Unique metal manufacturing business model fosters growth

FabCorp's hopper business now operates under its own brand, Hippo Hopper, and out if its own build-to-stock focused factory that produces 38 standard product lines along with more than 100 custom products.

As a younger man in the early 1980s, Allan Hohman visited hundreds of manufacturing plants—forge shops, casting operations, machine shops, and more. As a manufacturer’s rep, he saw what worked and what didn’t. He also recognized each plant as, in his words, “having its own personality,” almost a living thing that needed room to breathe.

Each had its idiosyncrasies. One operation produced a narrow product range yet focused on one or just a handful of industries. Others produced a wide range of products but had more operational complexity. Others added only a little value beyond the raw material itself, which brought strategic purchasing and smart inventory management to the fore.

This experience laid the foundation for a collection of Houston-area metal manufacturers, all operating under Houston-based Hohman Associates. It’s a corporate entity (“really just a landlord,” as Hohman put it) that used to be Hohman’s rep firm but now operates as a holding company, an umbrella over a portfolio of complementary businesses: a metal service center; two very different product-line manufacturers; and a custom metal manufacturer offering extensive fabricating and machining.

Hohman’s story exemplifies how one can shape a metal manufacturing enterprise into a diverse, sustainable business, able to withstand economic downturns, even the booms and busts of the oil business. And thanks in part to disciplined tracking and advances in software, an organization with many moving parts can be managed, fine-tuned, and perfected.

The manufacturer’s story is one of adaptation, opportunity, and how very different businesses—with strong management and smart planning—can be stronger together.

From Rep to Shop Owner

Hohman spent a few years in the steel service center business before striking out on his own in 1979 as a manufacturer’s rep. And after spending years on the road, visiting plants across the U.S. and abroad, he received a phone call from a friend at a previous employer.

“He had bought a flame cutter and went off on his own, and he called me and asked if I wanted to buy the business,” Hohman recalled. “He had some health problems, and he needed to get out from underneath that. So I said sure, and here I am.”

That’s the abridged version. The complete narrative involves the building of a group of businesses that today employ 216 people.

Source Metals

Hohman took the reins of his friend’s flame cutting operation in 1985 and launched Source Metals, a sheet and plate processor. “We leased a little 8,000-square-foot plant. We had just one cutting machine, and we started putting plate on it. We then grew to two machines, then three.”

And the customer base grew from there until 1992, when Stewart & Stevenson, an existing customer, came to Hohman and asked for more value-added work, including bending, forming, welding, and machining, to fulfill an upcoming contract for military trucks.

FabCorp performs a wide range of processes that focus on custom, high-product-mix manufacturing.

“Trouble was, we didn’t have the structure to perform the work,” Hohman recalled. “We didn’t have any machines either—no press brakes, no welders at all. All we had was flame cutting and plasma cutting. So I came back from a meeting at Stewart & Stevenson and told my general manager that we’re going to have to change the company.”

Enter FabCorp

Analyzing the opportunity, Hohman and his team knew that it would be a mistake for Source Metals to delve into this kind of custom fabrication work. Steel-buying customers throughout Texas and Oklahoma knew Source Metals as a service center and plate processor.

Moreover, Source Metals operated under a business model very different from custom metal fabrication. The business requires a lot of raw inventory of various grades. Today it’s not unusual for Source Metals to have between 3 million and 4 million pounds of raw inventory, from sheet to a range of plate thicknesses—ammunition that allows Source Metals to respond quickly to highly variable demand.

When more value-added services enter the equation, the strategy needs to change. The quick-turn nature of the service center business means it has the cash flow to carry inventory that would drown a small custom fab shop. At the same time, Hohman didn’t want to turn down the opportunity from Stewart & Stevenson simply because it would get his foot into custom fabrication, a business that’s much less reliant on material price trends.

Considering all this, he opened a sister company, FabCorp, in 1992.

“God’s a funny man,” Hohman said. “Right when the work came in, the tenets next door moved out. We leased 20,000 square feet next door to Source Metals and got to work.”

For the first year FabCorp grew with the Stewart & Stevenson job, fabricating army truck components as the contract transitioned from prototypes to production. This work continued through the 1990s and early 2000s, as the contract was sold to Armor Holdings, which in turn was bought out by BAE. By 2011, though, the contract ended.

If FabCorp had simply grown on the back of that defense contract and similar work, it might have been in dire straits—but it wasn’t and, in fact, was able to reinvent itself, thanks to a history of recognizing opportunities and acting on them.

Hippo Hoppers

Although FabCorp officially launched as a custom fabricator in 1992, the name itself goes back to 1990. Shortly after launching Source Metals, Hohman kept seeing scrap hoppers damaged beyond repair, which was not unusual for a heavy plate processor. Heavy plate abuses scrap hoppers in a hurry.

Of course, Hohman knew he wasn’t the only heavy plate processor in town, and he knew he wasn’t the only one facing this problem. So he and his team designed a better mousetrap: a self-dumping scrap hopper with a thick, heavy-duty rocker that could withstand the abuses in thick plate fabricating, handling, and scrapyard environments. In 1990 Hohman began selling these hoppers to scrapyards, fabricators, and others under a newly incorporated name—FabCorp.

The FabCorp plant (on the left) used to fabricate hoppers along with a range of custom products. When the Hippo Hopper line grew, it was moved to a focused factory (on the right).

After FabCorp launched in 1992 as a custom fabricator, the shop continued to produce the hoppers alongside its other work. But as volumes rose for hoppers, they kept stealing capacity away from other work, especially its defense contract.

“We were ramping up to fabricate parts for 42 [military] trucks a week,” Hohman recalled. “We ran out of space. So we expanded a small plant we owned in Tomball, Texas, added 35,000 square feet of manufacturing space, and moved the hopper operation up there in 1996.”

The hopper business now operates under its own brand, Hippo Hopper, and out if its own build-to-stock focused factory that produces 38 standard product lines along with more than 100 custom products. Hoppers undergo cutting, forming, welding, and finishing, all under one roof. The hopper plant also has wet and powder coat painting capacity, which it shares with its sister companies.

The hopper operation has its own inventory and operational requirements that set it apart from its sister companies. “That business eats up about 100,000 to 150,000 pounds of material a week,” Hohman said, “and we just can’t be out of raw stock there. There’s just not enough time to catch up. I have to feed the monster.”

Hippo Hopper’s focused factory has elements that wouldn’t work at all at FabCorp. The hoppers use gauge material up to about 0.25 in. Most material handling flows downstream via carts or with hoists; there’s no need for a high bay and a bridge crane. Many workcells are designed around single-piece part flow, and many are designed to perform a specific task on a specific product. Everything is designed so that when finished stock is depleted to a certain amount, it can be replenished quickly.

Hippo Hopper has evolved to become a business that generates steady cash flow, thanks to the hoppers’ broad customer base and relatively low purchase prices, at least compared to defense contracts, oil patch work, and other custom fab jobs. Even in 2015 and 2016, when the oil boom ended and industrial spending dried up across Houston and beyond, Hippo Hopper kept hopping along.

FabCorp Reinvents Itself

By the mid-2000s Hippo Hopper ramped up its robotic welding, and many of those robots happened to come from the FabCorp plant, which at the time was amid a transformation. Until that point the majority of FabCorp’s revenue came from production of relatively small parts, many of them repetitive and, hence, perfect for robotic welding. When the contract ended, Hohman and his team turned their attention to what was at the time a small but growing part of their business: large, heavy work, including a fair amount of subsea and topside oil and gas fabrications.

“This had been a big focus for us going back to the height of the BAE job,” Hohman said. “We were heavy into oil and gas drilling components and general fabrication in the Houston area.”

Expanding this work called again for reinvention. After all, typical workpieces before the transformation were small and many were 0.25 in. or even thinner. Large subsea products could involve plate 8 in. thick or even thicker. Years before the company had hired welding supervisors who were certified and familiar with the idiosyncrasies of thick-plate and structural welding, so the organization had the talent it needed to make the transition.

The welding robots were sent to the Hippo Hopper focused factory, and the entire plant floor at FabCorp was restructured. Machining now played a bigger role (and today that capacity has grown to 42 CNC machining centers), as did heavy-duty welding.

More than a decade ago, FabCorp transformed itself after its defense contract ended. Today heavy weldments dominate its revenue streams. Images provided by FabCorp.

This work was a large part of FabCorp’s revenue for more than a decade, even in 2015 and 2016, when the last oil boom went bust. “Throughout all that, we increased our existing business in the telecom and semiconductor sectors,” said Tyler Hohman, vice president of sales. “Many of these products are part of the infrastructure needed for the explosion in the telecom business that we see today. It also allowed us to compete and be awarded various military contracts that utilized our existing equipment.”

Resources at FabCorp are also used to fabricate metal components for yet another company under the Hohman Associates umbrella: Hammonds Companies, which was a FabCorp customer until 10 years ago, when Hohman purchased the company. The firm makes fuel-additive injection systems for the aviation and marine markets, essentially injecting additives into commercial aviation and marine fuel so it can be used in military and commercial vehicles.

“We’re the preferred supplier for all the NATO air forces worldwide, including our own,” Hohman said.

About Visibility

Like its sister companies, FabCorp has unique inventory requirements, and having Source Metals as a sister company certainly helps. If FabCorp wins a bid on a large project requiring unusual material, there’s a good chance Source Metals has the right material and can deliver cut blanks in short order.

FabCorp itself doesn’t have a warehouse or even a central location for all raw stock. Instead, it stocks all material at the point of use, with carefully controlled raw work-in-process inventory buffers throughout the plant.

“The whole plant is basically a warehouse,” Hohman explained, “because why would I need a central warehouse when I can track material locations, any location, anywhere in the facility?”

Such inventory tracking becomes possible with enterprise resource planning—in FabCorp’s case, an ERP package from Global Shop Solutions. Hohman has used the software since 1994, and today it serves as a common backbone that runs across all sister companies.

Predicting material demand has been key, as Jim Morris, FabCorp’s vice president of operations, who has worked with the software directly for decades, explained. “If you have the next six months of work orders that you know about in the system, that tells our purchasing area how much steel to buy, or what different kinds of steel or aluminum we might need. This allows us to be more efficient and to get better pricing in finding the right amount of steel and get it to the work center precisely when we need it. In short, we don’t want inventory just sitting on the floor or on the shelf, and we never want to run out of material.”

Besides inventory management, FabCorp uses Global Shop Solutions’ advanced planning and scheduling (APS) module that allows the company to consider both machine and people capacity. As anyone who has scheduled a job shop knows, capacity hinges both on having available machines and available people qualified to run them. Even the most automated machines need someone to manage them in some way.

Some manufacturing steps don’t have a static maximum capacity, especially if it’s a manual process. A machine has only so much capacity over 24 hours. But if a large weldment needs to be completed in a hurry, the schedule dedicates more welders to the project.

As FabCorp General Manager Brett Rush explained, “We have a master schedule that serves as the plan. And then every department has someone that does the scheduling on each machine and work area.”

The ERP software shows everyone current and future loads. “We can schedule accurately, because we have the ability to see our current loads and what those loads will be two to three weeks into the future.

“And that load might not necessarily be in machines,” Rush explained. “It could be an individual, or it could be a department, like in welding, where we group welders depending on their qualifications.”

The company groups its welders into three categories: C level is entry-level, B is midlevel, and A represents the company’s most experienced. The company’s A welders can do B- or C-level work, but C welders can only do C-level work. Under this system, the software measures load levels so that shop leaders can plan.

Visibility Scales the Complex

Growth can get the best of many entrepreneurs in this business. A shop founder has an idea, launches a side business or product line, tackles another process, offers another service, and the number of moving parts quickly grows out of control.

Walk FabCorp’s floor and you’ll see employees clocking in and out of jobs, scanning material when it arrives and when it departs. The tracking helps software predict upcoming capacity and inventory needs and helps managers build the right inventory buffer and ensure the right employees and machines are available at the right time. It also helps speed estimating and developing time standards, drawing from a historical database of identical or similar jobs.

Careful tracking doesn’t mean micromanagement. Different variables are at play, depending on the application and business: Hippo’s inventory requirements and job flow stand in stark contrast to FabCorp’s; work center loading at Source Metals is much different from that at its two sister companies.

Each business, as Hohman puts it, “has different personalities. They have different needs. You can’t try to shove a square peg into a round hole. You just need to look at what every business needs and design a system to suit.”