Economic outlook from those
at the show: It’s complicated
For business leaders who attended FABTECH in November, the economy in 2015
and 2016 will surely prove how valuable having the right information at the right
time really is.
“We’re experiencing some slowdown in some areas and more business in other
areas,” said Cody Cuhel, marketing manager at Winsted, Minn.-based Millerbernd, a
heavy fabricator that exhibited at the show. “We’ve made some adjustments this year.
And for 2016, we’re expecting business to remain flat or be a little bit up [from 2015].”
You might think this would be a typical report from fabricators, considering the
broader economic indices. The Institute for Supply Management’s PMI, which in
late 2015 fell below 50, into contraction territory, is just one example.
But the story is a little more complicated. South Bend, Ind.-based General Sheet
Metal Works, for instance, has benefited from a significant amount of work from the
solar industry for mounting and tracking systems. “2015 was an absolute record,
and 2016 will be even bigger,” said John Axelberg, company president. “There’s an
investment tax credit that drops from 30 percent to 10 percent at the end of 2016.
The future will depend on Congress and the presidential election, but we anticipate
a big dropoff in 2017.”
Rockford, Ill.-based Superior Joining Technologies (SJT), a specialty welding and
fabrication operation that exhibited at the show, also reported record earnings.
“September  was one of our biggest months, and [in 2016] we’re relocating
into a building that’s five times bigger than what we have now,” said Teresa Beach-
Shelow, one of SJT’s owners. “Keep in mind that our customer mix is 85 percent
aerospace, and aerospace is doing very well.”
As these and other fabricators report, the health and level of business depend
greatly on not just what industries the shop serves, but what components and prod-
ucts the shop fabricates for that industry. It really is about being in the right niche.
For instance, Spec Fab is a custom fabricator based in Honey Brook, Pa., just
a few towns over from where agriculture equipment-maker New Holland has its
roots. You might think Spec Fab would be having a rough year, considering who its
major customer is.
“The demand for huge machinery, like harvesters and combines, is way down.
But the demand for [the smaller machines like] hay tools, including balers, is up,
and that’s what the New Holland plant [in Pennsylvania] makes.”
So said attendee John Reed, Spec Fab’s shop manager, who added that the cus-
tom fabricator expects double-digit growth next year, despite the broader state of
the agriculture machinery segment.
The subtleties of the economy have confounded industry observers, including
economists themselves. “Every single thing that happened [in 2015] took economists by surprise,” said Chris Kuehl. The economic analyst for the Fabricators &
Manufacturers Association spoke at the organization’s annual economic forecast
breakfast at the show.
China is not the China of just a few years ago. Leaders of the second-largest econ-
omy want to make the country’s currency, the RMB (yuan renminbi), a currency
of global trade. Earlier this year China let the RMB fall in value, which sent jitters
through global markets. “But China was just reacting to the [International Mone-
tary Fund] saying it needs to let the currency float,” Kuehl said. “Will China keep its
currency lower? In the past, the answer would be yes. But not now.”
On top of this, Kuehl added that “we’re entering a whole new era of oil.” Unlike
the 1970s when OPEC reigned supreme, no one entity has dominant control over
the price of oil, and the U.S. has become a major oil and gas producer. The Middle
East and Russia (the latter of which needs to sell its oil and gas at any price) keep
pumping. Sure, the Keystone Pipeline was scuttled, but the argument over that
pipeline was overshadowed by the fact that the supply of fuel now seems to be
“Years ago we talked about peak oil,” Kuehl said. “Now we’re talking about peak
demand.” Energy consumption is down in the U.S., Asia, and especially Europe, and
“industry is also using less energy.”
The push toward using less fuel seems to be a long-term trend. Regardless of the
short-term price of fuel, using less of it may just make business sense.
institutes systems in which certain information spurs action; in other words, im-
provement becomes automatic.
He added, however, that many small companies never move beyond the
second phase, or as Vragel described it, “the phase in which we’ve done this
enough to know we achieve most of what’s expected most of the time.”
This is understandable, in one sense, considering the gumption it takes to
launch a business in the first place. Small-business owners like to be flexible, yet
at some point the business becomes too large or complex to manage without
clearly defined processes and procedures.
Considering all this, it’s no surprise NASCAR® legend Rusty Wallace was a hit
keynote speaker at the show (Figure 4). Auto racing has it all. It’s fast-paced
and has a history of people going by their gut to make things happen, not unlike the owner of small job shops. Yet all the frenetic activity has a backbone of
some solid and often incredibly advanced engineering that must abide by physical and regulatory constraints: this part needs to be of such and such material,
and so on. NASCAR has a lot of rules.
Racing teams need to move so quickly that basic processes must be mapped
out and documented, ready so that anyone can react on a moment’s notice.
That’s not unlike the process development and documentation that occur at a
growing custom fab shop.
It’s also no surprise that Bob Markley got his start in racing too. Markley owns
Indianapolis-based 3rd Dimension ( www.print3d4u.com), a firm that specializes in industrial 3-D printing. His company exhibited in FABTECH’s additive
manufacturing area near the show entrance, alongside other companies in this
new but growing manufacturing arena.
This included Cincinnati Incorporated’s BAAM, or big area additive manufacturing, system, which spent its time at the show printing chairs, tables, and other
large objects. Earlier the system also printed a Shelby Cobra racecar and a kayak,
both displayed on the convention center’s main concourse (see Figure 5).
While the BAAM system prints using a carbon fiber-reinforced polymer, 3rd
Dimension specializes in an even narrower niche: industrial metal printing (see
Figure 6). While attending Purdue Polytech, Markley worked on racing teams,
including an Indy car team. After a stint at Rolls-Royce and GM, he had a hankering to get back to a faster pace of working but, now with a young family, without
so much time on the road.
“I heard something about 3-D printing, probably on NPR, and I said, ‘Let’s take
a look at it to see if this has any legs,’” Markley said. “It was one of my hare-
brained ideas that actually worked.”
The pace of innovation in 3-D printing is not unlike the engineering wizardry
performed by modern racing teams or, for that matter, the mechanical magic of
the machines on display at McCormick Place.
Regardless, having the right information at the right time—be it a collaborative design effort on a 3-D printed part or a last-minute schedule change at a
custom fabricator—ultimately helps win the race.
FABTECH is sponsored by the Fabricators & Manufacturers Association International ( www.fma
net.org), the American Welding Society ( www.aws.org), the Precision Metalforming Association
( www.pma.org), SME ( www.sme.org), and the Chemical Coaters Association International (www.
ccaiweb.com). For more information on FABTECH, visit www.fabtechexpo.com.
Our fabrication division has 25 employees, and two years ago
we had just 12. And we’re still planning for growth. But growth
comes with its own challenges. We’re looking for ways to streamline the front office. We might fabricate one piece, then fabricate
a large order for 600,000. So how do you find a system that can
handle one part—especially when it costs more to do the paperwork for it than it does to do the entire job?
—John Reed, Spec Fab, Honey Brook, Pa.