Chairman of the Board
Texas ProFab Corp.
First Vice Chairman
Second Vice Chairman
William “Jeff” Jeffery
Ohio Laser LLC
Chairman of the Board
Al Zelt, ASKO Inc
Rick J. Hargrove
Steel & Pipe Supply Co. Inc.,
Storage & Processors
Kawasaki Motors Mfg. Corp. USA
Amada America Inc.
MC Machinery Systems/
Briggs & Stratton Product Group
Industrias Selbor SA de CV
Valley Iron Inc.
Airgas USA LLC
Form Tech Concrete Forms
President & CEO
Fabricators & Manufacturers
FMA’S CERTIFIED EDUCATION CENTERS
FMA Certified Education Centers (CEC) are community
and technical colleges, trade schools, and universities
that specialize in training adults for careers in the metal
forming, fabricating, processing, and machining sectors.
They offer coursework for local students year-round and
serve as host locations for many types of FMA professional
development programs as requested. A council of
members convene six times a year to plan and execute
special programs on worker training for educators and
human resource managers from companies of all sizes.
To learn more about FMA’s CEC program and view a list
of the current member schools, visit www.fmanet.org/
To discover how your local community or technical college
can become a member, call 888-394-4362 or send an
email to firstname.lastname@example.org.
FROM THE EDITOR-IN-CHIEF
Read more from Dan Davis at www.thefabricator.com/author/dan-davis
As I was doing my best to moderate a panel discussion with three bright minds from the banking and private equity community
speaking to a room full of inquisitive fabricating
shop owners and managers at The FABRICATOR’s Executive Summit in late August, I asked a question of
the audience about their average number of days in
accounts receivable. That sparked some pretty lively
Consider these comments:
• “I had a large company buy our largest
customer, and now they are asking for 120 days
[for payment terms].”
• “Why would they do this? It prevents us from
reinvesting in our own businesses.”
• “They are basically asking us to finance their
This obviously peeved many in the room as they
viewed these unfavorable payment terms as just an-
other example of a large company throwing its weight
around when it should be doing more to support the
viability of the entire supply chain. If these large com-
panies are starving their metal fabricating service
providers just so they can squeeze 30 more days of
interest out of their own money, they are introducing
a lot more risk to the supply chain than they might
realize. Simply put, if shops are deprived of prompt
payment for services delivered, they don’t have as
firm of a foundation to survive the inevitable revenue
swings that are a reality in a fabrication shop.
FMA’s “Financial Ratios and Operational Benchmarking Survey,” which the panel was discussing,
has shown a gradual increase in days in accounts
receivable (total sales/average accounts receivable).
It’s crept up one day for each of the last four years:
For a small business, that sort of trend can prove to
be a real pain, particularly if that customer repre-
sents a huge chunk of overall revenue. Job shops
know the importance of customer diversification,
but when customers start to expand and send more
work over, job shops aren’t going to say no. Organic
growth is the easiest way to boost revenue—even if
it comes with more headaches.
One fabricator mentioned that these large companies looking to save every penny they can will even
work payment terms into their supplier score cards.
A fabricator might receive a score of 10 for meeting
quality benchmarks and on-time delivery deadlines,
but it also might be dinged heavily with a score of 2 if
it stipulates 60-day payment terms. This sort of practice only entices bad business practices. It’s hard to
The fabricators involved in this discussion realize
why these situations exist: The executives in these
larger companies are being rewarded for this behavior. These purchasing agents are wringing their suppliers for every last cent, and their supervisors are
earning nice bonuses.
Many might argue that business is survival of the fittest. Well, I don’t think this means that fit companies
should make it their business to eat their partners
to survive. They should be invested in the success
of the entire supply chain as that is where so much
untapped innovation is waiting to be discovered. If a
metal fabricator is scrambling to survive and meet its
payroll, it’s not going to have the time or motivation
to look for new designs or production methods that
could ultimately save a customer money.
The best thing is that metal fabricators actually
practice what they preach. On more than a couple of
occasions, I have heard about fab shops paying their
raw material vendors within the much-more-wel-
comed 30-day term and receiving high levels of cus-
tomer service in return. When these fab shops ask for
multiple deliveries during a day, the service center
is more than willing to consider the arrangement.
When a hot order is placed to accommodate a rush
job, the service center picks up the phone and works
to accommodate the delivery. Respect and trust are
much healthier motivators than fear and threats.
Keiretsu is a word that describes how Japanese
manufacturing companies seek to have trustful and
collaborative relationships with supply chain partners even as they tackle tough subjects like cost-cutting. They know everyone is stronger when they
work together. Let’s hope that large U.S. manufacturing companies come to better terms with their
own supply chains.
Plenty of fabricators in North America are doing
excellent work when it comes to reinventing themselves and growing the business. If you think your
shop falls into this category, please consider sharing
your story with The FABRICATOR.
The editors are accepting nominations for the
2018 Industry Award winner. The fabricator that
stands out as a leader in operational excellence,
marketing success, and community service will be
featured in the cover story in the February 2018
issue and will be honored at The FABRICATOR’s
Leadership Summit, March 7-9, at the Talking Stick
Resort in Scottsdale, Ariz. (The FABRICATOR will
pay for the trip and accommodations.) For more
information and to make a submission, visit www.
On better terms with large customers
The bigger they are, the longer they seemingly wait to pay