Friday afternoon is a good time to sit back and learn a little about the manufacturing sector. Today's blog looks focuses on the metal products sector, which is known by some as the ‘invisible sector'.
Metal products, responsible for 5% of total manufacturing output, is one of the more unknown but also vital parts of the manufacturing sector.
What does the sector do?
As the name suggests, the sector is produces metal products of various shapes or forms using a wide range of processes. To break it down, the sector involves the following types of manufacturing:
- Machining, or the use of machines to mill, plane, saw, grind, polish, weld etc metal pieces (this makes up approximately 29% of the metal products sector);
- Structural metal products, which are largely used in the construction sector (21%);
- Weapons and ammunition (9%);
- Forging, pressing, stamping and roll-forming of metal and powder metallurgy (7%);
- Treatment and coating of metals (6%); and
- Other fabricated metal products.
Who buys these metal products?
Only a small proportion of the sector's output is sold directly to consumers or directly exported – 10% of output is sold to households as tools, utensils and personal effects and a further 10% are exported. The largest export markets are the US, Germany, France, Ireland, the Netherlands and, interestingly, Saudi Arabia.
The rest of what the sector produces is sold as intermediate or investment goods, which are used in the production of other goods and services.
Why the invisible sector?
The sector is mainly business-to-business and sits largely in the middle of the manufacturing supply chain. As a result, it is not very consumer facing. At its most basic level, the sector takes a lump of metal and turns it into something else and, as such, the sector tends to have little commercial, political and consumer visibility. But there are some other reasons as well, including
- The fact that the sector is made up of a very large number of small and medium sized companies.
- That the sector suffers from having little bargaining power – metal products companies are sandwiched between large customers (i.e. automotive) and large suppliers (i.e. of steel) and sometimes comes under pressure from both ends of the supply chain.
But the sector itself is both dynamic and vital to the health of other parts of the economy
The metal products sector feeds into many other parts of the economy, such as construction and communications, and also feeds back into various parts of manufacturing. Also, despite being only 5% of the total manufacturing sector, over 20% of all manufacturing firms are metal product manufacturers and they employ 11.4% of the people who work in UK manufacturing.
The sector is also technology-intensive and has a strong focus on process innovation as companies seek to maintain market position and compete against low-cost producers.
So all up, while not a sector that is top of mind when thinking about manufacturing, as metal products feeds into lots of others parts of the sector and is also focusing on quality and improvement, it tends to provide a good barometer for the health of the manufacturing sector as a whole.