It’s been a luke warm year for manufacturing.  Sort of, let’s dip the big toe and see how cold the water still is, kind of thing.  It’s difficult to look at how well the industry is actually doing without looking at the past few years to compare.  So based on some research, I’m going to point out a few key points of where the industry was, and where it’s headed for 2011. Rumors of a double dip recession are still being circulated, which would be another blow to the industry, but most economists are keeping the glass half full in this regard against it.

Prices have clearly fluctuated with the crash of the market in 2008, and are slowly starting to creep back to pre-recession prices.  The real question is, are these prices sustainable against demand? Here is a look at some raw material prices for steel:

* Steel Scrap price is a median price. The data used had ranges for this variable.

** Coking Coal and Electricity are missing data for months 8-10.

US – As stated before, inventories are returning to regular levels, with new growth uncertain.  This includes all small mediums and large automotive, specialty metals, aerospace, and medical manufacturers. There is a concern however for small and medium enterprises (SMEs). Economists are concerned for SMEs and the recent tax debate in Washington, and with no answer at least until the New Year. It is difficult for small or large companies to even plan for expansions, or the hiring of new employees. Uncertainty for this group leaves them unprepared as to whether they should expand, hire new employees, or maintain current levels.

Mergers, acquisitions (M&As) and vertical integration has slowed due to the recession, but has slowly rebounded, much like the rest of the metals market. Besides acquiring plants, companies are starting Greenfield projects, or reopening plants that were forced to close over the last couple of years.

Green – this has taken hold over the last few years, in basically every industry possible. However green theories are applied, the basic principles of INNOVATION still apply. Recycling of scrap steel and other metals is of significant importance. With scrap prices still low but rebounding, a focus on effectively managing recycling processing and keeping costs low is extremely important.  Other functions of the supply chain need to be controlled accordingly to offset the fluctuating prices. As from the charts above, it is apparent that all raw material prices are starting to creep up. This does not bode well if consumption remains low or at current levels for 2011. 

New alloys – stronger and lighter alloys in specialty metals are making strides in the aerospace market. Lighter aircraft means more fuel efficient and faster flights.  Automotive is also continually finding ways to reduce weight, especially with the fuel conservation at the forefront of concerns for consumers.

Manufacturing – automation and using new technologies continues to be a hot topic for manufacturing practices.   New processes from design, to using robots and more effective ERP and MES systems are being implemented for automotive production, and other areas.  Equipment and software investments are supposed to grow to nearly 12% in 2011 according to Industry Week.   

This is only a scratch on the surface for the industry.  Going into 2011 looks like a balancing act on a very thin rope, but with economists and industry experts being optimistic of a good year, let’s hope the numbers stay positive.