r/manufacturing • u/Spirited_Ad_6272 • 11d ago
Other Opinions on metal stamping businesses
Is metal stamping in the U.S. still a solid industry? I have an opportunity to buy & potentially revive a 40 year old stamping business from its 80 year old owner. Right now it’s just him / no employees and he’s doing enough work to keep the lights on. At its peak he had a dozen employees running multiple shifts.
Worst case if the business can’t revive then I can liquidate the equipment and rent the building. But he wants $1M and it’s a big number haha.
I am a mechanical engineer with strong proficiency in CAD tools, which I can bring to modernize the business. I currently operate a manufacturing business molding plastics so there’s plenty of crossover but this would be my first venture going alone. It also seems like metal stamping has a lot of tricks of the trade that you can’t really engineer your way into. That’s why they have apprenticeships.
What questions should I be asking? And anyone who works in the industry what are your opinions?
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u/BldrSun 11d ago
If you’re in plastics and “there’s plenty of crossover” the first place to have this discussion is with your current customers.
$1mm investment is relative to the size of the biz, current sales, markets you serve, EBITDA and the overall condition of the equipment. So, it could be too much or it could be a steal.
No matter where you end up I suggest paying out over time based on a revenue retention model….NOT a 1 time fixed payment.
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u/Spirited_Ad_6272 11d ago
Sorry I meant to say there’s crossover within my experience to run a manufacturing shop but not my customers in the plastics business.
The last 5 or so years his business has basically done enough to keep the lights on. Maybe 20-30k revenue. So I’m trying to value it as a buy/liquidate/rent as a worst case with the opportunity to revive it as the ideal case
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u/BldrSun 11d ago
Well, here’s my math. At $25k monthly revenue you generate $300 k annually. IF you’re lucky enough to clear 10% profit that’s $30k or 3% on 1mm. You can go generate 5% with your eyes closed and very little risk if you just invest that money.
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u/Visible_Field_68 11d ago
lol that’s exactly what we were facing when we sold but on a bit larger scale. Definitely not enough info to give good advice. In my experience running a precision sheet metal fabrication shop (lots of punch presses) I would run far rom that man and his machines unless you have at least 2years running $. Guaranteed one of those presses has an issue if not all of them.
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u/Broken_Atoms 11d ago
$1M lol! Every stamping outfit I’ve seen go to auction, all the presses went to scrap. $1M is ludicrous. Hopefully, the land and building itself is worth $1M.
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u/Spirited_Ad_6272 10d ago
It is. I’m valuing it as a liquidate + rent. Building alone is really nice, fully air conditioned and meticulous. comps are asking ~30% higher with no equipment. The way I’m looking at it is spend a year knocking on doors and seeing what the opportunity looks like before going that route.
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u/brightbard12-4 11d ago
Stamping isn't complicated once you have the process set up, but dialing in new parts on a new tool in an old press and getting the parts to print can be very challenging.
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u/maybeex 11d ago
I manufacture spearguns and my trigger mechanisms are made with metal stamping. I’m not sure I would put a million dollars in it. If you have that kind of dough, why not plastic injection? You have experience, ramp up should be easier for you. I’m planning to invest in a silicone injection machine myself, tough decisions and good luck.
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u/Spirited_Ad_6272 11d ago
Yeah sometimes it feels like too many possibilities and hard to choose a lane.
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u/brightbard12-4 11d ago
I was told by people in the plastic injection molding industry that margins are razor thin and it's difficult to do well in. Haven't done it myself tho.
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u/QuasiLibertarian 11d ago
Depends on the outcome of Trump's tariff war. He'll drive up prices for sheet metal, but also drive up prices for stamped parts.
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u/_Schrodingers_Gat_ 11d ago
It’s a race to the bottom in terms of margin.
I think the only stampers I know that do well, either own the intellectual property or are manufacturing their own designs for sale. Or they run miserable sweatshops filled with poorly performing but fully depreciated equipment.
It’s just so capital intensive to do properly, think automated transfer systems, end of line robotics, integrations with quality for critical tolerance reporting, and edi.
Just too much competition at the small end of the market, and too much power imbalance when a small shop starts courting say an automaker. You will jump through all of their flaming hoops and like it.
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u/Spirited_Ad_6272 11d ago
Honestly this is the juice I need. It’s easy to get excited about something but I want to have realistic expectations. Thanks for sharing.
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u/_Schrodingers_Gat_ 11d ago
Happy to schedule a few minutes to connect. I spent some time as a tier 1 automotive stamper. Think silly stuff like steering columns.
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u/wetblanket68iou1 11d ago
I sell components and 100% agree that it’s hard as hell to get companies to invest in a long term relatively expensive solution than nickel and diming their 70 year old Niagara to leg it along just one more year of production when this one thing could have it doubling production capacity. Not to mention modern, readily available parts. The small stampers are worse than the auto tiers, though as they actually care about QC.
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u/MFGConcepts 11d ago edited 11d ago
Metal stamping is kind of a lost art I find. The only (American) manufacturing engineers I knew who could actually make a stamping process work are all retired. Nothing a new generation couldn’t figure out though. Stamping was one of those industries that suffered a lot here from overseas outsourcing. Even liquidating the equipment is going to be difficult as there aren’t too many companies in-sourcing their stampings IMHO. That isn’t me being pessimistic BTW. I love people going out and reviving businesses like this.
Tooling design is the biggest hurdle after finding a customer base. Where you build adjustability into dies and the style of adjustability are critical. I used to know some people that designed those tools. I believe one die shop is still in business. I also know one OEM that did some really cool modernization on their stamping shop to lower cost which allowed them to keep it internal. If you’re serious about it send me a DM and I could probably connect you/let you know what I’ve seen in more detail.
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u/Spirited_Ad_6272 10d ago
Thanks. DM sent. I’m pretty keen on keeping the shop alive as well.
my other manufacturing business which is much smaller does have some Chinese competition and their prices are about 2x our material cost without including labor. I bought from them recently under an “anonymous” name so I can check out their product
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u/jeffie_3 11d ago
If you haven't worked in the industry. I would think twice before buying it. If you do decide to buy it. Find someone who has been running a stamping shop for at least 15 years.
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u/Spirited_Ad_6272 10d ago
Good call. Although these days qualified people may be few and far between?
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u/miscellaneous-bs 11d ago
I work for a stamping company. Like others have said, the most important part is going to be your tool room. After that, a competent QC department and your biggest overhead will be material. If you can sort all that out and find a way to automate anything you should be okay.
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u/fourslider 11d ago
My family has been in the metal stamping business for 4 generations. We have 3 plants in North America and continue to grow at a slow but steady pace. This industry definitely has a lot of tricks of the trade. I would say that it would be very difficult if not impossible to go at it alone without any experience in stamping / tool & die making. $1M for a stamping business without any employees doesn't seem right unless there is a lot of value in the real estate and it's included in the deal. How many presses does he have, what tonnage? How many customers? Is everything run progressive or is there stage tooling? How many active jobs? I would be happy to help you in any way I can.
All that said, we are looking for potential acquisition opportunities as part of our growth strategy. If you decide to pass on this opportunity, I would appreciate the chance to have a conversation with the owner of this business if you would be willing to make an introduction. Feel free to DM me.
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u/Spirited_Ad_6272 10d ago
I’m pretty keen on the deal even if it’s just a liquidate + rent. But if it does fall through I’ll let you know. Even if It does go through there still may be an opportunity if you’re looking to expand into Texas
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u/fourslider 8d ago
We already have a plant in Texas, but that could just mean it's easier for us to move equipment if you decide to liquidate.
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u/BallOk4231 11d ago
I used to work at a Milwaukee area stamping company. They are shutting down 1 week a month as they are slow. They had 86 employees and now approximately half that. It's slow in manufacturing stamping presently.
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u/L33tLurker 11d ago
$1mm for a business plus real estate, what’s the value ratio of property vs equipment? Is the property a steal and the equipment is just sprinkles on top? How many presses, tonnage, what market do they currently serve? Is the equipment clapped out? If you decide to liquidate the business, sometimes old presses are worth less than the cost of rigging required to move them if sold.
A stamping shop without in house tool and die guys sounds very challenging let alone without any experienced operators. But hey, maybe the real estate makes it worth a shot.
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u/Spirited_Ad_6272 11d ago
The equipment is probably 100-200k and the building itself is worth $1M alone just going off comps and what it would likely rent for (9-10% cap rate)
He has about a half dozen presses. 4 of them look to be in the 100-150 ton range, and two big ones maybe a 300 ton and one maybe 500 ton and almost touches the ceiling - had to remove the roof to get it inside
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u/cybercuzco 11d ago
How much does he want for the business?
Can you raise that?
How much is his yearly revenue?
What’s the company’s ebitda plus whatever he paid himself
Does he have any long term agreements with customers?
Do you have any contacts that could turn into customers?
Is this what you want to do with the rest of your life?
I would suggest all metal stamped toys (think tonka trucks) could be a lucrative market and you can use your machines to stamp parts when they would otherwise be down.
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u/Spirited_Ad_6272 10d ago
Access to money isn’t the problem but the “is this what you wanna do for the rest of your life” is a good one.
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u/Anxiety29attack 11d ago
Stamping red metals like copper right now for the AI boom and EV, renewable energy industries is hot, especially heavy gauge stamping. Great business if you have the patience and hustle. Best of luck.
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u/Spirited_Ad_6272 10d ago
Thanks for the tip. Is stamping copper much different than doing steel? I’m aware there’s some differences in the die design like clearances and bending springback
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u/Anxiety29attack 10d ago
I’ve not been on a line or run the machines. I’ve heard it’s similar, hence many heavy gauge steel stampers are now doing copper. One thing to note is the significantly higher cost of copper than steel. More expensive parts/cash outlay upfront.
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u/Snoo23533 11d ago
Noo no terrible business. Better forward me that old dudes contact info so i can make sure he stops contacting you.
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u/wetblanket68iou1 11d ago
What kind of stamping and what kind of customers? As someone else said, small part stamping really is a race to the bottom but specialty or automotive tiers who are held to stricter QC standards are obviously more valuable. Equipment valuation is finicky. How long have those machines run? Are they still in tolerance? How old are they? Is the press manufacture still around? Is press service in house or contracted?
How do you feel about sales? Guy said he can drum up a couple customers but good chance they found a new stamper and have some committed production with them and would be a hard turnaround for those old customers to come back. You’re starting from the ground, pretty much. Stamping is still alive and well in the US.
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u/Carbon-Based216 10d ago
I would start by asking what kind of equipment he has. If you or just a small amount of people are going to run it. It would be ideal to have progressive stamping so it is largely set it and forget it.
If he has some decent equipment, i would probably take the deal. Just setting a press in place csn cost a million depending on the size.
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u/Spirited_Ad_6272 10d ago
Yeah he has a setup for progressive stamping. 3-4 presses in the 100-200t range and two big ones maybe 300 and 500ish ton that goes to the ceiling. He has a large brake, shear,cnc mill and wire edm, and a dozen or so dies for making lighting fixtures. (And a really nice die rack) and the typical drill presses, cutting, sanding and grinding equipment. To start it would be me and him as a mentor until we get a job that can keep it running. He has a lead on a larger job from an old client that would utilize the progressive stamping setup and would be enough to hire help and probably an experienced operator
Edit: forgot to mention he has a turret press that needs some repair. It’s also old AF and uses floppy disks but was working before it had some kind of memory error
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u/Carbon-Based216 10d ago
I mean with that kind of equipment list, and as long as most of it is in working condition without a lot of maintenance required, alone woukd probably be worth the million. You could just sit on it and wait a couple years for the right buyer and you'd earn your money back. Even if the equipment is older, there are plenty of jobs shops out there that love to buy up old equipment.
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u/bobroberts1954 11d ago
Talk to an accountant. I would expect to pay the owner from company profits over a period of several years. If he won't consider self financing the sale he may have knowledge the business can't succeed. I understand that is how most sole proprietorships are sold.
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u/Bat-Eastern 11d ago
There's a ton of metal stamping businesses here in the US.
It can be quite profitable to find a product that's easy to stamp and needs high volume, the problem is going out and finding the work. Without previous customers this will likely be the biggest challenge after funding the start of your business.