manufacturing
over the next year.
Meanwhile, manufacturers decreased their dependence on
foreign materials slightly during 2013, with the average
percentage of inventory purchased from outside the United
States falling to 13.2 percent from 16.2 percent in 2012,
according to the survey.