Metals: a resilient sector, subject to strong price pressures

28,531 is the number of active establishments (head offices and secondary establishments) in the Metals sector, which recorded a 5.2% increase in the number of companies (head offices) between January 2021 and January 2022. As of March 31, 2022, over a sliding 12-month period, the sector confirmed a positive entrepreneurial dynamism index (IDE) with 1,950 new businesses created for 1,571 companies that disappeared, including 176 judicial liquidations. However, the pressure of business disappearances is increasing sharply with +48.9% of entities disappearing against +3.45% of entities created over the period under consideration.

A difficult period with little visibility

In the first half of 2020, Covid-19 brought economic activity to a sudden halt, paralyzing the Metals sector. Its main customers such as the Construction, Aeronautics and Automotive industries had indeed sharply reduced their demands. By stopping the production chain (supplies and outlets), the pandemic significantly reduced the sector's activity, both in value and volume. At the same time, certain activities, such as foundry and mechanical parts, have seen their business model change, with the accelerated change in the direction of the automotive industry (end of internal combustion engines), combined with a cycle of falling vehicle sales. The Metals sector is at the heart of the challenges of the ecological transition (carbon footprint, mobility, rational consumption, recycling, etc.).

In the period 2021-2022, the international economic recovery creates an opposite problem, by once again calling for significant metal production. The increase in the price of raw materials will lead to a shortage of supplies for the foundry and metalworking industries, which will be difficult to pass on to customers in the form of higher prices. This has resulted in longer delivery times, postponements and cancellations of building and public works projects, in particular, and has led to a drop in sales. More recently, economic forecasts have become more restrained, with lower GDP growth in 2022, accompanied by a decline in purchasing power and household consumption based on a significant rise in inflation.

In the longer term, stricter environmental standards and the development of electric motors will weigh on the sector's activity. Green energies such as wind and solar power could maintain demand for metals and the production of technical parts. However, in this context of change, companies in the metals sector are likely to encounter difficulties, as the ecological transition involves heavy investment expenditure.

A very mature sector

The Metals sector ranges from the production of raw materials (iron and steel, metallurgy) to their transformation into technical parts and consumer goods (metalworking). This heavy and capital-intensive industry, which is considered mature, operates in an unstable context, marked by major fluctuations in energy and raw material prices (copper, cobalt, etc.). At the end of May 2022, there were 24,458 companies active in the Metals sector in mainland France. This sector of activity now has a limited economic weight, representing only 0.2% of companies and 1.4% of employees in French companies, all activities combined.

Metalworking professionals are the most represented with 88.1% of companies and 73% of the sector's workforce. This activity is followed by Metalworking (excluding steel) which represents 9.5% of companies and 14.7% of the workforce in the Metal sector. In third place is the steel industry (steel), which accounts for 2.4% of companies and 12.3% of employees in the sector. As far as the steel industry is concerned, France is largely dependent on foreign countries. World production is dominated by Asia at more than 60% (of which nearly 50% for China alone), then by the European Union with nearly 12%.

In this activity, France still hosts three groups of international stature: ArcelorMittal (steel), Eramet (mining, steel and alloy metals) and Aperam (special steels). The Metals sector remains handicapped by a composition essentially made up of small structures (64.2% of VSEs), as well as by a low concentration of activity, with only 44% of sales generated by companies with more than 250 employees. These are serious handicaps in a very competitive market where investments remain important to adapt to the market.

Limited dynamism

Although not very representative of the French industrial fabric, the Metals sector remains dynamic. Thus, between January 2021 and January 2022, its population of active companies grew by 5.2% compared to an average of 6.3% for the whole of metropolitan France, all activities included. Between 2012 and 2016, however, the sector had recorded a decline in its entrepreneurial population with more disappearances than business creations. However, from 2017 onwards, the curve was reversed again, with an average of 1.3 new businesses created for every one that disappeared.

In the metals sector, 60% of business start-ups are sole proprietorships and 40% are commercial companies. The most dynamic activities in terms of business creations are linked to the construction industry with, in particular, installers or manufacturers of metal structures, followed by intermediaries of metal work such as forging, stamping, forging, powder metallurgy as well as metal treatment and coating.

The sector is not very geographically concentrated. Many companies are located near the sites of their direct clients (Automotive and Aeronautics) or benefit from more diffuse markets such as those of the Construction industry (metalworking). With this territorial dispersion, the most important region is Auvergne-Rhône-Alpes with only 19% of companies and 16.5% of the sector's workforce. At the end of March 2022, over a sliding 12-month period, the regions that created the most companies in the metal sector were Auvergne-Rhône-Alpes (more than 300 registrations), Nouvelle-Aquitaine and PACA (more than 200 new entities).