The metal fabrication industry appears to be shifting in certain markets, including in Europe, China, India, U.S. and other countries. Current trends suggest that domestic automotive sales will continue to rise over the next two years, use of aluminum will continue to grow, and even the way we look at preparing the next generation of metal fabricators is changing, along with many other trends.
Trends don’t just affect one market or industry, but several. Sometimes it’s difficult to see these other impacts, but upon further analyses, the metal manufacturing industry is a global system that can help or hurt other countries based on another’s choices or current trends.
The potential for the European markets to open up in a manner like NAFTA a few years ago will be a boom to U.S. manufacturers. The European Union wants to keep markets open and trade flowing. This won’t just benefit Europe, though. Open with fewer tariff and local government regulations will be good for all U.S. manufacturing businesses as it will open more (European) markets.
In order for a country to export its products, it first needs to import raw materials. With these new markets opening, U.S. manufacturers have the opportunity to cut costs with their own products through imports, while increasing productivity by exporting raw and finished products.
Chinese Fabrication Industries
China may lose steam in the near future as they struggle with their own internal infrastructure and government debt situations. China’s short-term problems are predictable and as the global economy moves away from underwriting growth, these issues will become more apparent. This will create more jobs for U.S. manufacturers and fabricators internally and externally as other countries look to the U.S. for replacement manufacturing.
Also, depending on how they start to look at the impacts their manufacturers are inflicting on the environment from their low-cost, careless approach to production, outsourcing to China could be more expensive if they decide to enforce stricter environmental regulations.
This is not to underestimate the competitive power of China as they will always be a strong competitor in the metal fabrication and manufacturing industry.
India will continue to rise as a global power and have positive and negative effects on U.S. manufacturing. They provide cheap outsourcing rates, while not hindering the quality of a product. Not all the time, of course, but there will always be lemons. This is good for businesses looking to trim costs, but in turn creates fewer jobs for Americans.
India manufacturing is low cost, yet applies skilled labor to its manufacturing processes. It has created 45 million jobs as of now and is estimated to create 90 million by 2025 (source: ibef.org). It is undergoing governmental reforms to establish a more high-end type of manufacturing. They and many other BRIC countries are widely considered to be economic powerhouses of the future.
Other Developing Countries
As the U.S. gains confidence and strength, other developing countries may be seen as markets, not competitors. The cycle is in our favor. U.S. manufactures have survived the downturn and have the potential to use that learned-strength to become net exporters of even products like metal fabricated parts.
Domestic Metal Manufacturing
Financial and profit pressures will cause a continued move to domestic manufacturing as we are able to help reduce transportation costs, transportation time and thus reduce procurement and inventory costs. We are already winning business away from lower cost Chinese metal fabricators because we can beat them on delivery, often quality, service-after-the-sale and overall procurement cost.
Overall, the manufacturing and metal fabrication industries are looking up for domestic production. Partnerships and trade with other countries creates new markets and expands the potential for U.S. manufacturing to grow, while giving these countries the U.S. cooperates with the ability to expand, as well. At the same time, however, competition with China and powerful economic countries will still be present and carry over into these market opportunities.
Sam Ott writes for Mack Hils, a Midwest metal fabricator located in Moberly, MO.
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