operated at 66-80% of capacity; 10.8% operated at 80-90% of
capacity, and 10.8% operated at 90-99% of capacity. A fortu-
nate 3.1% of respondents’ plants operated at 100% of capacity
Forgers know that what happens outside that plants is often inseparable from their own performance and results. Theimposition of tariffs on steel and aluminum imports has roiledthe forging sector — limiting raw-material sources for someforgers, initiating retaliatory actions by foreign governmentsagainst many of the forging sector’s most dedicated suppliers,but limiting competition for a certain number of forgers thatproduce their own (mainly steel) raw materials.
Asked what effect tariffs have had on their business during2020, 50.0% of all survey respondents report there was noeffect, but 20.3% maintain that imported forgings “remain acompetitive factor” and 17.2% indicate that U.S. tariffs haveimpacted their customers’ demand for forgings. In addition,
7.8% report that imported forgings are becoming less of a
competitive factor, and 4.7% reveal that their business has de-
veloped its own export business.
“The global expansion of the forging industry coupled
with downturn in most sectors has led to desperation in terms
of price quoted,” one respondent explained. “Additionally,
some governments (China) have special packages to support
their industry — which brings market imbalance. The domes-
tic forging sector will need good government support in terms
of tariffs and financial packages, too …”
Of course, 2020 will remembered for one thing above all:
the COVID- 19 pandemic. Asked how many days of produc-
tion were lost due to shutdown related to the virus, 16.4% of
respondents reveal that their operation lost 60 days or more of
activity; and 8.9% lost 40-60 days of work; 14.9% lost 30-40
days of work, and 22.4% lost 15-30 days of work. 11.9% of
respondents lost 15 days of work or less due to virus-related
Among all respondents, 60.9% estimated that their operations’ shipments were reduced by 10,000 tons or less, but12.5% lost 10,000-50,0000 tons of expected shipments, and4.7% lost 50,000-100,000 tons of shipments, and 1.6% lost100,000 tons or more of shipments due to the pandemic.
An evergreen indicator of manufacturing conditions iscapital spending. In our survey, CapEx — including investments in personnel training and process technology — alsoindicates how forgers aim to improve their competitive standing, and what types of products and/or service the supply chainis demanding from forging operations. So, we asked surveyrespondents to describe (multiple choices) the improvementsthey have invested in during 2020.
Among all the survey respondents, 35.9% reveal theyhave invested in forging furnaces and/or billet-bar heating systems during 2020, and 32.8% invested in training and/or education for their workers. 29.7% invested in forging machineimprovements or rebuilds, including modernization to processcontrols. 26.7% invested in air compressors; and 25.0% invested in testing and/or inspection technology.
Capital spending plans for 2021 show an encouragingmood of optimism. Less than one fifth of the respondents,19.7%, will invest less next year than during 2020, and 45.5%will invest about the same amount in 2021 as during the current year. More than a third, 34.8% of all respondents, willincrease capital spending in 2021.
Among those who will raise their investment levels next year, 16.7% indicate theyear-over-year increase will be in the range of10% or less; 40.0% will increase spending by10-25%; and 26.7% will increase spending by26-50%. Those with higher spending levels include 6.7% who will spend 51-75% more thanduring 2020, 3.3% who will invest 76-90%more, and 6.7% who will invest over 90%more in 2021 than they have done in 2020.
Among all respondents, 42.4% plan toinvest in new production equipment during2021, and 18.2% are planning plant expansions. An intriguing 9.1% of respondents planto invest in new plant facilities during the coming year. Meanwhile, 39.4% have no majorcapital investment programs planned during2021.
Among those with spending plans for2021, 34.4% will invest $100,000 or lessnext year, and 12.5% will invest $101,000-$250,000, as well as 12.5% who will invest$251,000-$500,000.
Going further, 9.4% of respondents will invest $500,000-$1 million in 2021, and 26.6%will invest $1 million-$5 million next year,and 4.7% plan to invest $5 million or more inthe year ahead.
Turning to the respondents who report
they will be decreasing their investments in
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How will your 2020 forging
shipments (tonnage) compare
with 2019 forging shipments
About the same 34.85%
How do you expect your 2021forging shipments (tonnage) tocompare with the 2020 forgingshipments (tonnage)?
About the same 31.82%
Indicate the approximate valueof forged products your plantwill ship during 2020.
Less than $1 million 16.67%
$1 - 5 million 13.64%
$5 - 10 million 15.15%
$10 - 20 million 10.61%
$20 - 50 million 13.64%
$50 - 100 million 9.09%
More than $100 million 21.21%