For the 19th consecutive year, FORGING surveyed executives in the U.S. forging industry during the fourth quarter of this year to learn what conditions and results they expect for the coming year, and what investment plans they are laying for 2009. We conducted a survey by mail among the leading executives and managers of every domestic forging operation in our circulation database. Even with the turmoil in the domestic economy, the rate of response of forgers reporting their expectations and projections indicates our survey results are reliable, if not complete.
As was projected in the 2008 Business Outlook Survey, a vast majority of respondents recorded 2008 business activity that was equal or better than what they posted for 2007. Their projections for 2009 drop off somewhat from that level, and a slightly higher percentage of responders than in last year’s survey project a decrease in business .
We consider the findings of this survey to represent the views of forgers across the country on the business outlook for 2009. Among our respondents, carbon and alloy steels are the most widely forged metals, at 84.6% and 53.8% respectively. Stainless steels are forged by 42.3% of the respondents, aluminum by 15.4%, titanium by 15.4%, high-temperature alloys by 11.5%, and brass and copper alloys by 19.2%.
Of responding producers, 61.5% manufacture impressiondie forgings, 42.3% perform open-die operations, and 11.5% roll seamless rings, with 7.7% performing roll forming. (The total of these percentages exceeds 100% because many plants perform multiple forging processes.)
The employment sizes of plants represented in our survey are: 42.3% employ up to 20 people, 19.2% employ 20-49, 23.1 % employ 50-99, 7.7% employ 100- 249, and 7.7% employ 250 or more.
In terms of sales volumes, 19.23% of the respondents indicate they conduct $1 million of business annually, 26.92% operate in the range of $1 million to $5 million, 3.85% do $5 million to $10 million of business; 19.23% conduct $10 million to 20 million of business; 19.23% are operating in the $20-million to $49-million range; 3.85% do $50 million to $100 million of business; and 7.69% conduct more than $100 million of business per year. The survey results indicate the outlook for 2009 is reasonably optimistic for the vast majority of the respondents, allowing for the confusion in the domestic economy. A total of 42% expect to ship more forgings in 2009 than they did in 2008. Another 34% expect next year’s shipments to stay even with shipments in 2008. Some 19% are braced for a decline in shipments. Six percent preferred not to project shipments for 2009. The table titled “Forecasts: Forging Shipments 2009 vs. 2008” identifies their projections according to company size.
In the table titled “Capital Expenditure Plans for 2009” we show how forging companies of various sizes are planning to invest during the coming year. Because of multiple selections, such as plant additions and new equipment, the totals comprise more than 100% for each size category.
According to the survey, 40.3% of the respondents expect their capital spending to increase in 2009 while 46.3% expect their 2009 spending to match that of 2008. Only 13.4% indicated that they plan to cut their capital spending in 2009 versus 2008. A table breaks out the data by forging company size.
Plans for capital spending are spelled out in a table titled “Borrowing plans for 2009 by employment size” It shows that 22.7% of the respondents plan to remain at their current debt levels, 40.9% indicate that they have no debt currently, and 36.4% report they plan to retire debt in 2009. No forger indicated plans to add debt to finance capital equipment purchases in 2009.
Another table, “Investment plans for 2009” spells out how the survey respondents plan to spend their capital. Of major interest for 2009 is that 50% of respondents identified the cleaning/finishing equipment category as an area of purchasing plans. Next in popularity would be forging machine rebuilds and modernization, with 40% of the respondents indicating such an investment. A similar number are planning to invest in lift trucks and in process control hardware and software. Approximately a third of respondents are planning to acquire diesinking equipment, machine tools, testing equipment, design software, and air compressors.
One quarter of all respondents are planning for forge furnaces and billet/ bar heaters, robots or manipulators, and grinding equipment.
Several other areas of investment were indicated by respondents, too.
As in previous surveys, FORGING asked executives to indicate what major problems they encountered during 2008, and which ones they expect in 2009.
The high cost of medical insurance for employees is the leading concern of 69.2% of forgers looking at 2009, though in last year’s survey that concern ranked second highest in “popularity.” The second-leading concern for 2009 is the high cost of energy, according to 65.4% of respondents. It was the third most common concern for 2008.
High raw-materials costs is the next ranking concern for 2009, according to 57.5%. It was the second-highest rated concern for 2008.
The fourth-ranking problem anticipated for 2009 is foreign competition, identified by 34.2% of respondents; they ranked it fifth for 2008.
Some 30.8% of all respondents anticipate a general shortage of labor as a major concern for 2009, fifth place in the ranking. This same concern likewise ranked fifth in the assessment of 2008 problems.
Rounding out the top ten concerns in both 2008 and 2009 are raw material lead times, worker compensation costs, lack of orders, and high interest rates. The ratings for several other concerns/ problems are shown in the table.
In recent years, we have asked forgers about their use of process simulation in forging operations. With this survey, a total of 27% of respondents report they use computer simulation for production planning. As in previous surveys, respondents who employ forging simulation value its use for reducing shop-floor trials and after-thefact analysis of production and process problems.
Non-users cite costs (19.2%) and the lack of trained personnel to operate such programs (11.5%) as their reasons for not using process simulation.