Senior Editor
- FMA
- The Fabricator
- FABTECH
- Canadian Metalworking
Categories
- Additive Manufacturing
- Aluminum Welding
- Arc Welding
- Assembly and Joining
- Automation and Robotics
- Bending and Forming
- Consumables
- Cutting and Weld Prep
- Electric Vehicles
- En Español
- Finishing
- Hydroforming
- Laser Cutting
- Laser Welding
- Machining
- Manufacturing Software
- Materials Handling
- Metals/Materials
- Oxyfuel Cutting
- Plasma Cutting
- Power Tools
- Punching and Other Holemaking
- Roll Forming
- Safety
- Sawing
- Shearing
- Shop Management
- Testing and Measuring
- Tube and Pipe Fabrication
- Tube and Pipe Production
- Waterjet Cutting
Industry Directory
Webcasts
Podcasts
FAB 40
Advertise
Subscribe
Account Login
Search
Metal fabrication, a people business
- By Tim Heston
- March 12, 2013
Those are wise words. Kallage’s column focuses on company valuation. It delves into not just why customers buy from you, but why another company or investor would want to purchase a custom fabricator. As Kallage explained it, investors will pay more for a fabricator with new equipment, because they know they won’t have to update equipment during the near term. But they don’t view equipment as a key differentiator because--unless a shop uses proprietary, custom machinery--other fabricators can buy the same or similar machines.
This is why investors value talented people more than machines. Only people can identify bottlenecks, make the right machine investments, and improve part flow. Only people can talk to customers about cost-saving sheet metal design alternatives. Only people can rearrange machinery to best suit the product mix on the shop floor. Only people can adjust to market changes and external challenges (such as the one some shops may be starting to face, as the effects of the government’s self-imposed sequestration go into effect over the coming weeks).
A few manufacturers out there can boast technical trade secrets or proprietary equipment that competitors can’t touch. But in many cases, an application’s volume doesn’t warrant an investment in such custom equipment.
People outside manufacturing perceive that any business making things in the United States as driven by machinery and automation. Labor, they say, is just too expensive, so manufacturers automate. But when you look at the balance sheet, direct labor in the U.S. doesn’t take up that much of the balance sheet. For several years running, the Fabricators & Manufacturer Association’s Financial Ratio and Operational Benchmarking survey has pegged direct labor at around 13 percent of sales for many fabricators (though the number can vary widely, depending on the type of work the fabricator does). Material generally is far more expensive than labor, so the faster that material is turned into a thing of value, the better.
Automation can cut, bend, weld extraordinarily efficiently. Material flies during operations, but how about between operations? In most high-product-mix, low-volume situations (the majority of U.S. manufacturing), people on the shop floor must devise ways to move that material from A to B as efficiently as possible, weighing constraint operations and capacity. That’s not easy, and it requires people to think on their feet.
Machinery does make a difference. Shops can’t survive without technology. Good machines, in fact, can help a company attract the best people. That’s the case at Total Manufacturing Co. (TMCO), a product line and contract fabricator in Omaha, Neb. Several weeks ago I talked with Todd Blacksher of TMCO’s National Mfg. Division, which makes equipment for chemistry laboratories. The shop has made major capital equipment purchases in recent years.
“If we want to be better, we have to have the best equipment,” he said. “Most people who work here really love the new technology, and there’s always something new. The machines empower our talented employees.”
That really says it all.
subscribe now
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
Tim Heston
2135 Point Blvd
Elgin, IL 60123
815-381-1314
Tim Heston, The Fabricator's senior editor, has covered the metal fabrication industry since 1998, starting his career at the American Welding Society's Welding Journal. Since then he has covered the full range of metal fabrication processes, from stamping, bending, and cutting to grinding and polishing. He joined The Fabricator's staff in October 2007.
- Stay connected from anywhere
Easily access valuable industry resources now with full access to the digital edition of The Fabricator.
Easily access valuable industry resources now with full access to the digital edition of The Welder.
Easily access valuable industry resources now with full access to the digital edition of The Tube and Pipe Journal.
Easily access valuable industry resources now with full access to the digital edition of The Fabricator en Español.
- Podcasting
- Podcast:
- The Fabricator Podcast
- Published:
- 04/16/2024
- Running Time:
- 63:29
In this episode of The Fabricator Podcast, Caleb Chamberlain, co-founder and CEO of OSH Cut, discusses his company’s...
- Industry Events
16th Annual Safety Conference
- April 30 - May 1, 2024
- Elgin,
Pipe and Tube Conference
- May 21 - 22, 2024
- Omaha, NE
World-Class Roll Forming Workshop
- June 5 - 6, 2024
- Louisville, KY
Advanced Laser Application Workshop
- June 25 - 27, 2024
- Novi, MI