Don't judge a business by its market

October 27, 2008
By: Tim Heston

During these economically trying times, you would think some companies would have a better shot at emerging from this mess somewhat unscathed, while others might be more vulnerable. But that"s not necessarily the case.

Consider news last week of two metal fabricators, one that"s laying off and another that"s expanding. I covered both in blogs earlier this year, and I have to admit something: Things didn"t turn out the way I thought they would for either of them.

Defense fabricator Ultra Machine and Fabrication was on a tear earlier this year. It opened up a new, 101,000-square-foot facility, nearly doubling its manufacturing space at its Shelby, N.C., campus. During the opening ceremony, CEO Frank Stewart stood on a stage, backed by a massive American flag, and said he was honored to help the community by hiring more than 250 people in 2007 alone. Most of the work came from OEMs for MRAPor mine-resistant, ambush-protectedvehicles.

I"ve heard many stories of manufacturing suppliers experiencing fantastic growth, only to have the rug pulled out from under them as their major customers put the brakes on orders. But to me, Ultra seemed different. Earlier this year I talked at length with Wendell Fannin, vice president of business development, about the business"s future. He said that while the company was on the hunt for more customers, he predicted that military work would remain the company"s core business, because the war on terrorism wouldn"t likely curb demand anytime soon.

Fannin added, In the beginning, Frank"s thought process went like this: If I can get to a certain point and the market changes, I want to be so solid financially that nothing can hurt the company."

Then last week happened. Late Thursday, Stewart announced 38 layoffs.

"This has been a very difficult day and one that for about five months we have been putting off, Stewart told the Gaston Gazette, a local daily. Our business has been down all year. We have been paying wages with last year"s profits. I have committed that we will not lay off anybody else, but if it comes February or March and things are not different &

What a difference a few months make. This is a manufacturer that built a reputation in armored military vehicle fabrication, one of the more bullish markets out there. But obviously things aren"t so healthy at Ultra. Stewart told the newspaper that the company still has a lot more people working than we have business for, many doing everything except what we hired them to do, such as cleaning floors and landscaping.

Not everybody"s hurting. As Ultra let go of 38 employees, Greenheck Fan Corp. announced plans to increase production in its Kings Mountain. N.C., plant, barely 12 miles away from Ultra"s headquarters. The Greenheck plant, which makes commercial kitchen ventilation systems, employs 64, and managers plan to add 102 employees over the next three years.

In May this blog covered how the metal fabricator"s information technology efforts have streamlined front-end operations and drastically reduced lead-times. And a complete report on Greenheck"s operations will appear in the November print edition of The FABRICATOR.

Greenheck"s nicheventilation products for commercial and industrial real estateseems more vulnerable during these economic times than military work. But as our November feature describes, Greenheck has kept competitive through not only IT advancements, but also an innovative corporate structure and customized automation. For certain items, customers can place orders by noon and have products designed, fabricated, and shipped by the next morning.

At this point Greenheck has been lucky enough to skirt the real estate mess; the company sells mostly to commercial and industrial customers. As David Loomans, IT manager of engineering and manufacturing systems, put it, We"re worried about it, of course, but at this point we haven"t been affected by it yet. Regardless, he said, buildings will still require air-movement products, no matter what happens on Wall Street, and quick turnaround helps Greenheck win business.

By this time next year, I hope Loomans is saying the same thing.

Tim Heston

Tim Heston

Senior Editor
FMA Communications Inc.
2135 Point Blvd
Elgin, IL 60123
Phone: 815-381-1314