The term metal manufacturing most commonly refers to metal fabrication — which covers everything from metal forming and cutting to assembly. According to Value Line, metal fabricators have a number of shared traits, including the fact that they are intermediate producers of hundreds of thousands of materials and components used by a variety of manufacturers, many of which are highly cyclical. End customers reside in the auto, residential and commercial construction, mining, energy, general industrial, and other sectors.
A McHone Industries’ blog notes that most experts predict positive growth for metal manufacturing in the U.S. over the next 5 to 10 years. As foreign wages continue to rise, market volatility increases and outsourcing proves less beneficial, more and more companies will be moving their fabrications back to the U.S. That is good news for metal fabricators across the country, but it may also present a challenge to smaller companies that need to ramp up to remain “in the game,” but may lack the cash on hand to do so.
Another issue for metal fabricators is staying current with the technological advances being introduced in the industry, such as data-based decision-making via enterprise resource planning (ERP) systems. The old saying that you have to spend money to make money is usually true.
The Business Realities
Most metal fabricators are capital intensive, and maximizing operating leverage is crucial for them. During periods of economic expansion — or high demand — these companies can easily cover fixed costs. In a contraction, however, cost absorption falls, and management needs to cut variable costs where possible to support profit margins. Investment in machinery and facility modernization helps to expand capacity and/or improve production efficiency — but many traditional lenders may be wary of providing the necessary capital outlays to bridge gaps and support growth.
The Solution: Specialty Financing
CSC understands the challenges and opportunities facing metal manufacturers in today’s economic climate. Our flexible financing options, including working capital loans and equipment financing, help support:
- Funding innovation and growth
- Addressing fluctuating commodity prices
- Meeting evolving regulatory requirements
- Securing new or updated machines to streamline production
- Expansion and time-sensitive growth opportunities
- Purchasing and/or transporting raw materials to production sites
- Corporate operating costs resulting from increased government regulations
- Research and development
- Investing in technology-intensive practices
- Dealing with new terms from vendors that are shortened and capped
We have significant experience in this industry, as we have worked with clients that specialize in aluminum manufacturing, automotive supplies, building materials, hardware and tools, scrap recycling, and steel manufacturing.
The Takeaway
Metal manufacturers must make sure they can maintain their operations through good times and bad. They also need to be able to respond to new opportunities without straining their resources and have the ability to secure technology that can help streamline their operations. The solution to all those situations can be specialty financing from CSC. Why not schedule a free consultation today?