What a difference a year makes……………. Closing out our 2024 chapter brings continued and renewed optimism for the overall domestic Manufacturing sector. The political climate has most certainly shifted as we prepare for a new administration to take the reins in January 2025. For the manufacturing sector, this is likely to bring more opportunity than risk as we lean into new and renewed opportunities to embrace the value of a strong Manufacturing sector as a foundational aspect of our overall economy. After all, U.S Manufacturing is a $7 Trillion industry.
Transportation (Automotive), Appliance and Aerospace are traditionally large sectors that have a significant impact on overall U.S. Manufacturing. Specific to Automotive, the advent of the electrified powertrain solution is most certainly driving many layers of manufacturing expansion. Viewed through a wider lens, the infrastructure needs that this market demands does drive optimism for an array of manufacturing subsets that are seeing expansion of domestic capability and capacity. Electrification, to include Power Generation, Distribution and Management, are growing sectors that will most certainly benefit over a long time horizon from any shifts away from traditional energy sources.
It is estimated that as much as 50% of all the electricity generated on the planet goes to drive some form of electric motor. So, it is important to embrace and champion those traditional sectors that are also driving manufacturing growth. Industrial Motors, Transformers, Generators, to name a few, have long been an integral aspect of domestic manufacturing strength. The OEMs in these markets continue to evolve to meet the needs of the electrification trend. So, while Tesla and Edison are considered the fathers of the electricity that powers our world, it is amazing to see how much of the latest technology is based on the fundamental principles of magnetics and electricity that they championed.
In the case of overall manufacturing demand, we see healthy plant level demand amongst our customers and platforms that we support. But at the same time, we are experiencing tempered shipment activity in the immediate term where we see OEM’s rationalizing their supply chain inventory. At a broader level, that experience is shared amongst many manufacturers as OEM’s grapple with instances of bloated inventory as a result of the post Covid supply chain issues and cycles. So while we acknowledge some immediate term softness does drive conservative planning for 2025, the broader demand projections carry a positive trajectory.
The steel supply landscape continues to evolve as well. Consolidation of domestic Steel production remains the trend. Geopolitical factors will always affect the domestic supply and demand for Steel products. We believe that reshoring will be a continuing pursuit as part of a sound OEM supply chain strategy. Domestic sourcing of key manufacturing components and materials serves to bolster long term confidence in the supply chain.
In the specialty alloy space, the demand continues to evolve and to earn the attention of the producing mills. The EV market and related infrastructure support continues to drive a shift in the capability and strategy of the Electrical Steel producing mills. The higher efficiency demands of new and improved motor designs for the EV market drives the need for thinner electrical steels that deliver increased efficiency and performance. EV Steels continue to evolve and represent a larger portion of the developmental and production attention of the producing mills, both domestically and globally. This is driving attention in an exciting “new old technology” that we are proud to be a part of supporting.
As Sko-Die strides into our 78th year in business, our strategy remains focused on our continued investments required to meet the challenges of a new day. We are proud of the ongoing investments made in our people, in our facility, in our supply relationships and the commitment to our mission that our Sko-Die ownership and team has made. We wish everyone a very Safe, Healthy and Happy Holiday Season. We are eager to forge ahead with you in 2025 and look forward to successes that we can achieve together.
At Sko-Die we remain…
