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The FABRICATOR’s 2022 FAB 40: Delivering resilience to metal manufacturing

Top metal fabrication companies respond to booming demand in unprecedented times

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 13,000 subscribers. Companies were asked to provide their 2021 revenue as well as their number of locations and employees. 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. For information about participating in the FAB 40, contact Tim Heston at timh@thefabricator.com.

MEC, the Mayville, Wis.-based contract fabricator that’s been No. 1 on The FABRICATOR’s FAB 40 for the past dozen years, had an eventful year. In the fourth quarter, reacting to a rapid change in demand, MEC moved quickly, redeployed assets, and adapted.

Earlier, to meet the demands of a major fitness equipment client, MEC had opened a plant in Hazel Park, Mich., and filled it with some of the latest equipment. Then, in late 2021, the situation changed.

“Our fitness customer informed us it does not forecast any demand for any products or parts that are subject to our agreement for the remainder of the agreement … so we took steps to reduce operating costs and redeploy capital where appropriate.”

So said MEC Chairman, CEO, and President Bob Kamphuis during the company’s quarterly earnings call in early May. He added that the company sold some machines, redeployed others, and is now building up sheet metal capacity at the Hazel Park plant near Detroit. Even with this curveball, MEC ended 2021 with $454 million in sales, surpassing 2020 revenue by more than $100 million.

“Overall, the new business pipeline remains strong,” Kamphuis told investors, “with numerous projects being actively pursued.”

“We also really like the work force in the area,” Kamphuis said in a separate interview with The FABRICATOR. “We feel there are good opportunities in the [Detroit] metro area to find the skills we need. Our blue-chip customers are continuing to look for more, and we’re going to be able to give them more state-of-the-art capacity.”

Instead of shuttering its new Hazel Park plant, MEC repurposed it. It sold some machines and retooled or redeployed others. But overall, the fabricator added to its “universal capital,” as COO Rand Stille explained. “I want to have capital that’s universal, so that if one plant is screaming hot with demand and another is a little quieter, that [available capacity from universal capital] gives us a pressure relief valve. That’s the advantage of being big, of having multiple customers, multiple part numbers, and universal capital.”

Mastery of Cash Management

Managing all this at scale shows resiliency, a quality those in the FAB 40 share. Fabricators now are navigating a time of unprecedented, albeit inconsistent, demand. Customers forecast a certain amount, but then hold back until they can get all the parts they need. Then it’s off to the races as they demand parts from their metal fabrication suppliers—now.

Contract metal fabrication is a business that rewards mastery of cash management. Successful fabricators today need good cash flow to navigate this inflationary environment, particularly when it comes to the cost of materials, work-in-process (WIP), and finished goods. WIP is on the rise as some shops resort to finishing jobs to a certain point; then, when supply chain constraint releases and components arrive, they’re ready to finish the jobs.

Automation technology for metal fabrication

A robot in a small-part forming cell at MEC grasps and orients a blank for a bending sequence. MEC

“We’ve made the decision [regarding inventory] that it’s OK to buy a little more,” said Greg Frye, chief operating officer at Anchor Fabrication, Fort Worth, Texas. “Shipping zero percent of zero equals zero. I would rather lose a few [inventory] turns and build some stock to make sure we have material.”

Some large fabricators with finished-good stocking programs are navigating through highly variable demand. Overall demand remains consistent, but the timing of that demand is anything but. Some periods, customers take less than expected, many others are delaying their orders, and still others are ramping up demand now as they build up their own inventories, so they themselves can deliver.

“Or team has really worked on the right algorithm to determine what we should build based on what has happened historically, and really delving deep to gain an understanding of customer demand,” said Jared Lotzer, vice president of sales and quality at BTD, Detroit Lakes, Minn. “We’ve used that to modify our planning system based on customer take rates,” or the rate at which customers draw from BTD’s finished goods inventory.

The metal manufacturing economy in 2022 is a highway of stop-and-go traffic. The traffic (demand) is there, but too many are taking a trip at the same time. So, fender benders happen (delays in microchips and other components), which have people tapping the brakes for miles.

People with the right information (market intelligence) navigate off the crowded highway and find new paths for growth (reshoring, new part programs launched domestically). To get off the highway, though, fabricators need to differentiate themselves. They need technology and operational excellence that maximizes throughput. Healthy cash positions give fabricators buffers against uncertainty. That means the operation can hold more inventory and still have the financial resources to reinvest in the business.

Managing Volatility

Custom fabricators, never strangers to volatility, have spent the past two years refining how they manage it. Aside from specialty items, material availability isn’t the issue it was in 2021, but material price volatility persists. They’re also managing high demand made volatile from the fact that OEMs can’t get other parts they need from other suppliers to begin assembly, everything from microchips to highly engineered hydraulics.

“Some customers are starting to back off their 2022 forecasts, not because of our ability to provide fabricated metal, but because of shortages of other parts that might be coming from Asia and elsewhere,” said Brian Greenplate, president and CEO of Precision Cut Industries, Hanover, Pa. “We just try to communicate as comprehensively as we can. We understand things change, and we value our long-term partnerships with our customers. We’re also fortunate to be highly diversified. What’s happening in one market segment might not be happening in another market segment.”

In recent months, leaders at Anchor Fabrication installed a new enterprise resource planning (ERP) system customized to give broad as well as workcenter-level visibility across various plants. This, combined with disciplined capacity analysis and meeting regularly to perform sales and operational planning, has allowed the company to make the best use of its capacity and, if necessary, stop on a dime and adjust.

The system illustrates the unique nature of contract metal fabrication. Anchor is among the largest operations in the country, but even at its size, the lion’s share of company revenue comes from product produced by universal capital—lasers, brakes, and other flexible machines that can produce nearly any fabricated product.

The headwater of workflow occurs in nesting. Here, using a proprietary system that feeds information to its nesting software, Anchor looks across hundreds of jobs. “We created an algorithm in-house that gives us the capability to maximize material utilization and, say, look at 700 jobs into the future and find those with identical material, and we can nest those parts immediately at a touch of a button.”

Automated robotic welding

At Dallas-based Anchor Fabrication, a robot welds a large workpiece. Anchor Fabrication

Such intelligent, dynamic planning has become more critical than ever, and not just because of rising material prices. Utilization is only half the story. The other half involves dynamic flow of work through the fabrication plant and the ability to adjust quickly as demands change.

How work is released and sequenced really matters, especially in custom and contract metal fabrication, and this is where software has quietly stepped to the fore. Algorithms might not be as flashy as an arc welding robot, but they’ve had a tremendous impact in the modern fab shop.

Direct labor remains a challenge, of course. “We’re expecting tremendous growth over the next two years,” Frye said. “At a recent board meeting, I was asked what resources do we need to accommodate that growth. I said, ‘Well, it has two legs and two arms!’”

Fabricators now are offering signing bonuses and significant pay increases for those who achieve a certain level of training. The idea is to retain new hires long enough to capture hearts and minds, so they appreciate the shop culture and choose to stay—not leave for a few cents more an hour.

Part of the labor equation will be how employees interact with software and, in turn, how software supports employees. Those from outside the industry might be surprised to see the amount of manual labor even at the country’s largest fabricators. Parts from a laser might be transported by a conveyor, but someone still has to grasp and stack those parts. Some jobs still require manual forming and welding, and automating assembly remains impractical for most.

Sequencing those jobs, though, has become a science, managed not by hunches and assumptions but through detailed analysis and software algorithms. Working in concert with modern machinery, these algorithms have helped fab shops push throughput skyward.

Opportunity on the Horizon

As the FAB 40 went to press in mid-May, stock market investors were on edge. Would the Fed’s rate hike lead to a recession? Are we on the precipice of a wage-and-price inflation spiral? Many in the FAB 40, however, reported that they weren’t quite so worried. Yes, they thought the overall economy was far from ideal. They still needed more skilled people, and they wouldn’t mind having a bit more supply chain transparency. They also know that skyrocketing demand can’t go on forever.

Regardless, optimism outweighed worry. Reshoring opportunities continue, as does the focus on building more reliable supply chains. Most important, the contract metal fabrication business model is proving its resiliency. Fabricators serve diverse customers in diverse markets. And they do it while performing a balancing act, shortening that raw-stock-to-ship cycle while keeping enough material to ensure delivery and protect their customers’ brands. Those who can master the balancing act prove their resiliency, putting them in a good place for 2023 and beyond.

Man working a machine in a metal fabrication shop.

At Mayville, Wis.-based MEC, an operator reviews a nest of parts ready for laser cutting. MEC

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.