Like with all of us, 2020 was a challenging year for metals manufacturers.
Coming after a difficult end to 2019, with trade wars and tariffs pulling down demand and profits, the COVID pandemic led to additional challenges. Lockdowns, shuttered businesses, and just surviving during the COVID pandemic resulted in severe demand disruption.
A Year of Challenges for Metal Manufacturing
Customers that were determined “non-essential” shut down, cancelling orders. Other demand forecasts from critical industries like Oil and Gas, Automotive, and Aerospace were thrown into question, and manufacturers were forced to guess and speculate on optimal output. The pandemic also caused an increase in the price of materials. This led to many manufacturers implementing day-to-day forecasting on customer demands, which often resulted in production cuts followed by rush orders. Only by constant monitoring could the business stay a step ahead.
Even standard operating procedures in facilities have been impacted by COVID. Travel has been limited, and employee resources in production have been restricted. Just getting employees to work has been a struggle. In a business where operational procedures are standardized, new procedures in dealing with the virus have forced changes for many companies.
If nothing else, the challenges of 2020 have caused a seismic shift in the industry. Change is happening, even if some business leaders have been reluctant to embrace it. Many of the repercussions of these changes are still being assessed, making it difficult to fully understand what it will mean in the long run for the industry.
Looking Ahead for Metals Manufacturing
The COVID pandemic is not over, but all of us are (hopefully) learning to manage and mitigate it better. Most businesses won’t be shut down for extended periods, and we’ve seen supply chains cope with and overcome the challenges of the pandemic.
Even with that success, the last year has brought trials and tribulations for businesses across the spectrum, including metals manufacturers. Luckily for the manufacturing industry, the signs for the year ahead are strong, with metal manufacturing leading the way.
With so much disruption earlier in 2020, once businesses and manufacturing opened up, demand was strong. This shows no signs of slowing down. Industrial production in the U.S. increased 1.6% in December, a third month of gains, and that pace of production looks to continue in 2021. As strong as production and demand have been, it still hasn’t reached pre-pandemic levels, which means there is still room for growth.
Metal Manufacturing 2021 Trends to Watch
Let’s take a look at the trends shaping the industry in 2021.
Acquisitions and Vertical Integration
2020 was a banner year for company acquisitions in the metal industry.
United States Steel Corporation (U.S. Steel) acquired Big River Steel. This is a component of the U.S. Steel “Best of Both” strategy, providing customers the Gen 3 high-strength steel products of U.S. Steel with the low-cost, state-of-the-art, LEED-certified flat-rolled mini-mill offered by Big River.
Cleveland-Cliffs Inc. acquired AK Steel Holding Corporation and ArcelorMittal USA LLC, providing vertical integration of steel production with a focus on specialty manufactured parts for the auto industry. This makes Cleveland-Cliffs the North American leader in flat-rolled steel production.
While the end result of these acquisitions is still being assessed in the industry, the goals of the acquisition say much about the motives of company leadership — vertical integration and operational synergies. Both companies are now more competitive in how they can serve customers. They have more control and resilience in their supply chain, and can provide more downstream value.
Increased Collaboration Between Mills
Another trend that can be seen in the acquisitions is the focus and importance of mill collaboration.
In the past, even mills in the same company would rarely work together. There was a belief that the work processes and systems between the mills could be very different, and attempts to collaborate would lead to more challenges than benefits. Any collaborative efforts would be small and limited in scope, beyond shared leadership and support resources. Production occurred in separate silos.
That seems to be changing. To reduce costs and deliver more customer value, metal manufacturers are looking at ways to leverage the production, capacity, and benefits of sister mills, especially within the company. The strengths of one mill can be leveraged for another mill. Faster production runs with lower costs can be achieved through better coordination.
It’s a trend that has been long sought in the industry, but only now seems on the cusp of being achieved.
Better Information Leads to Better Production
Collaboration is only one way that metal manufacturers are looking at increasing production, delivering greater customer value, and reducing costs. Leveraging technology and better asset management is another area that business leaders are exploring.
New harsh environment and high temperature tag materials are delivering more accurate tracking and identification of hot metals in production. Polyonics is now offering labels and tags rated up to 1,292 ͦF (700 ͦC). Tags such as these can be applied to sheets, tubes, bundled wire, coils and more.
RFID is another technology that metal manufacturers are exploring. In the past, the harsh production methods used in metal production and fabrication made it difficult to use RFID, but new advances in the technology have opened up the possibilities for manufacturers. Because of the wireless nature of RFID, it promises to be a quantum leap forward in automation and linking digital information with physical objects.
In the past, many manufacturers felt it was riskier to implement new systems than to wait on change. The disruption and challenges of 2020 have made many companies and production leaders more open to testing and implementing new technology like labels and RFID.
A New Year and New Challenges
If the challenges of 2020 have taught us anything, it’s that change is happening.
2021 shows promise in the industry, with increased demand and larger orders. However, there are still challenges ahead and there is greater risk in relying on the status quo than in adapting and implementing new processes and technologies.
As a manufacturer, you’re always looking at ways to better deliver value to your customers. If you are interested in learning more about any of the topics we’ve covered here, or have questions about your production processes, then contact GO2 Partners. We’ve been leveraging technology and innovation to the benefit of our customers. We’re here to help.