In the metal stamping industry, one of our biggest challenges is often out of our control: the price of materials. While we try to stay ahead of the trends and buy raw materials when the prices are at their lowest, the market is a chaotic place and so is supply and demand.
On the supply end, there has never been a time that saw more production around the world. Since 2007, total world crude steel production has jumped almost 200 million tons with China leading the way. At the same time, demand has skyrocketed, so the cost savings have been limited and some critics claim quality has fallen. For those who do not rely on foreign metals, this trend towards overseas purchasing has also raised the prices of higher quality, American-made products. Massive swings in prices, some say caused by reckless commodity trading, have deeply affected the metal stamping industry.
Another part of the equation is a change in demand. Many major industries, including the automotive sector, are moving away from steel and iron and into lighter-weight aluminum. The demand for more fuel efficient, thus lighter-weight, products is a major driver in this switch. However, it remains to be seen just how much aluminum will replace steel in applications, as opposed to act as another option.
Overall, the experts agree that forecast for the metal stamping industry in the U.S. is a positive one. The WSJ claims that our industry will grow at a CAGR of 7.91% by 2016, which is great news. However, the question remains if this tricky balance between supply and demand will directly affect our customers and us. No matter what happens, American Industrial will always do our best to bring both the highest American-made quality and the lowest prices to all of our customers.
For many years, Made In America became synonymous with higher labor costs and declining quality. Company after company took their business overseas looking to boost profits. Without question, this mass exodus was devastating to the economy, as it stripped once proud towns and cities of jobs, factories, and pride. Thankfully, the trend of outsourcing is starting to reverse itself.
So, what has brought about this shift towards reshoring? As with any economic movement, a number of different variables are driving manufacturing back to American soil, as seen in this article. There are a couple that really standout.
Labor Costs: When reshoring first became a trend, costs of labor were much cheaper in places like China and Mexico than they were here in the U.S. Now, according to this article, those wages have grown 15-20% annually, making the wage discrepancy much shorter. As a result, companies are bringing manufacturing back to the States.
Quality: There is little question that the quality of American-made products outstrips those from most countries. We have an amazing pool of workers with superior training and education on every level of the manufacturing process.
Things are changing so quickly, that even the undisputed champion of low-cost, outsourced retail, Wal-Mart, recently pledged to buy an additional $50 billion in U.S. made goods over the next decade. It is a perfect sign that there is not only an emotional desire to bring manufacturing back to America, but also one built on profit margins.
At American Industrial Company, we have never strayed from our commitment to American made products. Since 1981, we have proven that you can manufacture high quality precision metal stampings in America, with American workers, and still compete on the world stage. From the look of things, more and more American companies are starting to come back around to our way of thinking.