Trend Data 2012-2016
Projected Spending by Plant Size
0 $200,000,000 $400,000,000 $600,000,000 $800,000,000 $1,000,000,000
n;2016 n;2015 n;2014 n;2013 n;2012
Total: $2,357,231,276 $2,304,886,701 $2,227,271,127 $2,198,357,562 $1,579,587,142
Some shops have reported that a job can spend
more time in the front office than on the shop floor. So
the industry is turning to better methods of communication, and they’re also turning to software: CAD/
CAM, nesting systems, as well as enterprise resource
planning (ERP). After all, no matter how good the
shop floor gets, they can’t meet customer demand if
they don’t get the right information at the right time.
So it’s no surprise that software spending is on the
rise. This year more than 94 percent of respondents
said software spending would either remain the same
or increase. Only 6. 7 percent said it would decrease.
Reflecting the continued strength of the automotive
sector, Michigan leads in projected capital spending
this year, followed by Illinois and—surprisingly—
Texas, despite the slowdown in oil and gas. This
may reflect how custom fabricators are diversifying.
The energy sector isn’t the only game in town.
When analyzing total dollars spent on equipment,
the industry is geographically concentrated. More
than 66 percent of total spending dollars will come
out of just 10 states (Figure 2).
A Small-shop Foundation
Back in 2012, as the industry bounced back from
the greatest downturn in a generation, total projected spending was at a little more than $1.5 billion.
Projected spending between 2012 and today has
jumped by nearly 50 percent.
Individually, large companies obviously spend
the most, though planned 2016 spending at companies with more than 1,000 employees took a
tumble, dropping by more than 50 percent from last
year’s forecast (see Figure 3). This may reflect the
struggle for large manufacturers connected to mining, oil and gas, and agriculture.
Individually, small shops obviously spend a small
amount. But collectively, these shops—the very small
shop, in fact, with fewer than 20 employees—drive
technology spending in metal fabrication, mainly because there are just so many of them (see Figure 4).
In 2012 the industrywide small-shop spending
was projected to be only $256 million. Back then,
shops with 250 to 499 employees were planning to
spend more than $441 million; that’s greater than
the 2016 projection. That was great for them, but
there simply aren’t that many medium-sized or
large shops in the fabrication business. Hence, in
2012 the total level of capital equipment spending
in metal fabrication was much lower.
Fast-forward to today. In 2016 small shops collectively plan to spend more than $977 million, a 35
percent increase over the 2015 forecast. To put this
in perspective, over the past five years the planned
spending at the small shop has nearly tripled. If anyone is looking at just how the manufacturing technology sector rebounded so significantly in metal
fabrication since the Great Recession, they should
thank the humble neighborhood job shop.
Senior Editor Tim Heston can be reached at timh@
thefabricator.com. To obtain a copy of the complete “2016 Capital Spending Forecast,” visit www.
fmanet.org/store, or call 888-394-4362.
Individually, small shops spend a small amount. But as this industrywide projection shows, they drive equipment
spending in metal fabrication.
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