To gauge the business prospects for the forging industry in 2006, Forging asked U.S. forging industry executives to project the outlook for their respective companies. To do this, we mailed our 16th annual survey to every forging operation in the United States.

The tally of results from 82 companies that responded to the questionnaire, and returned it to us before our deadline, indicates a very optimistic outlook. A summary of survey responses is presented here, with details illustrated in accompanying charts and graphs. We also have included some of the more interesting comments from respondents.


Optimism is widespread

One of our questions asked for a projection of next year’s business. A majority of the respondents — 56.3% to be exact — are looking forward to shipping more forgings in 2006 than they did in 2005. Another 38.8% expect next year’s shipments to stay even with shipments in 2005. Only 5% are braced for a decline in shipments.

When we averaged all the projections for next year, we determined that the respondents expect to boost their shipments in 2006 by 14.4%.

As in previous years’ Outlook Surveys, we asked forging executives a number of other, more specific questions about their 2006 plans.


Capital spending

We asked how capital expenditures for 2006 would compare to those of 2005, and what equipment, products, and/or services forgers planned to invest in during the coming year.

From the responses to these questions we conclude that 26.6% expect their capital spending to increase in 2006, 62.5% expect to hold steady on spending, and 10.9% expect to see their spending decline.

New equipment is on the shopping list of 72.2% of all respondents, and 20.7% are expecting to add to existing facilities or build new ones. An accompanying table (see p. 20) spells out what forgers are planning to purchase in the coming year.

With regard to debt, 36.7% of our respondents plan to maintain their current debt levels; 32.9%indicated that they currently had no debt; 20.3% said they were planning to retire debt in 2006; and 10.1% plan to add to their debt to finance new equipment purchases.


Cost of energy, raw materials

As in previous surveys, we asked executives to indicate what factors had been major problems for them during the past year, and which ones were likely to be (or, continue to be) major problems in 2006.

We found the top concerns of forging executives during 2005 to be a tie between the cost of energy and high material costs, with 70.7% ranking them equally. Respondents don’t see the situation changing for energy costs as an overwhelming 76.8% project it as the top problem in 2006. In our 2005 survey, 72.5% of the respondents picked energy costs as a top concern, while in 2004, the percentage was 66.6%.

The concern about higher raw material costs for 2006 drops off to 58.5%

As in our past surveys, the cost of medical insurance ranks high, with 65.9% of the respondents indicating it was a major concern. The same percentage of respondents expect this cost factor to remain a major concern in 2006.

Workers compensation costs ranked next with 42.7% picking it as a problem category for both 2005 and 2006.

The issue of raw-material lead times was a top concern for 39.0% of the survey respondents during 2005, while 31.7% expect it to continue to be a problem in 2006.

One of the most notable “problems” in recent years — foreign competition — has dropped out of the top-five concerns, with 36.6% indicating that it was a major concern in 2005, while 39.0% expect it to be a major problem in 2006.


Using the Internet, computer simulation

Again this year, we asked how forgers were using the Internet and if they were using computer simulation.

We discovered that more of our respondents are using the Web than ever before, with 95.1% of them using it for e-mail, 86.6% using it for information searches, 45.1% using it for procurement, 68.3% using it for e-commerce, and 4.9% for enterprise management.

A total of 32.9% of survey respondents, up from previous surveys, report they use computer simulation for planning in production of forged parts. As in previous surveys, respondents using forging simulation value it for reducing shop-floor trials and after-the-fact analysis in response to process problems encountered during production.

As for non-users, they cite the lack of trained personnel, followed by cost concerns, as reasons for declining the choice of process simulation.


Who participated?

The results reported here are based on the responses received from 82 forging executives. Among the respondents’ companies, carbon and alloy steels were the most widely forged metals, 71.9% and 75.9% respectively. Stainless steels were forged by 42.7% of the respondents; high-temperature alloys by 19.5%; titanium by 26.8%; aluminum by 19.5%; and brass and copper alloys by 22.0%.

Of responding producers, 70.7% manufacture impression-die forgings; 37.8% perform open-die operations; 8.5% roll seamless rings; 7.3% report they are involved with impact extrusion; 2.4% perform upsetting; and 1.2% performing powder forging.

The employment size indicated by respondents was as follows: 31.7% employ up to 20 people; 28.1% employ 20-49; 18.3% employ 50-99, 15.8% employ 100-249; and 6.1% employ 250 or more.

In terms of dollar volume of sales, 13.2% of the respondents indicated they do less than $1 million of business annually; 26.4% do $1-5 million; 15.8% do $5-10 million; 19.8% do 10-20 million; 15.9% do $20-49 million; 6.6% do $50-100 million; and 2.6% more than $100 million.