The biggest companies get bigger, but contract fabrication remains distinctly regional
By Tim Heston, Senior Editor
In this year’s FAB 40, size stands out. Some big fabricators got bigger. Mayville Engineering Co. (MEC), the Wisconsin fabricator that was struggling as recently as 2005, now has almost 2,000
employees in 16 locations. Thanks to its December
acquisition of Michigan-based Center Manufacturing, the company ended the year with $311 million
in sales. That’s nearly triple its 2010 revenue.
This year’s FAB 40 also includes O’Neal Manufacturing Services (OMS), a division of O’Neal
Industries. For years O’Neal has offered plenty of
value-added services, and after much planning the
company formally separated those services into its
own business unit, OMS, in 2011. With the purchase of Cedar Falls, Iowa-based Iowa Laser in 2012,
OMS now employs more than 1,400 people at 10
locations across the country.
According to company sources, OMS operates
separately from the distribution side, and for good
reason. When it comes to standardizing business
processes, the two don’t mix: Distribution hinges
on quick transactions and delivery; OMS, on the
other hand, manages more contractual manufacturing needs of major OEMs. Providing second-and third-step processing on subassemblies and
weldments requires more involved planning, engineering, and process controls.
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. One mailing
and two follow-up e-mails are sent to about
1,200 subscribers within the fabricated metal
products sector. Those companies that choose
to submit information are then ranked according to their 2012 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
OMS does, however, share back-office and purchasing functions with its larger parent company.
According to Gerald Brockman, OMS’s vice president of sales and marketing, the division’s 2012 revenue of $278 million represented about 10 percent
of the entire organization’s revenue. To this day the
company remains a privately held family business,
albeit a very big one.
During an April manufacturing conference organized by The Washington Post, James Manyika, San
Francisco-based director of the McKinsey Global
Institute, pointed out the “non-monolithic” nature
of manufacturing. A broad brushstroke doesn’t do
this business justice. He explained that although
manufacturing has helped pull the economy out of
the Great Recession, not all sectors of manufacturing have pulled with the same force.
Transportation and machinery manufacturing have been the much publicized heroes of the
recovery, and it’s well-deserved. The two sectors
have added several hundred thousand jobs since
2010—158,000 for transportation and motor vehicles; 147,000 for machinery. But the unsung heroes
of the recovery may be what Manyika identified as
“regional processors,” and this includes fabricated metal products, which in total has hired back
179,000 jobs since 2010.
In fact, of all the manufacturing sectors Manyika
analyzed—motor vehicles and transportation, rubber and plastics, food and beverage, primary metals, energy products, wood manufacturing, mineral
products, furniture manufacturing, printing, and
electronics—fabricated metal products had the
most pronounced jobs bounce-back of all since
2010. He said that it makes sense that regional
processors, fabricated metal products companies
included, have led the manufacturing recovery, especially considering the reshoring trend as OEMs
choose suppliers closer to the final assembly plant
and, ultimately, the end customer.
Still, cumulatively, all businesses in the FAB 40
this year employ fewer than 10,000. IBM alone employs well over 400,000 globally; General Electric,
more than 300,000. Compared to previous years,
the 2013 FAB 40 has seen a marked increase in head
counts, though a fair number of firms reported
higher revenues this year than in 2012, while employing fewer people.
But in aggregate, an army of relatively small
metal fabricators have been hiring, and this year’s
FAB 40—a progressive slice of the contract metal
fabrication marketplace—shows this. If companies
were charted out by revenue, the “long tail” would
be immediately evident. A few big players keep get-
ting bigger, but that long tail of small businesses
remains. And since 2010 many have been hiring,
chipping away at this country’s unemployment
rate bit by little bit.
These 8-foot-long laser-cut and formed channels from
O’Neal Manufacturing Services are for the agriculture
equipment industry. Photo courtesy of O’Neal Manufacturing Services.
Optimism Amid Uncertainty
Of course, from a broad perspective, fabricators are
chipping away at the unemployment rate with a
puny pickaxe. Even if every shop had highly qualified people lining up ready to work (which they
don’t), the industry is too small to make any real
dent in overall unemployment.
Proclaiming fabricators as a premier jobs engine
of manufacturing is a bit like Disney World bragging that Big Thunder Mountain is the tallest bit
of land on the overdeveloped sandbar of Florida.
As Manyika emphasized, manufacturing overall accounts for just 9 percent of this country’s employment, though it drives 61 percent of all exports
and close to 69 percent of all private R&D efforts.
Most significant, he said, is that 30 percent of the
increase in productivity among all economic sectors has come from manufacturing alone.
Still, the hiring trends are evident. General Sheet
Metal Works in South Bend, Ind., reported 187 employees last year, 218 this year. Cupples J&J Co. Inc.
in Jackson, Tenn., reported 215 employees last year,
245 this year. MEC is projecting growth this year, as
is Minnesota-based BTD, another behemoth. The
projections remain positive. Of all submissions this
year, only two companies expect revenues to be
down in 2013.