The sentiment amongst electroplaters, anodizers, powder coaters, and other finishers for 2024 is clear: hold tight for a bumpy ride.
Roughly half (48%) of plating and anodizing shops surveyed in late December by www.FinishingAndCoating.com expect only a 10% or less increase in sales in 2024, the largest segment of the survey indicators. About 18% say they expect a 20% increase in sales from 2023, and the same number of shops say their sales will stay flat with a 0% increase.
About 15% of plating and anodizing shops expect a drop in sales in 2024 compared to 2023. About 8% say the drop will be 10% or less in sales, and another 8% say the reduction could be 20% to 30% less in revenue. Nearly 3% say they could see a 30% drop in business in 2024.
“We see an increased volume in defense and aerospace and a rebound in some industrial markets.”
“It’s going to be very flat with a lot of our customers struggling with the economy,” says one shop, which many of the other shops in the survey asked not to be named.
“It is very tough and slow,” another shop remarked. “We are seeing large OEMs and others already pushing out orders or canceling.”
The survey was done at www.FinishingAndCoating.com in late December, with about 430 shops participating. Those shops will receive the full survey results, but here is a snapshot of what the survey discovered as we head into 2024.
Election Time Brings About Uncertainty
One shop noted that they are always tentative during election years when 2024 will see a new president elected.
- “You never know how the economy will react,” the shop president says. “Historically, it tends to slow down.”
- Other comments from plating and anodizing shops echoed those sentiments:
- “We see it as stable with no change.”
- “2024 could be closer to 2021-2022 than 2023.”
- “Uncertainty will continue, but the automotive market in the USMCA region will continue to grow.”
Some shops, however, predict things will improve in 2024.
- “We are adding about 30% capacity to one line and an entirely new line to our portfolio.That line should double our sales in 2024.”
- “Things should be solid and increasing.”
- “It could be better than 2023 with a couple of new customers.”
- “We see an increased volume in defense and aerospace and a rebound in some industrial markets.”
- “It will be good but hectic. The EPA regulations will make it hectic at best.”
- “We are expecting existing sales to be flat but are forecasting some sales growth due to new customer acquisition.
- “I am hoping it is better than 2023. We experienced a significant downturn in sales from 2022. Things are turning around in the last few months, but slowly.”
Yet 2023 was a good year for many plating and anodizing shops. Almost 42% say they saw a 10% or higher growth in sales in 2023 compared to 2022, with 21% reporting sales were 10% higher and 18% with 20% or higher sales. Roughly 18% of plating and anodizing shops say its sales were flat in 2023.
- “We had a strong finish. Many of our customers had trouble getting material throughout the year.”
- “it was very solid, as we had strong gains with new customers and good volume rebounds in aerospace.”
- “We closed the year with a good level of growth by consolidating lessons learned and generating strengths from our weaknesses.”
- “We grew our company by 1.5 times and added 45% more staff. We added a 3rd shift halfway through 2023 and want to double our sales next year.”
Some Shops Report Lower Revenue in 2023 vs. 2022
Meanwhile, 37% of plating and anodizing shops reported lower sales in 2023 than in 2022. Almost 13% of the shops say their sales were off by about 20%, and just over 10% say the sales were down 10%. About 15% say their sales dropped 30% or more.
- “It is difficult to keep up with the rising cost throughout the market. Unfortunately for our customers, we've had to make significant price increases to keep up with the rising cost.”
- “It was one of the toughest years we've had yet. With the downturn in sales and profitability, we were forced to make some radical changes. Things began turning around in August, but we still have a significant cash crunch. The year included a major capital investment in a new boiler system.”
- “The expected pullback in business was larger in magnitude by a factor of at least 2.”
- “We were up slightly in sales, but margins are squeezed.”
About 38% of plating and anodizing shops say their biggest concern heading into 2024 is inflation and the rising costs of products they use in their shops. A lack of qualified workers accounted for 33% of their concerns, and regulatory issues comprised 23% of the concerns for shops.
- “We have seen a 200% increase in products we have to purchase just for day-to-day production. Everything from maintenance items to commodities.”
- “We're strategically reassessing our supply chain, optimizing operational efficiency, and implementing cost-effective technologies to maintain competitiveness while ensuring the highest quality standards for our clients. It's a dynamic landscape, but adaptability and innovation will drive sustained success.”
- “Unfortunately, many of our customers are seeing a significant drop in demand.Everyone seems to be sitting on overpriced goods and excessive inventories. Until prices start dropping and getting more realistic, we don't see much change in demand and sales.”
“We closed the year with a good level of growth by consolidating lessons learned and generating strengths from our weaknesses.”
Yet even with the concern over flat sales and rising costs, almost 78% of shops say they have the budget for capital expenditures in 2024, with upgrading new equipment accounting for 41% of the improvements. About 25% say they will spend money installing new finishing lines to improve their overall sales, with almost 12% saying they are spending money on wastewater treatment upgrades and expanding their current facility.
Of those budgeting for major capital improvement expenditures, almost 46% say they will spend between $100,000 and $500,000 on those improvements, and roughly 11% say they will spend $75,000 to $100,000.
As for what expanded process plating and anodizing shops plan to add, about 25% say they will add a zinc-nickel process in 2024, while 13% of plating and anodizing shops hope to add a powder coating process to their finishing processes.
Powder Coaters and Liquid Coaters Also Worried About Economy
For powder coat and liquid coat shops, about 40% say their sales remained the same in 2023 as the prior year, with 30% saying they had at least a 20% improvement in sales. About 20% of shops say they see at least a 10% jump in revenue in 2023.
- “Things were improving but inconsistent month-to-month.”
- “We have several large jobs quoted but no serious programs locked in. We are moving into the new year with significant uncertainty but a positive bias, having made it through 2023.”
- “We are estimating a similar year to 2023 - hoping inventories aren't as much of a headwind as they were this year. We are anticipating the economy slowing further and wondering if we adjusted enough in 2023 or if things will worsen with stock market volatility.”
Looking at 2024, about 40% of powder coat and liquid coat shops say they expect to have a 10% or more increase in sales, while 60% say they expect to have less revenue in 2024 than they did in 2023, with 40% of those saying they could be off by 30%.
Roughly 60% of powder coat and liquid coat shops say they plan to allocate money for capital expenses to their facility, with 83% reporting they plan to buy new powder coat equipment and 17% saying they will add more lines to their operations.
