Metal fabricators getting back to business as unusual

The spread of COVID-19 has ushered in a completely new era, one in which many industries came to a standstill as revenue collapsed, many more workers than usual found themselves unemployed, and manufacturing activity across the board nosedived. Yet, some of these trends reversed course pretty quickly. Getty Images

Back in January, if someone had said that we’d soon be hip-deep in a global pandemic, it’s doubtful that anyone would have believed it.

The last worldwide contagion, the Spanish Flu, had taken place more than 100 years earlier. Surely we had learned a lot about containing an epidemic since then, hadn’t we? Wouldn’t a more advanced understanding of disease and prevention, better communications technologies, and a more comprehensive approach to tracking the spread of disease enable us to stop an epidemic in its early stages?

Well, no.

An easily transmissible disease with symptoms that are hard to pin down and often nonexistent, COVID-19 is confounding at best. The toll has been devastating: 19 million cases and 714,000 deaths. Beyond these grim statistics, the reactions and the results would fill a book, but that said, the biggest effects on business were in the many industries that saw their revenues collapse, such as restaurants, leisure and hospitality, air travel, and entertainment.

The gross domestic product dropped 32.9% in the second quarter of 2020. Whether it will fall further or rebound is a good question, but many statistics indicate that we are on a growth path already.

The latest Forming & Fabricating Job Shop Consumption Report, a quarterly publication provided by the Fabricators & Manufacturers Association Intl. (FMA) illustrates an environment of recovery. As far as equipment utilization, the respondents to the survey reported use of 64.7% (the benchmark minimum is 80%). Although capacity utilization is low, 45.4% of respondents reported that it had stabilized and 21.2% said they were seeing improvement. As far as new orders, a predictive measure, about half said they were decreasing; the other half reported that they had stabilized or were improving.

Data from the U.S. Census Bureau, reported monthly rather than quarterly, provided a much more positive view of new orders. In the durable goods sector, new orders amounted to $229 billion in March, and by June they were back up to $225 billion. The fabricated metal products sector fared about the same, going from $32.2 billion in March to $31.2 billion in June. The unemployment situation is improving too. The U.S. Department of Labor attempted to process 27.6 million claims for unemployment insurance in early April; by early July, claims had fallen to 17.5 million.

The upshot is that, while the economy is in bad shape, the worst seems to be behind us. Looking forward, is the pandemic creating new opportunities, or at least expanding existing ones, for metal fabricators? It sure seems to be.