By Tim Heston
A;er a less-than-stellar 2016, the custom etal fabrication industry this year seems to be breathing a collective sigh, doubling
down, and preparing for significant growth. That in
a nutshell is what this year’s FAB 40 tells us.
Some big markets last year—including oil and
gas, transportation, and various heavy equipment
sectors—had seen better days. But according to
many in the FAB 40, some of these markets have
likely bottomed out and are on the rebound. (This
doesn’t include the automotive sector, which has
been so;ening for some fabricators.)
Since 2010 The FABRICATOR has published its
annual FAB 40, a cross section of successful metal
fabricators, and at this point the list has become
a valuable tool that helps uncover some trends in
what remains largely a private industry. Market researchers can’t turn to SEC filings to truly find out
what’s going on.
Categorizing custom fabrication becomes even
more di;icult as you start to analyze the industry’s
largest players, including those who participate in
the FAB 40. Many o;er machining. A few are vertically integrated (to varying degrees) with metal service
centers. And at least one company o;ers plastics as
well as metal manufacturing.
Fabricators continue to o;er more and more services, sometimes through organic growth, but more
o;en because of strategic acquisitions. Investors
know that having a unique process mix can really
set a shop apart. It’s not about establishing a “
one-stop shop in metal fabrication” anymore. A;er all,
if a customer needs both plastic and metal parts,
even the broadest metal fabricator isn’t a one-stop
shop. Today it’s about growing a one-stop shop for a
target group of customers. In this sense, customers
are shaping the way their suppliers grow more than
This approach also helps with di;erentiation.
Good management can improve delivery and quality performance, but what about bringing in an entirely di;erent type of manufacturing? Duplicating
that isn’t a straightforward a;air.
Scale helps here too. A $10 million sheet metal
and plate fabricator might buy a small machine
shop, perhaps invest in a drill line to get into a little
structural work, but it’s probably not going to invest
in plastic injection molding or bring in a coil processing line. As the profiles on the following pages
show, the same thinking might not apply to a $50
million fabricator (or an investment group that
owns that fabricator).
All this is happening as more custom stampers are
entering metal fabrication, and more custom fabricators are adding stamping presses to tackle the
medium-volume market. Fabricators now can follow a product life cycle, from prototyping through
lower-volume fabrication to higher-volume stamping. And they can o;er machining and other ancillary processes.
Customers have driven this evolution for years
as they send more work to fewer top-performing
suppliers. The dot-com bust and Great Recession
played a role, too, as fabricators acquired the assets
from machine shops at competitive prices. And the
acquisition activity continues as shop owners of the
boomer generation near retirement.
So how does one describe a custom metal fab-
ricator these days? The FAB 40 is a good place to
start. In total, these companies serve disparate
customers, from heavy structural and construction
projects to intricate assemblies for medical equip-
ment and devices. But anchoring it all is sheet,
plate, and tube fabrication.
Even within this list, the characteristics of each
business are very di;erent. For instance, sales per
employee varies tremendously, mainly because of
the di;erent costs of material and outside services. A fabricator of large construction projects may
have a sky-high sales-per-employee metric, but its
purchasing costs (raw stock, manufactured components, services, etc.) might be very high too, so it
ends up with typical margins.
FAB 40 Trends
Know that the FAB 40 is just a statistical slice of the
industry, and participation varies from year to year.
All the same, the information may help give at least
some insight into broader industry trends.
For instance, the FAB 40 presents a statistical snapshot of revenue concentration—that is, how much
revenue is flowing to the country’s largest fabricators. A;er the Great Recession, more revenue than
ever flowed to the top shops, thanks largely to some
major acquisitions. As Figure 1 shows, the top 10
FAB 40 shops in 2012 generated more than $1.1 billion in combined revenue, while the remaining 30
shops combined generated less than $500 million.
The combined revenue for all shops that year was
In 2016, the top 10 generated more than $1.3 billion (a little less than 2015), while the remaining
shops increased their combined revenue to nearly
$1 billion. Combined revenue for all FAB 40 companies climbed to a new high, to almost $2.3 billion.
Still, 2016 was tough for many, including some of
the industry’s largest players—not surprising, considering the weakness in oil and gas, agriculture,
mining, and other heavy equipment markets.
It’s no surprise that the revenue total of the FAB
40’s 10 largest participants declined by more than
7 percent. Overall, the FAB 40 growth (that is, combined revenue of all shops) has remained relatively
flat for the past two years, growing by 1 percent in
2015 and 5 percent in 2016 (see Figure 2).
One would think that with negative or flat growth,
shops would be hitting the pause button on capital
expenditures. Not so. FMA’s “2017 Capital Spending
Forecast” (which is far more positive than capital
spending in the broader economy) pegged total projected equipment spending at more than $2.2 billion, which isn’t the highest ever, but an historically
high level all the same. As described in the following
pages, some FAB 40 shops hope those investments
will start to pay o; in a serious way this year.
The FAB 40 gives us one view of a dynamic industry that relies on keeping technology up-to-date to
stay in the game. Even in the face of uncertainty and
sluggish business through 2015 and 2016, fabricators have been tooling up for the growth they expect this year and beyond.
Senior Editor Tim Heston can be reached at timh@
thefabricator.com. For more information on FMA’s
other studies, including the annual “Capital Spending Forecast” and the “Financial Ratios & Operational
Benchmarking” surveys, call 815-399-8700 or visit www.
2016 2015 2014 2013 2012 2011
Combined revenue of
all FAB 40 companies
Combined revenue of the top 10
FAB 40 companies
Growth of combined revenue of
top 10 FAB 40 companies
Growth of combined revenue of
all FAB 40 companies
The combined revenue of the FAB 40 continues to
grow, though revenue of the top shops fell in 2016 due
to so;ness in some key markets. Most predict higher
growth going into 2017 and beyond.
Growth rates for the FAB 40 in 2011 and 2012 skyrocketed as the industry continued to rebound from historic lows during the Great Recession and acquisition
activity increased among the largest shops. Growth
has slowed since and has remained somewhat flat for
the past two years. Many predict robust growth to return in 2017.
Top shops predict a better 2017