Industry operators have been increasingly dependent on export markets, particularly in the United States
New York, NY (PRWEB) September 11, 2014
The Metal Stamping and Forging industry manufactures stamped and forged metal products using a variety of pressing machines and localized compressive forces. Industry products may be made of steel or nonferrous metals, such as aluminum, and are typically used as components in downstream manufacturing processes. Buyers of forged and stamped metal products include the aircraft and aerospace industry, ordnance (defence) markets and agricultural machinery manufacturers. Over the five years to 2014, the industry has grown at an anemic rate.
According to IBISWorld Industry Analyst Amal Ahmad, “industrial production in Canada has been weak, with an increasing number of manufacturers offshoring operations abroad and sourcing inputs, such as stampings and forgings, from foreign markets.” As a result, industry operators have been increasingly dependent on export markets, particularly in the United States, which boasts a stronger manufacturing sector. Still, competition in key export markets is high and rising, limiting the industry's expansion abroad and keeping export growth modest.
Volatile metal prices have also challenged industry operators in recent years. Rising steel and other metal prices raise the purchase cost for operators; however, they also boost the value of inventory and reflect periods of high and inelastic demand for metal products. Consequently, operators are able to pass cost increases onto customers in the form of higher selling prices, boosting revenue. Profit also hikes if the selling price increase exceeds the cost increase. Conversely, falling metal prices devalue inventory and reflect weak demand and an oversupply of metal products, causing both revenue and profit to take a dip. In the five years to 2014, world steel prices have been highly volatile, increasing through 2011 and bolstering revenue before dipping and causing revenue to contract
Moving forward, the price of steel is expected to rise slowly as global demand outstrips global supply; the same applies to the price of nonferrous metals. “This will bolster industry revenue and profit,” says Ahmad. However, export growth is likely to remain weak while import penetration rises. This will pressure operators to consolidate production and become more cost efficient. Overall, IBISWorld expects revenue to grow in the five years to 2019.
For more information, visit IBISWorld’s Metal Stamping and Forging in Canada industry report page.
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IBISWorld industry Report Key Topics
The Metal Stamping and Forging industry manufactures stamped and forged metal products. Stamped metal products are shaped under a press, whereas forged metal products are shaped by a localized compressive force. However, this industry does not stamp automotive products, cans or coins.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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