For Metal Manufacturing and Structural Steel Construction
One cynic described a barometer as “an ingenious instrument which indicates what kind of weather we are having.” I suspect that most of us don’t feel we need an economic barometer to indicate what we are experiencing in today’s economic climate.
But perhaps there are useful measures of how metal manufacturing and structural steel construction are doing as of the first quarter of 2011.
According to Dan Davis, editor of the The Fabricator magazine, perhaps the single most useful measure of all metal fabrication sectors is the capacity utilization number for manufacturing. It was sitting around 75 in March which was good. When this index is in the lows 80’s– things are really humming.
The Institute of Supply Management in March showed a PMI of 61.2.( A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.) This source reports that economic activity in the manufacturing sector expanded in March for the 20th consecutive month.
The Federal Reserve Beige Book provides reports from each of the 12 Federal Reserve Districts. “In January and February economic activity continued to expand at a modest to moderate pace,” the report states.
A considerable amount of metal manufacturing is linked to construction, both residential and nonresidential. For residential construction, if new houses are going up, people are purchasing metal goods to furnish and use in the new homes. The nonresidential construction sector is more directly linked to the work of structural steel fabricators. Both residential and nonresidential construction are down significantly.
Lastly, John Cross in his April newsletter for members of the American Institute of Steel Construction stated that “The building construction industry is slowly moving into a period of expansion.” He reports that the construction market peaked in 2006 and that as of April 2011, the market is now down some 64% from that peak. He believes that a significant recovery will not occur until two things happen: the improvement of credit availability and growth in GDP exceeds 3%. 2011 construction starts will increase 8% over 2010 but will still be 8% lower that the already low level of 2009.
Although some of this data is less than encouraging, those of us in the manufacturing and construction industries can extract–over time–the data relevant to our industries. We can use the data to modify our business model if needed, and implement those steps in our organizations to survive. Perhaps we can use the data to thrive in this tough business climate. For example, drilling down into the data from these resources may give us information on what markets are growing rapidly.
