SOUTHFIELD, Mich., April 18, 2023 – Harbour Results, Inc. (HRI), a leading authority to the manufacturing industry, recently released results from its Harbour IQ Manufacturing Pulse Study, which indicated 92% of respondents were profitable in 2022 with an average EBIT (earnings before interest and taxes) of 9% and, on average, they expect a 2.6% increase in revenue from 2022-2023. However, the data also showed a drop in capacity utilization from Q3 2022 to Q1 2023 across all manufacturing processes – tooling, die casting, metal forming and plastic processing.
The study, which is conducted three times a year to understand the current health of North American manufacturing and identify trends was launched in February 2023 with approximately 320 manufacturing facilities participating. As part of this study, HRI developed the HIQ 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).
“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,” said Laurie Harbour, president and CEO, HRI. “Overall, the manufacturing industry seems optimistic despite the drop in utilization and ongoing marketplace instability.”
Tooling Faces Challenges in Early 2023
The tool and die industry is facing a number of challenges in 2023 including the growing cost of doing business, increased outsourcing of tools to low-cost countries and vehicle launch delays that are impacting new tool sourcing. The study shows that tooling utilization dropped significantly from a high of 86% in Q3 2022 to 67% in Q1 2023. Additionally, backlogs are trending down (4.3 months) and work on hold is increasing (13.1%).
“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,” added Harbour.
Plastic Processors are Optimistic About 2023
According to the study, plastic processors expect to see growth in 2023 in both profit and revenue with 60% forecasting revenue growth of 5% or more from 2022 to 2023. They have forecasted utilization to increase from 54% in Q1 to 57% in Q4 of this year. Nearly half of the respondents are expecting to hire in 2023 and a majority are seeing an increase in business quoting activity.
Die Casters Expect Improvement in 2023
Die casters are also optimistic about 2023 and expect to see growth in 2023 in both profit and revenue with 42% forecasting revenue growth of 5% or more from 2022 to 2023. They have forecasted utilization to increase from 62% in Q1 to 68% in Q4 of this year. Over half of the 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. All of this said, die casting has fewer production suppliers and there is some strain in this industry that could lead to some challenges for the OEMs in 2023.
Metal formers Expect 2023 to be Status Quo
Metal formers expect 2023 to be very similar to 2022 with 60% of respondents expecting to see no change in EBIT and only 36% forecasting revenue growth of 5% or more from 2022 to 2023. They have forecasted utilization to increase from 60% in Q1 to 65% in Q4 of this year. Over half of the respondents are expecting to hire in 2023 and a majority are seeing quoting levels about the same this year as last.
“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,” said Harbour. “HRI will be conducting its next Manufacturing Pulse Study in May along with its annual Benchmarking study. We encourage all manufacturers to participate and have access to the full study report.
About Harbour Results, Inc.:
Harbour Results, Inc., a leading business and operational consulting firm for the manufacturing industry, offers operational and strategic advisory expertise, market research and proprietary assessment programs to help optimize a business’s performance. With data and intelligence as the foundation the company is focused on helping small- to medium-sized manufacturers. HRI utilizes its data, knowledge, experience and relationships to build sound strategies and implement operational improvement. Headquartered in Southfield, Michigan, Harbour Results was founded in 2005 by industry analyst Laurie Harbour. For more information, visit, harbourresults.com, Twitter or LinkedIn.
