With FABTECH 2019 only a few months away, all things metal are on my mind, so I decided to focus this week’s article on a related industry: metal stamping and forging.
1) The metal stamping and forging industry consists of five major products and services.
These include nonautomotive stamping, ferrous forging, nonferrous forging, powder metallurgy, and custom roll forming.
2) This industry has a low market share concentration.
In 2018, for example, over 80% of the industry’s market share consisted of smaller operators (i.e., companies who didn’t generate more than 5% of the industry revenue).
3) Precision Castparts Corp. (PCC) and Allegheny Technologies Incorporation (ATI) are the only major industry players.
PCC has 10.4% of the U.S. market share, and ATI has 5.1%.
4) The metal stamping and forging industry’s growth declined from 2014-2019 at an annualized rate of -1.3%.
The industry declined due to several reasons such as:
- Volatile prices of nonferrous metals and steel across the world
- Unsteady and/or declining demand from downstream markets like oil and gas machinery manufacturing, aerospace manufacturing, and agricultural machinery manufacturing
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5) The metal stamping and forging industry is expected to experience an uptick in revenue from 2019-2024.
IBISWorld predicts that the revenue will grow at an annualized rate of 0.7%, reaching a total of $36.2 billion within the next five years.
Increased demand from the industry’s key downstream markets will drive this anticipated increase. More stable metal prices will as well.
6) Companies who serve the aerospace manufacturing industry will most likely experience the most potential revenue growth.
The metal stamping and forging industry declined over the past five years in part because of a decrease in funding for the U.S. Department of Defense, which funds one of its key downstream markets: aerospace manufacturing.
But this trend may change. Since defense spending has increased in recent years and may continue to increase over the next five years, the aerospace manufacturing industry will very likely continue to grow.
Aerospace manufacturing also offers a major benefit to metal stamping and forging companies: the need for more complex and high-value-added products. These products produce high profit margins for companies in the metal stamping and forging industry.
The metal forging and stamping industry decreased in growth from 2014-2019, but if defense spending increases, other downstream markets demand increases, and world metal prices remain stable, this industry will very likely grow over the next five years.