August 2022 Volume 4

OPERATIONS & MANAGEMENT

Bright Spots Amid Softening Demand By Ian Stringer

The North American forged product market softened moderately in May. Bookings for forged products declined 21% as compared to April’s figure, which was the second highest value recorded in

the last 12 months. The decline in bookings outpaced the decline in shipments by 13 percentage points which confirms bookings as a leading indicator for shipments.

Figure 1 - Forging bookings and shipments. (Last 12 months) Source: FIA O& S survey

We are starting to see similar levels of decline across the economy, as the Federal Reserve tightens monetary policy to fight inflation. For example, the industrial production index for total durable goods manufacturing declined by 1.3% in May. This was the first significant drop in durable goods production since September 2021. Given the persistent high monthly inflation readings, the Fed will likely continue its campaign to increase interest rates to tamp down

inflation, which heightens the risk of an economic recession. Not all is doomand gloom. In fact, there appear to be some customer industries whose demand for forged products continue to be strong. Figure 2 highlights customer industries that have both increased forged product shipments inMay and have double digit growth over the last 12 months (Jun ’21 – May ’22).

Figure 2 - Forging shipment growth by selected customer industry Source: FIA - O& S Survey

Eleven out of thirty customer industry-forging product combinations fit the criteria described. Ten out of the eleven combinations highlighted are for either ImpressionDie or OpenDie products. The lone exception is that for shipments of Rolled Ring forgings destined for the Oil & Gas industry. Infrastructure/Off Highway, Industrial and Other Industries appear more than once in the list of bright spots for forged product destinations. Forge and Gear Shops round out the selection of top forging customers and those whose businesses are characterized by low to mid volume and specialized in nature.

Even during a general deterioration in economic conditions, there are likely areas of opportunity to explore. I encourage FIA members to leverage tools like the FIA – Orders & Shipments survey results to uncover some of those otherwise hidden opportunities.

Ian Stringer VP – Data Strategy The Association for Manufacturing Technology Phone: 703-827-5209 Email: istringer@amtonline.org

FIA MAGAZINE | AUGUST 2022 38