By Tim Heston
It’s been quite a run. Over the past four years many FAB 40 companies have reported big rev- enue gains. In 2015, not so much, at least on average.
Sales at some big companies either held steady or
declined somewhat, mainly thanks to weak markets
that by now every fabricator knows about: oil and
gas, mining, heavy construction, and agriculture
equipment. Other players, particularly those tied
to strong markets like transportation, saw dramatic
Overall, the numbers don’t show an industry in
crisis, but they do show a chessboard with a lot of
pieces on the move. Those who have enough pieces
in the right places are doing just fine.
A Sanity Check
The FABRICATOR’s annual FAB 40 list provides a
snapshot of the current state of metal fabrication in
the U.S. By collecting this information, we hope to
give metal fabricators an idea of how some of the
leading shops performed financially last year, and
what they are forecasting for the current year.
This list has become a window that shows what’s
happening in metal fabrication on the ground level—and there aren’t many windows, considering
almost all of custom metal fabrication occurs at private companies.
For sure, the revenue and employment totals for
the FAB 40 are in effect statistical samples. Revenue
from year to year isn’t entirely an apples-to-apples
comparison, considering participation in the FAB 40
But the comparisons do provide a sanity check of
sorts. We hear about the struggles in oil and gas. We
hear about how agriculture and construction OEMs
have bleak outlooks for the next few years. We hear
about how automotive may well have reached its
peak. And we hear about those sluggish exports and
the strong dollar.
But the FAB 40 tells another story, which is not
altogether positive or negative, just different. Total
combined revenue numbers for all FAB 40 companies are up ever so slightly: $2.16 billion reported for
2015, compared with $2.15 billion reported for 2014.
At the same time, total employment is up 5 percent.
Moreover, there isn’t a direct correlation between
revenue and employment trends. For instance, if
you take the top three companies that participated
in the FAB 40 both this year and last, you’ll find that
revenue declined by almost 5 percent, yet combined
head counts at those three companies increased by
almost 7 percent.
Despite softening revenue at some of the biggest
fabricators, head counts suggest that many are preparing for significant growth over the long term. The
majority of companies project revenue to increase
this year, some by only slight amounts while others by double digits. Still, the optimism is tempered
somewhat by a handful of large fabricators predicting slightly or significantly less revenue for 2016.
Positioned for the Future
The relative steadiness of FAB 40 revenue numbers
shows just how well positioned many top fabricators are for the future. Consider Mayville Engineering Co. (MEC), No. 1 on the FAB 40 for the past five
years. Interestingly, if MEC had not made the bold
move in 2012 to buy Michigan-based Center Manufacturing, itself a large fabricator, MEC may well be
in a far different place today, especially considering
its large agricultural equipment customer base.
The acquisition diversified MEC into transportation markets. This in turn spurred more sales in the
heavy equipment and recreation sectors. Customers figured the fabricator was big and diversified
enough to withstand any downturn, so they felt
confident in giving MEC more business.
In 2014 MEC reported revenues of $335 million;
in 2015, sales declined to $305 million—a dent for
sure, but not disastrous. Still, despite the decline in
2015, MEC said its revenue has increased on average by 19 percent annually over the past 10 years.
That’s not bad.
The Strategizing Continues
So how are things shaping up for 2016? “This year
started flatter than we had anticipated. But we
gained good traction, and we’re building back up.”
So said Steve Hartliep, sales and marketing man-
ager for De Pere, Wis.-based Robinson Metal. The
fabricator has business in a broad range of sectors,
making it somewhat of a bellwether enterprise.
Hartliep said that its pipe and vessel division took a
hit thanks to weakness in oil and gas. He added that
he sees a lot of shops that once were heavy in oil
and gas now chasing work in other industries, “so
we’re seeing a lot of pricing pressure right now.”
To compete, Hartliep said that Robinson is tack-
ling new niches by acquiring less common fabricat-
ing technology. What that technology is he didn’t
say, for competitive reasons, but he did say that the
move should help the fabricator increase its pres-
ence in markets that other shops really can’t touch.
That’s one of many moves fabricators are making
this year as the competitive board changes. Those
moves haven’t made things easy, especially considering the size of the overall market. If you go by the FAB
40’s total revenue numbers, the total market hasn’t
increased any significant amount between 2014 and
2015. Big growth in some areas (automotive, transportation) are being canceled out by well-known
weaknesses in other areas. Essentially, it’s a wash.
Regardless, the strong fabricators aren’t going
anywhere. They’re now just making a lot of strategic moves to tackle strong markets and positioning
themselves for the rebound in weaker sectors.
This isn’t a commodity business, though it may
seem like one to some. Two fabricators may both
use laser cutting machines, press brakes, hardware
insertion, powder coating, and welding. They may
even service similar customers, and yet their financials can be very different. Some of the strategies
covered on the following pages explain how this
Overall, this year’s FAB 40 doesn’t show an industry experiencing record growth. But at the very least,
it may hint at just how much opportunity there is to
uncover during the years ahead.
Senior Editor Tim Heston can be reached at timh@
DELIVERING THE FAB 40
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 about 1,200 subscribers within the fabricated metal products sector.
Companies were asked to provide their 2015 revenue,
2016 projected revenue, as well as their number of
locations and employees. Those companies that
choose to submit information are then ranked according to their 2015 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. If
your company is interested in being contacted for
next year’s FAB 40 mailing, or if you have comments,
please contact Dan Davis at email@example.com.