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Sheet metal fabricator develops full-fledged diversification strategy

Southern Stainless in Virginia expands market reach with tube laser machine

 tube laser machine for cutting and drilling

To diversify from the commercial kitchen market, Southern Stainless of Waynesboro, Va., recently complemented its sheet metal fabrication capabilities with a tube laser machine for cutting and drilling. Image provided

Every business owner understands the need to diversify. Many manufacturing shops originated as small moonlighting enterprises, making just a few parts for a single customer, and building a thriving business from such a small foundation certainly can be a matter of pride. However, continuing to rely too heavily on a single customer or a single industry is not part of a sound business plan.

Larry Rouse knows a thing or two about diversifying a business. He actually runs three businesses under one roof, a trio of companies that share space, expertise, and processes. In a nutshell, he runs one high-volume, low-mix manufacturing shop; one low-volume, high-mix fabrication shop; and a powder coating company that supports the other two. Located in Waynesboro, Va., the companies are Global Innovative Defense Inc., Southern Stainless, and Powder Coating Solutions.

While it sounds like he runs a diversified trio of businesses, Rouse isn’t content with the status quo. As a successful business owner, he pays more than just lip service to the concept of diversification. A recent investment shows that he doesn’t just talk the talk—he walks the walk.

Sharing a History, Sharing Resources

Two of the companies in Rouses’ portfolio, Global Innovative Defense Inc. and Powder Coating Solutions, were the products of organic growth. The parent company, Southern Stainless, would buy a machine or develop a process for a single customer and before long, word would get around among his customers. In these two cases Rouse created new companies to focus on those specific capabilities.

The Parent. The bread and butter of the company is Southern Stainless, which manufactures equipment for commercial food service applications—work tables, sinks, and conveyors for dishwashers—but it’s much more than that. Although chain restaurants might have standardized layouts, the number of variations of kitchen sizes and configurations in the commercial food industry as a whole is limitless. The sizes and heights of work tables, dimensions of food storage stations, configurations of dishwasher conveyors, layouts for sinks, and arrangements of equipment stands are endless, providing a continuous need for design and layout work. And that’s just in the back of the house.

For the front of the house, the customer area, the company makes serving stations, serving lines, salad bars, beverage stations, and condiment stations. Here again the configurations and layouts are infinite, which means the company’s work is an extreme example of high mix, low volume.

The Offspring. One of the original company’s children, Global Innovative Defense, operates more as a manufacturer than a fabricator. Its equipment is dedicated to high-volume, low-mix work, making tubular components. The company uses equipment built in-house for cutting, swaging, and a few other forming processes—machines initially developed for making the legs and other tubular components for the parent company.

“One of the main lines of Global Innovative Defense is a metal frame used for shelters,” Rouse said. The company supplies the frames to a supplier that delivers complete canvas shelters to the government, mainly for military use. It sounds like a basic operation to make basic components, but it’s more sophisticated than it sounds.

“Some pretty slick engineering goes into those frames,” Rouse said.

The other child, Powder Coating Solutions, offers a substantial depth and breadth in powder coating options—more than 6,000 formulas—so customers get quite an extensive choice in colors and characteristics. Stainless steel products don’t need powder coating for corrosion prevention, but some customers request colors, so Powder Coating Solutions is ready to oblige. Because most in the metals industry probably don’t associate powder coating with stainless steel, creating a new company with a descriptive name calls attention to the services it provides, creating a separate and distinct market space.

The company has a 200-ft. conveyor line, a 10- by 24-ft. powder coating oven, and a 10- by 24-ft. blast room. It’s accustomed to handling long and large items, such as railings and frame members for cars and trucks, and it powder-coats many parts that aren’t so large, like motorcycle components and various industrial products.

Manufacturing Support. The company isn’t big, but it is capable. Three sales and design engineers and a staff of fabricators handle the layout work, laser cutting, bending, and welding. Until 2019 the company had one sheet metal laser machine feeding four press brakes that sent that work along to a fleet of 20 welding machines.

Before the company purchased its first sheet metal laser machine in 2009, the staff did the layout work by hand. The precision was adequate, but the company looked for better dimensional control and invested in its first laser machine, a TRUMPF TruCoax 1030, a machine with a CO2 resonator that delivers 2.5 kW. Converting from manual processes to the automated layout and cutting afforded by a laser machine reduced the time needed for layout and in many cases made assembly much easier. When dimensional control is better, the fit-up is better, making the welding process easier.

Rounding Out the Equipment Portfolio

Rouse avoids the word “no.” When customers request something, Rouse does what he can to accommodate those requests. It isn’t necessarily simple or inexpensive, but dedicating the time to research new opportunities, considering equipment purchases and training, setting aside some floor space, rethinking production schedules, and developing a plan to integrate the new with the old are some of the many aspects that go into diversifying a business. He did this in a big way recently, which culminated in quite few equipment purchases in 2019.

“We spent about $2.3 million in capital expenditure investments in 2019,” Rouse said.

“One of our customers needed quite a few machined parts, and until recently we had to outsource that work,” said Travis Crowe, one of the sales and design engineers. It was the same story as always—Rouse’s companies had little control over lead times for outsourced work—so the executive team developed a plan to invest in machining capability to bring the work in-house. Rouse discovered the other same story as always: The demand for the new service was a fair bit greater than he had anticipated.

Waynesboro has a substantial amount of manufacturing, but it’s not a manufacturing hub. It’s too far south to capitalize on the automotive and other manufacturing work in the so-called Rust Belt, and too far west of the Atlantic seaboard to capitalize on shipyard work, so it’s not a hotbed of manufacturing activity. The OEMs in the area aren’t supported by a robust network of fabricators and machine shops, so Rouse took a small risk when he made his first machining investment. Would that single customer really justify the purchase? It turned out that the local demand was substantial and it didn’t take long to log enough orders to fill the machine’s productive capacity.

“There’s a lot of demand for machining in Waynesboro,” Rouse said.

Its initial plan to support a single customer turned into a fleet of machines in response to the local demand, which includes four mills and lathe.

The original laser machine was right on the money for the company’s applications, so in 2019 it purchased another 1030 model from TRUMPF, this time a TruDisk 4001. Much of the new machine is the same as the original, but the new one uses the company’s proprietary solid-state disk technology and offers 4 kW of cutting power. While CO2 machines were the workhorses of the industry for decades and still are quite capable, solid-state machines offer big improvements in areas such as cutting speed and energy efficiency.

Diversifying Ahead of the Market and Ahead of the Pack

Until recently, many of the investments at Southern Stainless have been in response to market demands. Customers needed some tube fabricating capability or powder coating, and the company added those and spun them off. Machining and turning helped it capture some new work, and its two sheet metal lasers helped it solidify its position in its existing markets.

Purchasing a new machine once in a while keeps a company moving forward with technology, but a full-fledged strategy is necessary to stay ahead of the pack. Rouse knew that to diversify further, he’d need something completely different from the equipment he had purchased in the past—an entirely new service to help break into new markets.

“Right now, the company is heavily tied to the commercial food service industry,” Rouse said. No sin there—it’s common for small manufacturing firms to have quite a bit of their resources dedicated to a single industry, or even a single customer. The only misstep would be to continue on a familiar path, and Rouse has no intention of doing that.

In the past, opportunities came from customers to Rouse. In 2019 he changed direction altogether, looking for opportunities to bring to his customers. That opportunity is tube fabrication. An investment in a TRUMPF TruLaser Tube 7000 fiber tube cutting laser demonstrates his commitment to expanding the company’s footprint in both its industrial and geographical markets.

On the infeed side, the machine handles materials up to 21 ft. long, while the outfeed area can unload workpieces up to 20 ft. long. It accepts round products up to 10 in. dia. Among squares and rectangles, it accommodates materials with sides up to 8-5/8 in. and fitting within the 10-in.-dia. envelope. Powered by a 4-kW solid-state laser, it can cut through wall thicknesses up to 0.4 in.

A large hopper with an automatic feeder on one side of the machine enables unmanned production, while a manual loader on the other side allows an operator to interrupt a large job to run a small, urgent order without unloading the hopper.

The laser’s capability goes beyond tube. It can cut a variety of shapes, such as D, channel, and many complicated and asymmetric profiles. Its profile detection system allows automatic loading and shape detection. A camera system measures the dimensions and determines the amount of camber, twist, and other irregularities so that when the laser is cutting, the head maintains the proper standoff distance. A varying standoff distance would cause the cut characteristics to vary, and of course it risks a crash. The machine is also equipped with SeamLine Tube, which finds weld seams or markings so the tube can be aligned in the machine appropriately. The machine goes beyond cutting, incorporating drilling, tapping, and friction drilling, also known as the Flowdrill process.

The new laser has a small role in the company’s current products. Most of the company’s work is in sheet metal, so the tube laser’s main contribution is fabricating components for Global Innovative Defense and making frames for food packages.

A food package frame isn’t a complex item, but cutting the raw material on a laser does simplify things, illustrating some of the burden that a laser alleviates. Rather than cutting four lengths of square tubing, fixturing them, and welding them together to make a frame, the process now uses a single length of tube with V-shaped notches. The welder has a much easier time preparing the frame and welding this material, fixturing is faster and easier, and the V notches ensure that each frame is straight and true.

The company’s in-house laser work is just a tiny percentage of the laser’s productive capacity, so this essentially was a well-researched but speculative investment. Rouse estimates that, like machining, the demand for tube laser cutting services is an untapped market in Waynesboro and well beyond the immediate area.

“We don’t know of any tube lasers in fabrication shops anywhere near here,” Crowe said. The company’s executive team is aware of a fabricator with a tube laser in northern Pennsylvania and another in North Carolina. If this is accurate, Rouse stands to capture quite a bit of the tube laser work within a 300-mile radius around Waynesboro, and perhaps further.

“A few OEMs in this region might have tube lasers for their own use, but that’s about it,” Crowe said.

A business owner like Rouse who simultaneously focuses on current sales, researches new markets, and reinvests in the company strategically is on a path to get ahead, and stay ahead, of the competition.

Southern Stainless, www.southernstainless.net

On the eastern seaboard, TRUMPF is represented by Mid Atlantic Machinery (midatlanticmachinery.com) and Southern States Machinery (southernstatesmachinery.com).

About the Author
FMA Communications Inc.

Eric Lundin

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Elgin, IL 60123

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Eric Lundin worked on The Tube & Pipe Journal from 2000 to 2022.