Perspective on 2016: Metal fabricators stand ready to swing

We’re in an odd situation. The world has too much stuff. That’s an oversimplified analysis of the crash of commodity prices, from metals and oil to food.

For custom metal fabricators, the crisis is almost a year old. In February of last year Rob Grand-Lienard, president of Special Products & Mfg. (SPM), a fabricator in Rockwell, Texas, received news from a major oil and gas customer. Contrary to a forecast it gave in December 2014, the oil and gas company did an about-face 45 days later. The business was gone.

SPM is a diversified company, though, and it’s since recovered with work from other sectors. But the fact remains that struggling sectors—including agricultural equipment and oil and gas—use a heck of a lot of metal.

So does the automotive sector, which is expected to grow again this year (albeit more slowly) and reach new records. But how long will the automotive party last? Manufacturing’s Purchasing Managers Index from the Institute for Supply Management remains just below 50, dipping its toe into contraction territory. And industry watchers are nervous. Will the commodity crisis and rising dollar push manufacturing continually downward?

Still, manufacturing executives still seem bullish about this business in 2016—according to a December survey from the Boston Consulting Group, at least.

And judging from my conversations with shop managers over the years, I think many custom metal fabricators who endured the Great Recession are poised to handle almost any challenge that comes their way. Surviving that experience was a bit like swinging two bats in the on deck circle.

China may be slowing, Latin America and Europe may continue to struggle, and commodity prices may continue sliding. But custom fabricators, especially those with healthy balance sheets and diversified customer bases, stand ready to swing.