A different recession, different challenges

November 25, 2008
By: Dan Davis

As you can see by this headline, I"ve used the word recession for the first time in writing blog postings or features for the magazine. I don"t think I have to worry about anyone giving me a ring and chastising me for bringing down U.S. manufacturing single-handedly by muttering the dread r word.

Is metal fabricating in a recession? Not so much.

Anecdotal evidence leads me to believe that business has slowed for many fab shops, but that business is by no means
halting to a crawl. Shop owners have run tight ships for years—staying out of debt and keeping just the right
amount of employees on the payroll—and their diversified customer bases have protected them from being
affected negatively by the downturn of the residential construction and automotive industries.

That doesn"t mean that metal fabricators aren"t vulnerable. This recession is showing signs of being very different from previous downturns.

For example, just because unemployment is rising, that doesn"t mean that the metal fabricating shops should find
hiring new talent any easier. With jobs being so specialized nowadays, an automotive worker can"t step onto a shop floor right away and start working a press brake. That worker may not have the right skills and may not be the right fit, coming from a unionized work force where flexibility isn"t a common concept. The working population is much more educated today, but that doesn"t mean they are properly trained for the jobs with the most openings.

Also, keep in mind that even the cheaper gas prices won"t stop the train known as environmental consciousness. (I think that train must be running on sunflower oil or something similar.) Gas prices might sink to $1.50 per gallon soon, prompting an uptick in sports-utility vehicle sales, but that"s an aberration. People want alternatives to the
urban-assault vehicles that have been so popular in years past, and the automotive companies that survive this
recession will need to offer those products if they are to be around for the next economic slowdown.

But this isn"t just about cars and trucks. It"s about the general public"s realization that alternative energy sources and energy conservation are both good for the environment and national defense. That"s great news for those metal fabricating shops involved with companies developing new power-generation technologies and resurrecting the nuclear energy.

This recession also could last longer than previous brief spells of economic doldrums. President-elect Barack Obama
has warned that times may get worse before improving, and the people running this economic bailout can"t seem to make up their minds on the best way to help out the ailing U.S. financial system.

Once again, for the company with the solid balance sheet, the current situation doesn"t look disastrous. Several more months of this could prove otherwise, however.

On one hand, customers could see business slowing and cut down on orders. On the other hand, a customer could push through more orders, but a job shop can"t respond because it lacks available bank credit.

I hope the financial community gets their act together soon. Perhaps this will be the recession where manufacturing will lead the way to better economic times. Now that would be different from past slowdowns.

Dan Davis

Dan Davis

FMA Communications Inc.
2135 Point Blvd
Elgin, IL 60123
Phone: 815-227-8281