Metal Coating, Engraving & Heat Treating

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 5,100 metal finishing companies in the US provide finishing services for manufacturing and construction customers. Major revenue categories include metal coating and engraving; electroplating, plating, polishing, anodizing, and coloring; and metal heat treating. Companies provide finishing services for customer-supplied metal goods and may sell finished metal goods. Some companies offer finishing services for alternative materials, such as plastics and composites.

Hazardous Waste and Processes and Government Regulation

The metal finishing industry is highly regulated because processes often involve dangerous chemicals and generate hazardous waste.

Customer In-House Capabilities

Companies may compete with manufacturers that opt for in-house metal finishing activities instead of outsourcing to a third party (“captive finishing”).

Industry size & Structure

The average metal coating, engraving, and heat treating service provider works out of a single location, employs about 25-26 workers, and generates $5-6 million annually.

    • The metal coating, engraving, and heat treating services industry consists of about 5,100 firms that employ about 129,700 workers and generate about $28 billion annually.
    • Most categories of the industry are concentrated, with the top 50 companies accounting for about 59-66% of industry revenue. The electroplating, plating, polishing, anodizing, and coloring sector is less concentrated, with the top 50 companies accounting for 34% of sector revenue.
    • Companies that specialize in metal coating and engraving account for about 47% of firms and 54% of industry revenue. Companies that specialize in electroplating, plating, polishing, anodizing, and coloring account for about 41% of firms and 27% of industry revenue. Companies that specialize in metal heat treating account for 12% of firms and 19% of industry revenue.
    • Large companies include Material Sciences Corporation, Metal Improvement Company (Curtiss-Wright Surface Technologies), and Bodycote. Some large companies are owned by foreign companies or have international operations.
                                      Industry Forecast
                                      Metal Coating, Engraving & Heat Treating Industry Growth
                                      Source: Vertical IQ and Inforum

                                      Recent Developments

                                      Dec 5, 2022 - EPA to Propose Metal Finishing Effluent Guidelines
                                      • The finishing sector could face new wastewater discharge requirements as soon as 2024 under a new rule proposed by the US Environmental Protection Agency. In a major step in the development of a nationwide wastewater discharge rule to control per- and polyfluoroalkyl substances (PFAS) associated with surface finishing operations, the agency in November proposed a formal Information Collection Request (ICR) to collect data from the surface finishing industry for its PFAS Water Discharge Rule. The agency plans to issue a proposed rule with new discharge requirements for the finishing sector by the summer of 2024, Products Finishing (PF) reported in November. In a regulatory alert to its members, the National Association for Surface Finishing (NASF) said the EPA’s PFAS action plan will require more vigilance on behalf of finishing operations.
                                      • The establishment of a new national office focused on advancing environmental justice and civil rights is expected to have a significant impact on environmental compliance for facilities including finishing operations, Product Finishing (PF) reported in October 2022. Specifically, compliance with applicable environmental requirements alone may no longer be sufficient to get approval for new permits or permit extensions, according to PF. Going forward, facilities will need to be aware of environmental justice and civil rights concerns in their environmental compliance and regulatory planning. The Environmental Protection Agency’s new Office of Environmental Justice and External Civil Rights will elevate equity, nondiscrimination and environmental justice issues on par with other major program offices such as air, waste, water, chemicals and enforcement.
                                      • Finishing activity was essentially flat in September 2022 for the first time since December 2020, according to the Gardner Business Index (GBI), a measure of month-to-month changes in activity at durable goods and discrete parts manufacturing facilities. September’s index score was 49.8, with a score of 50 indicating flat, with as many fabricators saying activity is looking up as saying it is slowing down. The two index components – production and backlog – contracted in September for the first time since August and December 2020, respectively. New orders started to contract in August and continued to do so at a faster rate in September, while supplier deliveries continued to lengthen, and employment activity continued to expand but at a slower rate. Export activity contracted at about the same rate in September as it did in August.
                                      • Demand for electrocoating and heat treating services to the electric vehicle (EV) market is likely to increase as a result of California’s ban on the sale of new gasoline-powered cars and trucks by 2035. All new cars sold in the state – the US’s largest car market – would then have to run on electricity or hydrogen. While the rule doesn’t force California’s car shoppers to buy these vehicles, it creates fines for automakers who fail to comply with the targets. The penalties are stiff enough that experts believe automakers will comply with the new mandates. The Clean Air Act grants California – the nation’s largest auto market – the ability to impose emissions standards on new vehicles that are stricter than those at the national level and which other states can then follow. Other states following California's lead by announcing similar plans include Virginia, Washington, Oregon, Massachusetts, and New York.
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