May 2025 Volume 7

INDUSTRY NEWS

Business Will be Affected by Tariffs Regardless of Process Type We further analyzed the impact of tariffs by looking at process types. Stampers/ metalformers were most concerned with 61% expecting tariffs to have an impact while suppliers, plastics processors, die builders, mold builders, and other** being slightly less concerned with just over 50% expecting tariffs to have an impact on their business. When looking at the chart below it is obvious manufacturing as a whole will be impacted. Regardless of process type, there is some level of change expected with tariffs, whether positive or negative.

Access to Skilled Labor Still an Issue Manufacturing head count is stable with 40% of manufacturers not adjusting headcount, with 21% hiring for growth, and only 4% performing layoffs. We have seen a trend the last couple of years that manufacturers are hunkering down and focusing on upskilling their workforce, spending on automation, and focusing on ways to improve efficiency outside of skilled labor. It is not that companies are performing large scale layoffs but rather are not actively filling open positions. They are using the open position as an opportunity to cross train or invest in other solutions. Despite Challenges, Manufacturers Stay Optimistic The Q1 2025 Manufacturing Pulse study found that 42% of manufacturers are optimistic about the upcoming year, which is 8% down from last year at this time, but up from 30% in the Q3 2024. Forgers were more optimistic during this first quarter than they were during the third quarter, this falls in line with what we typically see from manufacturers. In past survey analysis, Wipfli has seen increased optimism in Q1 that drops throughout the year as top concerns and challenges continue to be an issue for businesses, and the positivity of a new year wanes. However, with profit expectations high we expect that sentiment will continue to stay high through the rest of the year. Currently, there is a lot of uncertainty in the manufacturing industry with changes rapidly being implemented. Looking forward, manufacturers should continue to keep informed on changing policies around trade, tariffs, and the impact that will have on business as well as remain flexible with the ability to adjust business up or down depending on marketplace fluctuations. *In May 2024 Wipfli acquired parts of Harbour Results, Inc., including its Harbour IQ Manufacturing Business Intelligence tool.

Other includes: OEM, supplemental, custom metal fabrication, contract textile converter, industrial sewing, contract manufacturing, fabrication, among others. Utilization Up for Forgers We collect utilization data based on a 24-hour, 5-day shift structure. During the Q1 2024 Manufacturing Pulse Study, production shops had an average utilization between 70%-75%. This year’s study indicates production shops hover between 51%-73%, showing a lower utilization on average year over year. Isolating forgers, there is an uptick in utilization from Q3. Respondents in Q3 had an average of 51% utilization, which is 5% lower than the 56% average reported for Q1. Additionally, forecasted utilization was even higher at 61% for the end of 2025. When comparing utilization against profit expectations, 50% of forgers expect a profit increase of 5% or higher, which is the same as manufacturing. The expected year-to-year growth for manufacturing is 2.7%, with aerospace expecting the largest growth. Forgers expect the highest utilization in aerospace at 76% current and 84% forecasted by the end of the year. Those numbers are similar to our findings in the Q3 study, where current utilization for aerospace was 68%, and the next highest was automotive at 52%.

FIA MAGAZINE | MAY 2025 64