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2020 FAB 40: Metal fabricators show resiliency in crisis

Top shops adapt to a new reality in manufacturing industry, economy during pandemic

Abstract image of metal fabrication

The 2020 FAB 40 shows how the industry’s top metal fabricators entered the crisis, extremely healthy after years of record growth. Now they’re planning for the eventual recovery. Getty Images

Published every June, The FABRICATOR's FAB 40 is a list of the top custom and contract metal fabricators in the U.S. For more information and to view this year's complete list of participants, click here.

The 2020 FAB 40 stands apart from previous years, for obvious reasons. Glance at the list and you see a statistical slice of custom and contract metal fabrication as it was at the beginning of 2020—a very different time. That said, seeing how fabricators entered the crisis gives an idea of how they will emerge. Current events may well prove just how resilient metal fabrication really is.

Over just a few weeks in late March and early April, some FAB 40 participants experienced significant declines in capacity utilization and customer demand. Some even experienced historic one-two punches, one from COVID-19 and another from a decline in the oil and gas sector. Order forecasts changed daily, even hourly, and America’s top fabricators adapted. Fortunately, such adaptation is baked into the very business model of custom and contract metal fabrication.

Fundamentally Sound

Throughout the general business media in April, economic observers described the crisis with one clear implication: This recession is different, and not just in the obvious ways. Commercial aviation, automotive, cruise ships, hotels, the oil industry, retail—has the nature of these and other businesses changed in fundamental ways?

But go back a few links on the supply chain to custom metal fabrication, and the picture isn’t quite as stark. Thanks to organic growth and a healthy dose of acquisitions in recent years—there are more $100 million-plus FAB 40 participants than ever—many of the largest fabricators, all deemed essential businesses, have built ever-more-diverse customer bases. On the shop floor, automation has made social distancing somewhat natural. While break rooms need to be rearranged or closed, and workers in areas like assembly and grinding need to spread apart, most find it easy to do their jobs at a physical distance.

Of course, many shops still are feeling the pain. Some reported dramatic reductions in capacity utilization and new orders—down 50%, 60%, and even more. Such reductions make the Great Recession look like child’s play. Many smaller fabricators haven’t hesitated to apply for forgivable loans under the government’s Paycheck Protection Program.

Thing is, not every operation experienced such dramatic downturns. Yes, business conditions are bad in oil and gas, automotive, lawn and garden, and plenty of other sectors, but not all. Defense fabrication, for example, continues at precrisis levels. Fabricators support home-delivery infrastructure, serving logistics and warehousing. And plenty are helping to support the COVID-19 response directly, fabricating ventilator parts, hospital beds, test tube racks, and more. Then there’s utility and infrastructure work. Consider all the fabrication that goes into supporting warehouses and the server-farm facilities that support the cloud.

The metal fabrication business isn’t homogenous, another plus during these tumultuous times. Some large industrial and structural fabricators are completing huge projects that started well before the crisis. These massive projects take a lot of material and outside services (that is, pass-through revenue), which makes for very high sales-per-employee ratios—hence the stark difference in the sales-per-employee metric on the FAB 40 list. Those differences make comparisons difficult, but they also reveal how wide-ranging the fabrication business is.

Well-run metal fabricators also tend to have strong balance sheets with healthy cash flows, especially in quick-turn businesses. As customers have demanded shorter lead times, the quote-to-cash cycle gets shorter as well, which is a good situation for a fabricator building a bunker of liquidity to weather a storm.

A Diverse Business

A fabricator’s performance depends on its customer mix, of course. That has always been the case, but this year it rings especially true. Some fabricators expect to end 2020 in recovery mode, with revenue equal to or even a little ahead of 2019 numbers. Others with a foothold in strong-performing supply chains expect even more robust growth.

FAB 40 metal fabrication companies

The FABRICATOR's 2020 FAB 40.

No doubt, April was brutal for many. But by early May some of the largest operations were experiencing increased quoting activity. Still, COVID-19 (including the varied government responses to it) is in the driver’s seat. Revenue projections now are a moving target, even more so than they usually are, which is why you will not find them listed on the 2020 FAB 40.

Even so, the long-term outlook remains bright, with positive projections for 2021 and beyond. COVID-19 might fundamentally change certain areas of the U.S. economy, but the contract metal fabrication business—ever diverse and agile—probably won’t be one of them.

Editor's Note: The FAB 40 list is prepared with the help of metal fabricators willing to share their revenue numbers and company information with The FABRICATOR and its readership. Emails were sent to almost 7,000 subscribers within the fabricated metal products sector. Companies were asked to provide their 2019 revenue as well as their number of locations and employees. Those companies that choose to submit information are then ranked according to their 2019 reported annual revenue. This list is created as a reference for the metal fabricating market. It is not intended to act as an official benchmark for the industry because participation is limited and independent verification of reported revenue from private companies is not possible.

About the Author
The Fabricator

Tim Heston

Senior Editor

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.