| Policy issues at European level affecting the metalworking or metal articles industry are handled by Orgalime’s Metal Articles Liaison Committee (MALC) and technical issues are dealt with in detail by various task forces. It also covers the relations of the metal articles industry with its suppliers, in particular the steel industry and its customers, in particular the rest of the engineering industries and the transport industry (automotive, rail and aerospace). Orgalime has therefore been reacting to this situation in a number of areas: see steel
The metal articles industry is a heterogeneous sector which includes a wide variety of products ranging from semi-finished products and goods sold to industry to end products sold directly to the consumer.
The metal articles industry is defined by chapter 27 and 28 of NACE Rev 1, including:
- castings of metals, which includes ferrous and non-ferrous metal castings (chapter 27.5 : NACE rev 1)
- structural metal products, which includes the manufacture of metal structures and parts of structures, metal building and construction products and railway tracks (chapter 28.1 : NACE Rev 1)
- tanks, reservoirs, boilers, metal containers and steam generators (chapter 28.2 and 28.3 : NACE Rev 1)
- forging, which includes drop forging, close die forging, pressing, stamping and roll forming (chapter 28.4 : NACE Rev 1)
- treatment and coating of metals, which includes the manufacture of articles on turning machines and chains, the treatment of metals and general mechanical engineering on a subcontract basis (chapter 28.5 : NACE Rev 1)
- tools and finished metal goods (accounting for some 40% of production), which includes the manufacture of durable and consumer goods for use in offices, gardening and household, etc… metal packaging and general hardware items (chapter 28.6 and 28.7 : NACE Rev 1).
Germany accounts for about one third of the EU industry's production, France one fifth, Italy and the UK just over 10%. With a turnover in the EU25 of 423 billion euro in 2005 according to our industry’s estimates, the metalworking sector is a major manufacturing branch in its own right; it is a major employer providing some 3.9 million jobs in the EU27 and, with some 93 billion euro of intra and extra-trade, it is also a major exporter.
ORGALIME metalworking industry
by sectors - 23 member countries
Production 2004
The industry covers a wide range of products including tools and finished metal goods (accounting for some 40 percent of production), castings, forgings, boilers and metal containers, as well as secondary transformation on contract basis, such as treatment and coating of metals.
The value of production for the sector in the year 2009 is estimated at €379 billion. The number of employees is estimated at a level of 3.6 million.
The industry produces, to a large extent, inputs or products used in other sectors in engineering, such as machinery and motor car industry. Demand from those sectors fell dramatically in 2009. As a result, output is estimated to have fallen by 18 percent during 2009.
Based on the official data for Orgalime industries in EU27 available so far for early 2010, we see the volume of production has levelled off. As a matter of fact the level or production has increased slightly since early autumn 2009.
The results from various business surveys have improved lately. The Commission’s monthly business survey shows that most of EU27 Orgalime sectors still consider order stocks well below average, but that the inflow of new orders has increased slightly. Inventories of finished goods have been reduced strongly over the last couple of quarters and will therefore not affect future production negatively. Other surveys, such as purchasing managers’ index or forward looking surveys such as IFO expectations, also show considerably stronger outcome than last year.
The financial sector across the globe is however not functioning properly. In many countries, credit is still tight, as banks are forced to consolidate their balance sheets, while not necessarily shunning the financial investments which led up to the crisis. Investment will therefore continue to be negatively affected. On top of this capacity utilisation in industry is still low. These factors among others will have a negative impact on investment goods industry that dominates our industry.
However, economic policies are clearly accommodating as interest rates are still low. Some factors are in place for a recovery, but any future expansion 2010 will be rather limited and start from a very low level. Orgalime expects a modest increase in volume of production in 2010 or by about 1.5 percent.
Foreign trade in terms of exports is expected to increase by 2.5 percent. Demand outside EU is clearly expanding at present, especially in Asia and South America. It is also estimated that employment will contract rather sharply in 2010, by some 2.5 percent. Low utilisation of capacity and limited access to credit negatively affect fixed investment. We expect that fixed investment will contract in our industry by 3.5 percent in 2010.
Economic shocks that our industry have experienced earlier as the oil shocks in the 1970s, financial turbulence in early 1990s and the burst of the IT-bubble some ten years ago show that the road to pre-level crisis could be bumpy and also take some time or about 4 years on average. There are reasons to believe that this will also be the case with the most recent crisis.
At consumer level companies in the sector face increasing competition from imports from countries enjoying lower labour costs while at industry level, they are caught between the major suppliers of raw materials and the major purchasers (automotive, mechanical and electrical engineering industries…). In the last two years the issue of steel prices and availability of steel have been at the centre of the industry's preoccupation.
The industry is becoming more complex as companies in the metal articles sector are not only being called on by their clients to supply finished metal articles made to specification, but are more and more involved in the design and marketing. Here the challenges of the sector are twofold: the cost of investment in R&D and design, often a heavy burden for companies lacking both the financial and human resources and the problem of counterfeiting which can rapidly erode any profit derived from investment in research. A number of Orgalime members regularly exchange information about trends in the subcontracting industry and the activities they pursue (subcontracting conditions, fairs, etc…)
Two directives stand out in the regulatory area of internal market legislation affecting metalworking: the Pressure Equipment Directive (PED) which affects much of the tanks, reservoirs and boilers sector and the Construction Products Directive (CPD) which regulates many metal articles incorporated in buildings (fasteners, windows, doors, etc…).
Relationship between the CPD and LVD
Points of concern raised by our industry and proposals for improvement of the CPD have in the past been put forward by Orgalime to the Commission, in particular through a position paper on the relationship between the CPD and the LVD (Low Voltage Directive) in 1999 and a second position paper pointing out some issues to be solved and improvements to be made issued in October 2000.
At present, Orgalime is not directly active on this Directive, since work is essentially being carried out by the product sector organisations in the standardisation committees. We are however monitoring progress in this area and are kept informed by CEPMC, of which Orgalime is an associate member.
Aside from technical legislation there are a number of environmental issues which affect the metalworking industry such as:
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