Business is booming at North American metalworking plants, where a robust construction market and healthy economy is keeping work pipelines full and bottom lines healthy. Having endured the Great Recession years and the economic downturn, the modern-day metalworking company has a heavy workload, an ample customer base, and good prospects for the future over the next few years.
Of course, all business booms come with their own set of challenges. For this year’s Metalworking Industry Report, Grainger conducted hundreds of 20-minute, online surveys with key stakeholders in the metalworking industry reporting their perceptions of current business conditions, key challenges they’re facing, and the changes that are impacting individual companies within the industry.
Three Key Metalworking Industry Trends to Watch
For this year’s survey, Grainger customers described the steps their businesses are taking to remain competitive in an increasingly high-tech, globalized industry; what obstacles they're dealing with on the road to success; and how they're leveraging technology to work smarter, better, and faster. Here are the current, emerging, and future metalworking industry trends that respondents shared:
Trend #1: Business is robust, but the influx of new work also brings its own set of challenges.
Operating in a robust economy where both commercial and residential construction activity are at all-time highs, metalworking companies are tapping into new opportunities to grow their bottom lines and seeing the results of their efforts. Economic activity in the manufacturing sector (including fabricated metal manufacturing) expanded in July, and the overall economy grew for the 111th consecutive month, according to Institute for Supply Management.
This year’s Metalworking Industry Report also highlighted business challenges like fluctuating raw material costs, an aging workforce, overseas competition, and changing governmental regulations as the primary issues that metalworking firms are concerned about. These issues present a mix of challenges and opportunities for companies, many of which are turning to innovative labor recruitment efforts, advanced technology, and other strategies to succeed in the current business environment.
Trend #2: The tight labor market calls for more creative recruiting and retention strategies.
The good news is that work pipelines are ample and continuing to grow. The not-so-good news is that this is happening at a time when skilled labor is getting harder to find. So, while new projects open up expanded opportunities, many of those companies are now taking a closer look at how to find the help and support that they need to complete those projects.
As with most other industries, metalworking is using creative employee recruiting and retention strategies in 2018. That’s because as workers retire, filling the gaps they leave behind isn’t getting any easier. Currently, 59% of metalworking firms said they’re having a hard time finding and keeping qualified labor, and 45% are struggling with employee competency levels.
To offset these and other labor-related issues, 58% of metalworking companies have employee development programs that are focused on creating employee recruitment, development, and training programs—all of which they expect to become even more important in the future. Currently, 38% of companies use manager/supervisor training; 28% are using employee bonuses or profit sharing; and 28% are adding staff.
Of those companies that are using these strategies, all feel that the steps will have a moderate positive impact on their operations over the next three years. Other strategies include the development of apprenticeship programs (21% are using them), college/tech school partnerships (21%), and staff reduction (17%). Combined, these approaches are helping the metalworking industry fill open positions while also ensuring that their current labor forces stay in place.
Trend #3: Advanced technology is helping metalworking firms advance toward the Industry 4.0 movement.
Advanced technology continues to play a major role in the Industry 4.0 movement, which finds more and more manufacturers utilizing connected, automated systems to run their operations. According to the survey, keeping pace with these technological changes is “somewhat challenging” for 48% of metalworking firms, 44% of which say the cost of the new technology presents a challenge to their budgets.
The types of technology currently deployed at metalworking firms is both wide and varied, and it’s helping these companies work smarter, better, and faster. Currently, 17% of metalworking companies have high-speed machining (HSM) programs in place while 5-axis/universal machining and multi-task equipment (e.g., twin turret, turn-mill) equipment is being used by 13% of firms, respectively. Ten percent of customers are using 3D/additive for prototyping while 5% are using it for product parts.
Over the next three years, survey respondents say their top initiatives will include rebuilding some existing equipment to original specifications to meet changing customer requirements; adding new processing equipment; diversifying their product lines; and utilizing stronger, more focused recruiting efforts. Other strategies that metalworking firms are using to optimize their practices include lean manufacturing processes (28%), production monitoring and planning systems (27%), ongoing improvement processes like Six Sigma (23%), and supplier/vendor optimization analysis (18%).
As the metalworking industry continues to work through some of the current industry challenges, it plans to leverage more advanced technology (sensors, Internet of Things, artificial intelligence) in order to maintain competitive advantage. Each new year brings a new set of challenges and opportunities for all manufacturing sectors, and metalworking will surely withstand—and prevail over—the challenges put in front of it while also benefitting from emerging opportunities.
Brad Laux is responsible for the Metalworking category at Grainger. Prior to leading the Metalworking Strategy, Brad launched the Metalworking Specialist Program which has grown from 5 markets to covering most of the U.S. During his 9-year tenure at Grainger, Brad has also successfully led Sales Districts and Service Teams.