Southfield, Mich.-based consulting firm Harbour Results Inc. has released the results of its latest business pulse check and found 92 percent of responding manufacturers were profitable in 2022.
The companies disclosed earnings before interest and taxes of 9 percent and, on average, they expect a 2.6 percent sales increase through 2023. However, the data also showed a drop in capacity utilization from Q3 2022 to Q1 2023 across all manufacturing processes, including tooling, die casting, metal forming and plastics processing.
The data is collected three times a year for the Harbour IQ Manufacturing Pulse Study and is used to understand the current health of North American manufacturing and identify trends.
The data in this study was collected in February 2023 with about 320 manufacturing facilities participating.
This study also included a newly developed data point called the Harbor IQ Manufacturing Pulse Index to measure the overall expansion or contraction of the industry.
The forward-looking indicator is a statistical analysis of a variety of metrics collected as part of the survey. For this study, the overall Manufacturing Index is 64 (out of 100), according to HRI President and CEO Laurie Harbour.
"It is hard to give a definitive forecast based on this initial index number. However, as we trend it over time, we feel it will be a strong indicator of what's to come for manufacturers," Harbour said in a news release. "Overall, the manufacturing industry seems optimistic despite the drop in utilization and ongoing marketplace instability."
The pulse study reveals the tool and die industry, in early 2023, is facing the growing cost of doing business, increased outsourcing of tools to low-cost countries and vehicle launch delays that are impacting new tool sourcing.
Tooling utilization dropped significantly, the study shows, from a high of 86 percent in Q3 2022 to 67 percent in Q1 2023.
Also, backlogs are trending down to about 4.3 months while work on hold increases 13.1 percent.
"Tool suppliers are starting off the year slow, dangerously slow, but we expect it to pick up on the back half of 2023 and into 2024 and 2025, which will be strong years based on the number and type of new vehicles the auto industry — the largest consumer of tools — is forecasting," Harbour said.
The study indicates plastics processors are optimistic about 2023 and expect to see growth in sales and profit. Sixty percent forecast sales growth of 5 percent or more from 2022 to 2023.
The surveyed processors forecast utilization to increase from 54 percent in Q1 to 57 percent in Q4 of 2023. Nearly half of the respondents are expecting to hire in 2023 and a majority are seeing an increase in business quoting activity, according to the study findings.
The die casters surveyed also expect improvement in 2023. Forty-two percent forecast sales growth of 5 percent or more from 2022 to 2023, and they project utilization to increase from 62 percent in Q1 to 68 percent in Q4 of this year.
More than half of the die caster respondents are expecting to hire in 2023, and a majority are seeing an increase in business quoting activity in defense, agriculture and off-highway, heavy truck and industrial industries.
Die casting has fewer production suppliers though, so there is some strain in this industry that could lead to challenges for the OEMs in 2023, the news release said.
Meanwhile, the metal formers expect 2023 to be status quo compared with 2022. Sixty percent of respondents expect to no change in EBIT and only 36 percent forecast sales growth of 5 percent or more from 2022 to 2023.
The metal formers forecast their utilization to increase from 60 percent in Q1 to 65 percent in Q4 of this year. More than half of the respondents are expecting to hire in 2023 and a majority are seeing quoting levels about the same this year as last.
HRI will be conducting its next Manufacturing Pulse Study in May along with its annual benchmarking study. Harbour encourages all manufacturers to participate and have access to the full study report.
"It is critically important for manufacturers to have access to data and information that can help them make sound business decisions as well as better understand how the industry is responding to both opportunities and challenges," she said.