Two weeks ago I talked with one fabrication shop owner who has what last year would have been considered an unusual problem. Bankers were lined up, eager to give the small business owner a loan--only he didn’t need one. Work is coming in the door, but it’s mostly small jobs, nothing to warrant a huge expansion.
That’s a real-life example of the glass-half-empty adage: Bankers are eager to lend you money, unless you need it.
Just from anecdotal evidence, I can see something in this economy is brewing. In this month’s FABRICATOR, for instance, we cover Impulse Manufacturing, a large north Georgia contract manufacturer that has doubled--that’s right, doubled--its customer base during the past six months.
Other shops aren’t so fortunate, but the lights are still on and machines are still running. Many pine for the days of long backlogs and big contracts. But today it seems small volumes and quick turnarounds have become the new normal of contract metal fabrication. Yes, we had an inventory rebuild, but, as consultant Dick Kallage of KDC & Associates put it at the Metal Matters conference earlier this year, “The inventory rebuild has been spotty at best.”
Why? Some attribute it to lean manufacturing. No one wants inventory, so no one is going to give a contract shop a huge order. It’s now about giving them just enough, just in time. So how does a contract fabricator compete today? Short backlogs, short-run jobs, competitive pricing, and fast turnarounds don’t add up to an easy business.
Just from my observations, it seems the best contract fab shops out there find a way to manage through automation. OK, I’ll admit that’s a hackneyed phrase. But by automation I don’t mean investing in a big material handling tower and multiple lasers, though they may help in the right places. I mean automating, or at least streamlining, everything outside those big pieces of equipment: the quoting, order tracking, and job flow. For instance, a software guru at Impulse Manufacturing developed a Web-based job tracking and measurement system that streamlined front-end processes and caused manufacturing time to plummet.
Software helped the company solve the complex puzzle of contract metal fabrication. How do you quickly turn around small orders while at the same time maximize material utilization and bid competitively enough to get work in the door? Automated scheduling, nesting that maximizes use of material (including remnants), and other tools now are helping the contract shop brave the ultra-competitive manufacturing landscape.
From one perspective, it’s nice to see so many small jobs out there. Many small contracts make a more stable whole, financially. It takes more sales effort on the front-end, certainly, but if a few small contracts cancel, they won’t put the company under. It’s true that big contracts can help a company grow quickly and hire more people. But when those orders are canceled, the pink slips come--and I know we’ve all had enough of those.