Finding direction for the welding industry

We may provide more direction than we think

PRACTICAL WELDING TODAY® JANUARY/FEBRUARY 2006

January 10, 2006

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The welding industry may be the only one forecast to show any growth between now and 2012, but growth in the U.S. is threatened by a number of factors: skilled worker shortages, welding rod litigation; and what some consider the need for greed among business executives.

In some ways, the welding industry is almost entirely in a class of its own.

As far as manufacturing job prospects go, the welding industry is in a minority because it's expected to experience job growth—albeit average—through 2012.

Boilermakers, for example, have dimmer job prospects: little or no sector growth for the same time period. Millwrights and machinists have it even worse, with slower-than-average growth projected. Job opportunities are forecast to decline for assemblers and fabricators too.

But while the welding industry may appear to be sailing right along according to the Bureau of Labor Statistics, it's threatened by several factors. The most obvious challenge is the financial health of the sectors that need welding.

Perhaps more subtle, though, are the changes in U.S. society that have been mounting slowly every day—changes that threaten to impair the industry's domestic future.

Skilled Workers

You've heard it before—and often—that the welding industry may suffer in the near future because so many welders will be retiring.

But the industry isn't going to lose just workers. It's also losing certain ways of doing business.

"The days of someone troubleshooting and repairing something are almost gone," said J. Jones, applications specialist for Victor Equipment Co., Denton, Texas. "We have people who want to work in a Wal-Mart, and it doesn't take much skill."

Jones blames this trend, at least partly, on a lack of job pride, evident since post-World War II. Before that war, he said, trades didn't have a negative image.

Then there's the disposability factor. Today's society regards more and more goods as disposable; so while many companies may be willing to refurbish and retrofit equipment that would have high replacement costs, even more people are willing to replace what they have instead of making their tools and equipment last.

Fueled by markets in emerging economies, civil transports dominate the growth of the aircraft industry over the next decade. In the jetliner segment, 30- to 50-seat jets and the newer 60- to 108-seat jets will emerge as the most popular models over the next 10 years..

Welding Equipment

Your stereo equipment or television set may not be the only goods that cost more to repair than it does to replace—welding equipment sometimes falls into this category, too, Jones said.

"Equipment doesn't last as long. It costs too much to repair, so it's better to throw it away," Jones said. "Equipment-makers are trying to make it for less so they can sell it for less, because they say that's what people want."

Part of the reason equipment has a shorter life span is that there's always something new around the corner, Jones said. This causes consumers to rethink their purchasing strategies.

"Things evolve so rapidly—computers, for example—so companies would rather lease than buy equipment," he said.

By 2010 sales of Class 8 commercial vehicles is expected to grow to 250,000 units in the U.S., 35,000 in Canada, and 18,000 in Mexico.

Another potential challenge regarding welding equipment surrounds tools that really are consumable: welding electrodes.

As lawsuits trickle into the courts, welding equipment-makers are holding their collective breath to see how potential changes in electrode chemistry will shake out in the industry.

Bill Rice, CEO of OKI-Bering, Cincinnati, believes that fume litigation is the biggest challenge facing the welding industry today.

"It will change the face of our industry if there are changes like with asbestos," Rice said. But the difference with filler metals is that there isn't an alternative material to use in them, he said.

Whether or not the fume litigation issue is legitimate, if lawsuits are won and laws and regulations change regarding welding fumes and filler metals, everyone will have to abide by them, Rice said. For now it's a waiting game.

"Manufacturers are waiting to see what happens," he said. "It hasn't had as big an effect on it yet."

The market for construction machinery holds the promise of being even larger than the boom times that closed the last decade, with 100,000 more units sold compared with the strong years of 1998 and 1999.

The farm tractor market will take a slight step backward as sales for the vehicles are forecast to below 20,000 for the first time in two years.

Business Practices

Unlike they do today, people used to stay at the same company for many years and work for only one or two companies during their career. This led people to identify themselves by the company they worked for and the skill they practiced every day—hands-on skills.

Today society's perspective and priorities have changed, said Ben Grimmett, a member of Practical Welding Today's editorial review committee.

"Corporations are now focused on maximizing profits," he said. "In the meantime employees are encouraged to jump ship for that next, bigger offer. There is no loyalty from either direction. Companies want to get by paying as little as they can, employees want to make as much as they can—neither really realizing they are in this together. There really is an adversarial relationship at work here."

Grimmett said these attitudes—and how they affect the bottom line—are at least partly to blame for the straits manufacturing is in today.

"According to a simple Google search, average salary for a CEO is about $10,500,000, which works out to nearly 500 times the average worker pay," Grimmett said. "On the worker bee side, everyone is about instant gratification. Look how many businesses are open on weekends [and] offering instant credit, instant car loans, pay advances, overdraft loans, you name it—we are an instant-gratification society."

New-home construction and remodeling efforts continue to be kind to the U.S. appliance industry. Shipments of washers, dryers, dishwashers, refrigerators, freezers, and ranges are expected to climb again in 2006, making it six consecutive years of growth.

The Bottom Line

But that instant-gratification sentiment takes hold long before you get into the work force—it's also ingrained in the U.S. educational system, according to Jones.

"Everything they do is in response to how the school district can make more money or spend less money," he said. "Schools are giving prizes, like boom boxes, to students with perfect attendance. We're in a very instant-gratification society."

And because schools themselves are so interested in the bottom line, the trades simply aren't being represented to the youths who might be interested in them.

The first knock against teaching the trades in schools is capital cost. The second is liability—both because of the setup, safety, ventilation, and equipment needed to make a welding lab work properly and safely. In response, schools are finding other ways to represent technology-type jobs, Jones said, without the challenges a welding lab poses.

"If they put computers in the same space, they can call it a technology center and get more money from the federal and state governments. It's a business," Jones said.

Just as schools consider themselves to be businesses, manufacturing businesses also are fixed on the bottom line, especially concerning labor.

Companies aren't outsourcing welding alone to save money, but welding and assembly labor costs and operations are going overseas. This makes financial sense for manufacturing operations that include welding and assembly, Rice said.

"Welding is a part of the manufacturing process, but it's a small percentage," he said. "[Companies are] not going to go offshore unless there's a lot of labor in the process. Once the incentive for labor isn't there, why would you move there?

"But Rice doesn't think outsourcing is quite as extensive as it was three years ago.

"The industry has grown since then. You're seeing more demand in the U.S.," he said. "As long as there's high demand for welded products, as [there] is today, I don't think there's going to be as much of a change in the industry. There will be a need for more welders if the need for welded products is there."



Stephanie Vaughan

Contributing Writer

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