The model of a modern major fabricator

May 15, 2012
By: Tim Heston

Steve Wiseman is honest. “We’ve forecast about a 15 percent growth this year, but mind you that 2011 was terrible for us.”

The vice president of operations at Nu-Way Industries--part of our Fab 40 list of top U.S. fabricators, to be featured next month--knew that when the AT&T and T-Mobile merger fell apart, the fabricator’s telecom business would suffer. “[Telecom companies] are suffering from a lack of capital to expand their networks,” he said, adding that the Des Plaines, Ill., fabricator has always focused on diversification, “and we’ve been fairly diversified over the years. But you can get caught in some unexpected, opportunistic business.”

Over the past year the company has gained work from new and existing customers, but it analyzes new opportunities carefully. If a prospect offers lucrative work over the next few months, the fabricator can take the job, of course, but it looks at such opportunity with eyes wide open. “You have to look where you have capacity, and you need to make sure you are not going to sacrifice existing relationships for some opportunistic piece of business that’s here today or gone tomorrow. So we look very hard at who a customer is and the potential for growth.”

Such savvy management is a necessity now, postrecession. Many small shops that offered limited services and relied on a handful of customers have shut their doors, Wiseman said. Companies with diverse customer bases, broad services--including engineering and design--have remained, and “now they’re all hungry and looking to grow their business again. It’s become a much more competitive marketplace for everybody.”

I believe this aptly describes, in a nutshell, the experience of the modern metal fabricator during the past decade. Business is brisk, but it isn’t easy.  Historically, contract metal fabricating companies have grown extraordinarily quickly--often thanks to work from just a handful of customers--but they have also fallen just as quickly. These days fabricators must deal with forever-mutating sales forecasts, constantly tweaked to accurately reflect (and often this isn’t accurate enough) the ups and downs of customer demand.

Today the metal fabrication landscape is full of savvy, successful companies hungry for more work. Meanwhile, OEMs and other customers continually look to consolidate and simplify supply chains, made evident by comments from Mike Jacobs, vice president of strategic sourcing, operations, and engineering services at Rockwell Automation in Milwaukee. Here’s what he said during his talk at this The FABRICATOR Leadership Summit in March, organized by the Fabricators & Manufacturers Association, International.

“We have performance and on-time delivery expectations,” but engineering and technical assistance is playing a greater role, Jacobs said. Globally, Rockwell has more than 5,000 suppliers. “We are aggressively reducing that number. We think it’s in our best interest to work with a much smaller group of high-performance suppliers.” OEMs want enough suppliers to ensure continual product delivery, even during natural disasters--but no more. Too many suppliers just breed inefficiency.

This has shaped the competitive business landscape for the modern major fabricator. And judging by my talks with the members of this year’s Fab 40, the country’s top metal manufacturers are up for the challenge.

Tim Heston

Tim Heston

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