Demand from high-margin industries that need specialized parts will stimulate growth
Los Angeles, CA (PRWEB) March 05, 2012
Following years of moderate growth, the Metal Forging and Stamping industry faced particularly difficult challenges during the Great Recession, as revenue dropped 25.9% in 2009. The global economic downturn created anemic demand conditions from the industry's major markets (e.g. automotive, aerospace and agricultural), with credit becoming increasingly difficult to secure and industrial production effectively grinding to a halt. As a result, demand from the high-margin aerospace market decreased, as evidenced by Boeing's decision to delay production of its new 787 aircraft in light of plummeting business confidence. Conditions rebounded markedly in 2010 and 2011 as the US manufacturing sector revived alongside rising consumer confidence and spending. According to IBISWorld industry analyst Brian Bueno, strong international demand for downstream products bolstered revenue. As the sector and overall economy recovers, the industry is expected to grow at an estimated 1.6% to $34.0 billion in 2012, marking an average annualized decline of 1.1% over the past five years.
Over the five years to 2017, the industry will record modest growth, primarily driven by increased manufacturing demand. Producers will benefit most from supplying high-growth and high-margin industries, such as the Aircraft, Engine and Parts Manufacturing industry (IBISWorld report 33641a), which require highly specialized parts. Operators also benefit from the adoption of new alloys to develop forgings and castings with enhanced qualities, such as lower weight, greater strength and resistance to corrosion and temperature. Continued growth is anticipated in the automotive industry over the next five years, which is a major buyer of industry products. Additionally, demand from agricultural machinery, which flows through to demand for stamped and forged products, will remain strong. However, unpredictable weather conditions, such as drought, can cut demand from this sector.
Industry concentration within the Metal Stamping and Forging industry is low, with many small and medium businesses operating within the industry. Over the five years to 2012, concentration has increased, influenced by changes within the major player and small operator parts of the industry. At the larger end, Precision Castparts Corporation (PCC) grew its market share due to a series of acquisitions. “While operators throughout the fabricated metal products sector have been challenged by rising prices for metal inputs over the period, manufacturers that supply the automotive sector have been hit especially hard,” says Bueno. Waning sales have made it difficult for these operators to pass on higher costs. Consolidation is expected to continue over the next five years, as many industry players expand their operations to service global clients and to provide clients with single-point integrated supply systems. Larger companies will take advantage of weaker ones during tough economic times and swallow them up to increase their market share. Consolidation activity will also be driven by mergers of smaller firms, as they seek to achieve operating synergies and value stream efficiencies. For more information, visit IBISWorld’s Metal Stamping and Forging in the US report in the US industry page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
Firms in this industry manufacture forged, stamped and spun metal products. Forged metal products are those shaped by localized compressive force. Forging may be carried out at room temperature, which is cold forging, or at high temperature, which is warm forging. Stamped metal products are shaped under a press.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.