Metal Coating, Engraving & Heat Treating NAICS 3328

Apr 21, 2025 - Tariff Turmoil

• Tariffs are raising the cost of raw materials, including steel, zinc, nickel, and other coating and plating materials, used by the metal finishing industry and threaten to disrupt supply chains and the industry’s customers. In March, the Trump administration imposed 25% tariffs on steel and aluminum imports to the US making those metals more expensive and harder to come by. Trump’s “Liberation Day” announcement of reciprocal tariffs on a wide range of imports – including vehicles, auto parts, and appliances – in April (since delayed for 90 days), would have a significant impact on metal finishers' suppliers and customers as well. More broadly, the tariffs threaten to slow economic growth – reducing demand for metal finishing services – and could even drive the US economy into recession. In early April, J.P. Morgan Research raised the probability of a recession occurring in 2025 to 60% — up from 40%.
• While white and neutral colors continue to reign as the most popular choices for vehicles in North America this year, industry insiders expect consumers to gravitate toward bolder colors in years ahead. “We have been predicting that consumers will be ready now and in the next decade for color… and move away from all gray and beige,” said Misty Yeomans, manager of color styling at PPG. Automakers have already responded with Neoteric Yellow (Hyundai) and Molten Magenta (Ford). According to Kelley Blue Book’s 2025 color forecast vivid blue is increasingly popular because it stands out on the road and works well with a variety of car models. Blue’s growth in popularity is a reflection of shifting customer preferences, especially among younger drivers. Meanwhile, per BASF’s 2024-2025 Automotive Color Trends report, white represents 34% of car purchases, followed by black (22%), silver (14%), gray (10%), blue (9%), and red (8%).

• Declining orders and production at US factories and recovery in the labor market is leaving less work for robots, The Wall Street Journal reports. According to the Association for Advancing Automation, orders for factory robots in North America plunged by nearly one-third in 2023 from 2022’s record volume and orders continued to slide during the first six months of this year. The pandemic-induced surge in demand for robots – driven by a shortage of factory labor and rising production as the economy reopened – has fallen steeply as manufacturers cut back on purchases of automation equipment, manufacturing executives told WSJ. The slowdown in electric vehicle production due to soft sales has also cooled demand for robots. US industrial production and manufacturing output fell in September, according to the Federal Reserve, while capacity utilization at US factories stood at 77.5%, compared with August's 77.8%.
• Employment by metal coating, engraving, and heat treating firms was relatively unchanged in January – dipping 0.4% – compared to a year ago, while average industry wages rose 6.9% over the same period to $24.09 per hour, according to the latest US Bureau of Labor Statistics data. Sales for the fabricated metal products industry fell 9% year over year in the fourth quarter and were down 1.6% compared to Q3, Census Bureau data shows. Looking ahead, sales for the US metal coating, engraving and heat treating operations industry are forecast to grow at a 1.48% compounded annual rate from 2025 to 2029, slower than the growth of the overall economy, according to the latest forecast from the Interindustry Economic Research Fund.