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Diversification makes life easier on the roller coaster
- By Dan Davis
- February 6, 2015
Bill New, president of New Industries, Morgan City, La., isn’t worried—at least right now—about the big dip that may be coming from a slowdown or an abrupt end to jobs associated with the drop in oil prices that occurred over the last three months. Many of the deep-water oil and gas projects his fabrication company supplies assemblies to are two- to three-year undertakings. By the time New Industries is involved, the projects are close to completion. Even with the collapse of oil prices, these fabrications need to be erected at the bottom of the Gulf of Mexico so they can begin pumping oil and bringing in cash to help pay for the project.
So the offshore jobs continue at the 25-acre campus of New Industries, but if the pricing situation remains the same, the oil and gas jobs may not be readily available in the near future.
“The downside is that if the oil companies are not starting new projects today in the engineering phase, three years from now there won’t be any work for me to do,” New said. “Once they do decide to go ahead, it’s going to be a while before there’s any steel cut on the kind of stuff we’re doing.”
Luckily, New Industries has diversified its job base. Half of the company’s work involves pressure vessel fabrication. These vessels often are used to carry liquefied petroleum gases and other chemicals on barges to and from the plants that dot the Gulf of Mexico and the Mississippi River. New added that future opportunities might await in the petrochemical facilities being built in the region.
Diversification of the customer base is no industry secret. After the Great Recession, the shops that didn’t shut their doors likely remained open because they didn’t have a huge concentration of customers in just one industry. Just look at the automotive industry where hundreds of suppliers to GM and Chrysler filed for bankruptcy; there were even stories of some companies sending employees home and closing up shop permanently.
Today even the smallest job shops realize they need customers from different economic sectors to balance the peaks and valleys associated with their customers’ businesses. New Industries saw it right after the 2010 Deepwater Horizon oil spill. No one was building new rigs, so the company turned to other marine fabrications, such as a floodgate for the U.S. Army Corps of Engineers.
“It’s just like learning to ride the roller coaster,” New said. “It’s like somebody told me, ‘If you didn’t want to ride the roller coaster, you shouldn’t have bought a ticket.’”
If metal fabricating is a roller coaster, at least each day brings a different ride. New said he’s glad he bought his ticket in the mid-1980s, and he doesn’t have any desire to exit the ride in the near future. A majority of metal fabricators probably feel the same way.
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The Fabricator is North America's leading magazine for the metal forming and fabricating industry. The magazine delivers the news, technical articles, and case histories that enable fabricators to do their jobs more efficiently. The Fabricator has served the industry since 1970.
start your free subscriptionAbout the Author
Dan Davis
2135 Point Blvd.
Elgin, IL 60123
815-227-8281
Dan Davis is editor-in-chief of The Fabricator, the industry's most widely circulated metal fabricating magazine, and its sister publications, The Tube & Pipe Journal and The Welder. He has been with the publications since April 2002.
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