Hardware Manufacturers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 540 hardware manufacturers in the US primarily produce metal hardware, including hinges, handles, brackets, keys, and locks. Firms typically develop and engineer products and systems designed for specific applications, such as aircraft, appliances, motor vehicles, or construction. Large firms produce related products like tools and electronic security products. Other related products include nuts, bolts, screws, rivets, washers, nails, and spikes.

Competition from Private Label Products

The commodity-like nature of many hardware products, like hinges and basic locks, creates ripe opportunity for private label goods and low-priced imports since the differences in quality are marginal.

Variable Raw Material Costs

The cost of raw materials for hardware products, which include metals like steel, zinc, and brass, can vary and affect margins and cash flow.

Industry size & Structure

The average hardware manufacturer employs about 54 workers and generates about $18 million annually.

    • The US hardware manufacturing industry consists of about 540 companies that employ about 27,640 workers and generate between $9 billion and $10 billion annually.
    • The industry is highly concentrated; the top 50 companies account for over 80% of industry revenue.
    • Large firms, which include Allegion, Spectrum Brands, and The Hillman Group, may offer a portfolio of related products.
                                  Industry Forecast
                                  Hardware Manufacturers Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  May 16, 2023 - Low-Income Housing Tax Credit Reintroduced
                                  • Bipartisan legislation to strengthen and expand the low-income housing tax credit (LIHTC) was reintroduced in May in both houses of Congress, HBS Dealer reports. The LIHTC is the nation’s most successful tool for encouraging private investment in the development and preservation of affordable housing. The Affordable Housing Credit Improvement Act (AHCIA) of 2023 (S. 1557 and HR 3238) would restore the 12.5% LIHTC cap increase that expired in 2021 and further increase allocations by 50% over two years. It’s estimated it would finance an additional 1.94 million affordable rental units over 10 years. Since its enactment in 1986, the LIHTC has financed more than 3.7 million affordable homes, according to the National Lumber and Building Material Dealers Association, which notes that very little affordable rental housing development would occur without it.
                                  • The National Association of Manufacturers (NAM) is pushing back against a proposal by the Environmental Protection Agency to lower soot pollution standards, according to its website. The association in March urged the EPA to withdraw its draft proposal to lower the limit on industrial fine soot from 12 micrograms per cubic meter of air to between 9 and 10 micrograms. The proposed revision – the first in a decade to address soot levels – would protect the public from what some scientists call the deadliest form of air pollution. But the lower soot standard would impose a substantial economic burden on manufacturers, according to NAM, citing the EPA’s own estimate that the total cost of the controls required for compliance with the proposed standard of up to $1.8 billion, and possibly more. The EPA is currently taking public comment on the proposed limits.
                                  • The dust that results from grinding aluminum and other metals can be dangerous, triggering explosions if precautions aren’t taken, The Fabricator warned in an April article. Metal dust explosions are caused by high concentrations of combustible dust particles that rapidly combust inside an enclosed space. Once ignited, ambient oxygen feeds the flame, and the fine metallic particles ignite quickly, creating the potential for an explosion if a lot of dust is present and no sprinkler system is triggered. Aluminum dust resulting from activities such as surface finishing is especially dangerous as it can heat up and burn easily. When exposed to an ignition source, such as the spark from a motor, the dust may explode. Fabricators unaware of the potential dangers posed by metal dust on the shop floor risk explosions, injuries and even fatalities, according to The Fabricator.
                                  • Smaller manufacturers needn’t miss out on the opportunities and benefits of automation as the floor space required to accommodate robots shrinks, Modern Machine Shop (MMS) reports. The growing market for affordable, space-saving robots and pre-engineered robotic work cells enables shops that are tight on floor space to optimize workflows and deliver high consistency, efficiency and quality. Today’s robots boast smaller space requirements, with compact and lightweight six-axis robots that can be mounted close to workpieces and machines in existing lines and cells. Robots deployed for machine tending can improve throughput and operational safety while maximizing overall equipment effectiveness. Smaller robots can also be deployed for secondary operations such as trimming, laser cutting, laser marking, and deburring, according to MMS. Robots can help shops overcome challenges such as evolving customer requirements, supply chain issues, and labor shortages while elevating workforce productivity and maintaining fluid operations.
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