In 2023, metal fabricators will face many challenges which threaten business profit and productivity. Fabricators won’t be able to grow your business unless they’re aware of biggest challenges and prevent it from happening.
“Still, due to the economic recovery and projected growing demand from industrial and military markets, IBISWorld expects industry revenue to fall to just $38.6 billion with an annualized revenue loss of 0.3% over the five years to 2027,” reported by Terry Faber from IBISWorld.
To keep the business running and increase profit, fabricators must overcome 3 main challenges in 2023:
- Labor shortage
- Inflation and recession
- Technology integration
Labor shortage
Lack of skilled craftsmen in metal fabrication industry results in longer lead time and low-quality products
As of today, most of skilled craftsmen are above 50 and some of them are close to retirement age. In fact, according to the US. Census Bureau, almost one-fourth of the manufacturing workforce is between the age of 55 and older. After the pandemic, increasing of the early retirement rate is the reason why the industry can’t keep up with the hiring process. Facing the labor shortage, some fabricators attempt to hire young craftsmen, which are time-consuming and money wasted.
10 years ago, to hire more craftsmen, fabricators posted on newspapers. Then, with the existence of the internet, they started to post on company websites and social media. Now, fabricators must spend at least 3 weeks to find young craftsmen and another 6 month or longer to fill the skill gap. Some fabricators also invest thousands of dollars in many scholarship programs to attract young generation in manufacturing industry and guarantee jobs after graduation.
With all the attempts, the metal fabrication industry still doesn’t have enough labor to fulfill the job. Money has been wasted on the recruitment process, but neither of them can boost business profit nor productivity. Consequently, fabricators must choose a better option instead of hurting their own business.
Inflation and recession
In most instances, declining in revenue caused by inflation and recession.
From the survey released by National Association of Fabricators, fifty-nine percent of manufacturing leaders say inflationary pressures are making a recession more likely in 2024. High inflation and signs of recession are putting fabricators in a distressed situation which threatens their profits and growth rate.
Because of labor shortage, fabricators have to pay higher wages than usual. Supply chain disruption also cause a cost increase in material, energy, shipping and logistics. Despite the cost increase, many fabricators accept the loss in revenue to keep the customers. With the prediction of upcoming recession, fabricators will loss more money before they can start regaining.
Technology integration
One of the competitive advantages fabricators are missing is intergrating technology into manufacturing.
For the metal fabrication industry, the most beneficial improvement fabricators can make is to integrate machine automation into their production process. From deep learning AI programs to robots, cutting to welding, they can provide consistent workflow to produce the final product in a short lead time. Even produced in high volume, products made by robots are precision and durable.
For many reasons, technology integration is still insufficient and doesn’t fit in the business setting. Perhaps the cost of robots is skyrocketing and outweighing the profit they can bring. Perhaps the lack of trained craftsmen to operate and control the machine. Perhaps the small volume and unsteady demand cause buyer hesitation. Thus, technology integration is still a barrier for metal fabricators.
Finding the best solution today
The best way to tackle these harmful challenges is to start finding the possible solution today. Although solving these challenges are tough to solve, there’s always be a way to tackle and get the business more profitable. Please contact us at (800) 234-4239 if you have any questions regarding our resources or anything else found on the website.