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Carrying on

By Gretchen Salois

The economy falters as the COVID-19 pandemic stymies growth but, not to be undone, fabricators adapt to an evolving reality

July 2020 - As the COVID-19 pandemic continues, the ripple effect on the metals sector emanates throughout the supply chain. Fabricators of varying sizes are coping with the new normal by allocating some personnel to work from home, adjusting lines of communication to keep operations running smoothly, coping with declines in revenue, all while planning for the future.

The virus presents a unique set of challenges different from financial crises past. The added component of fear for the health and safety of workers makes working amid a pandemic a complicated conundrum.

According to a survey by the National Association of Manufacturers, 35.5 percent of respondents reported facing supply chain disruptions, with 64.5 percent of those 558 respondents reporting they are not. Companies reported a near 50/50 split as to whether management had an emergency response plan in place to prepare their company and employees. This uncharted territory has resulted in companies taking swift action to instill order in circumstances out of their control.

Several fabricators share real-time challenges and solutions proposed throughout shop floors in America and what lessons others can take away.

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Remote work

Fabricators are adjusting to the new normal by reassessing which personnel can work off premises. At Ogden, Utah-based Richards Sheet Metal, President and CEO Sterling Jensen says those who could work remotely have done so as many vendors have followed suit. Richards Sheet Metal has 103 employees with 18 in administrative, sales and engineering or support roles. Sixty-four employees cycle through the shop floor between fabricators, shipping and receiving, maintenance, CAD programming and nesting, and quality control inspections.

Shifting to remote work has caused Richards Sheet Metal to adjust its paper handling between steps of the production process. Managing shop floor operations, such as adjusting to IT changes with employees working off site, coupled with employee concerns and fear of the unknown poses another set of challenges.

Changing the work environment to include signage and allowing for social distancing in common areas are some of the steps companies like Noble Industries in Noblesville, Indiana, have taken to adjust to doing business during a pandemic.

“We had 92 total employees before COVID-19,” says Brenda Snyder, vice president. “Some of our customers started reducing their orders so we had to let 10 employees from our temporary staff go. We have now hired four employees back as the work is picking back up.”

Compliance during COVID-19 has proved challenging for fabricators like Weaver Fabrication in Akron, Ohio. “Being a company that teeters from over 50 employees to under 50, the ever changing COVID-19 compliance laws and regulations is challenging,” says James Lauer, vice president and co-owner alongside his wife, Marian Lauer.

“Times are so uncertain for supply chains that no one is making commitments on long-term part orders yet,” Lauer continues. “For the time being, we are very busy and our backlog of orders is very strong this summer.”

In Lithonia, Georgia, Southern Metalcraft Inc.’s 39-employee team works four days a week running 10-hour shifts. “Our administrative and pre-production team normally work a 7.5-hour day on Friday but, since April, we’ve been closed every Friday due to a lack of work in these areas,” says Greg Williams, president and CEO.

Demand dropped for a period of four to six weeks for Fabricated Products Group (FPG) in Frankfort, Illinois, which employs 10 to 20 at any given time.

“There have been been many challenges in our business over the last few decades. However, this could be one of the more challenging,” says Daniel Shields, president. “We are a proactive company and have had to react to changing parameters set by local officials.”

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Employment at Weaver Fabrication teeters above and below 50, which affects how compliance laws and regulations apply.

Demand changes

While some customers have experienced cancellations, project delays or an overall decrease in demand for industries such as oil and gas and aerospace, customers in other fields—like medical equipment, pharmaceutical, food packing and military—have offset that decline for many fabricators.

“We are pleasantly surprised that work has remained fairly consistent, only slightly behind compared to the prior year,” Richards Sheet Metals’ Jensen says. “That in part is due to the diversity of our customer base and the industries they serve.”

The financial crisis from 2008 taught certain lessons, including at Richards Sheet Metal. After 2008, a new management team emerged. “We learned from that period,” Jensen says. “A global pandemic was not on the list of things we planned for, but the carryover from prior planning has benefited us. Having a diverse customer base has benefited us as well. One industry might be down, but another is ramping up.”

Weaver Fabrication’s Lauer is unsure just how detrimental COVID-19 will ultimately be for business. “But when the recession hit, business just stopped,” Lauer says. “Our revenue was cut in half in 2008. We were not prepared for it. We had just upgraded our machinery and expanded into another building. It was rough.”

While the U.S. is experiencing its highest levels of unemployment since the Great Depression with 40.8 million claims filed between mid-March and the end of May, Lauer has had a difficult time finding workers to hire.

Co-owner Marian Lauer is in charge of hiring and has found it difficult to fill positions. “She fights a constant battle,” James Lauer says. “I thought with the unemployment numbers where they are, it would be much easier to staff up. My surprise is there aren’t more people out looking for work,” he continues. “We have been on the hunt for welders, and it seems like we’ve been looking forever. We're having real trouble filling these positions.”

Finding qualified workers to perform grinding or operate press brakes “is extremely rare,” Lauer adds.

Williams at Southern Metalcraft also recalls the difficulties of the prior recession. “The difference this time is it came with little warning and the ‘unknown’ factors have caused extreme reactions, which have in turn had major ramifications throughout the economy,” he says. “We’re not second guessing any of the decisions we’ve made. We’ve tried to play the hand we’ve been dealt as best we can.”

At Southern Metalcraft, booked revenues are down about 50 percent due to COVID-19. “We had several orders put on hold or canceled due to the uncertainty,” Williams says.

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At Noble Industries, stations are reorganized to allow for social distancing between work stations.

Worker safety

Ensuring employee safety, including following social distancing guidelines, presents fabricators with sometimes difficult work station configurations. “We work on a team basis but as we looked at our operations, we found that for the majority of our fabrication activities, we were able to comply with the 6-ft.-apart guideline,” Jensen says. “In those areas we could not, we reconfigured work areas to spread them out to comply. We are always looking at automation to take over the redundant and tedious tasks to allow our people to focus on the more technical or fluid tasks.”

Richards Sheet Metal communicated with personnel, making clear they understood employees must juggle their work schedules with home schooling and other necessary activities. “We essentially said that we knew things were going to be off for a bit and that now, more than ever, we needed to communicate clearly as soon as we knew of a change to someone’s personal schedule or circumstances,” Jensen says.

Despite the unexpected arrival of COVID-19, FPG doesn’t plan to alter its business model. “That, coupled with our talented individuals and a sound construction industry, has helped us going into this pandemic,” Shields says. “There is no reason we need to change how we approach business.”

As the gradual reopening of the country continues, FPG is adding several protective items to its offerings, including products like sneeze guards, to help communities across the U.S. protect employees and customers. “As a result, this is helping us with production gaps caused from the earlier shutdown,” Shields says.

At Noble Industries, employees are instructed to stay home if they have a temperature, or to stay home for 14 days if someone they have been in contact with has tested positive for the virus. This reduces the chances of it spreading. Attention to detail includes the maintenance/safety manager personally going through all the frequent touch points in the building twice a day to wipe everything down, including door handles, keyboards, computer mouses and digital control panels.

When a hand sanitizer shortage prevented companies like Noble from purchasing it for employees, a company that handles chemicals for its powder coating line made hand sanitizer. Work stations have been relocated further apart, and workers eat at their work stations. Noble enforces a 6-ft.-apart rule to maintain physical distancing both inside and outside the shop.

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When the pandemic started, Southern Metalcraft's workload included nearly three weeks of backlog.

Expectations

As states ease restrictions on shelter-in-place rules, the economy is gradually shifting toward getting back to work. “In our market, I believe we’ll see a pretty quick restart. The demand is still there and needs are piling up,” Southern Metalcraft’s Williams says.

Despite cutting back some hours as some customer orders stall, Southern Metalcraft has not had to lay off anyone. “When the pandemic started, our shop workload was full with nearly three weeks of backlog,” Williams says. “We’ve worked hard to keep the virus outside our walls and other than normal sickness days, our attendance has not been a factor when meeting customer needs.”

Weaver Fabrication hiring efforts continue. “We are trying to staff up. I expect the economy to come back strong,” Lauer says. “I am hoping in the short-term for a lot of pent-up demand. The world has been locked up for three months.”

Jensen believes momentum will pick up later in 2020. “People will need to get back to work to provide for themselves and their families,” he says. “We have noticed a trend over the years that in a presidential election year, orders tend to be a bit soft until the election is over. Then customers place pretty significant orders.”

According to Jensen, orders are not placed because of which party wins the election, but rather, customers feel more comfortable making the purchase having an idea of what to expect. “We anticipated 2020 to be a slightly soft year and it is proving so, pandemic or not,” Jensen adds.

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Richards Sheet Metal's Sterling Jensen believes by keeping employees’ daily routine as normal as possible, they take less stress home with them.

Navigating challenges

Within three days of the daily CDC COVID-19 briefings, Noble experienced a decline in demand. “Customers started pushing back orders that we already had in house,” Snyder says. “Our job hours reduced 30 percent for most of our customers. Those customers with direct-to-consumer or home products, emergency response and medical have increased, which has helped offset the slower industrial customers.”

In adjusting to changes in demand and work operations, some Noble customers sought discounts. Surprises include two major customers “who had the nerve to ask for discounts even though their volume of work was reducing and our costs were increasing,” Snyder says. “One longstanding customer sent a ‘Dear Supplier’ mass email on April 13 stating that given the current conditions, they wanted a 12 percent reduction on their prices with an effect date of May 1.

“A different customer at least sent an email with our name on it on March 31 and asked for a response by April 15,” Snyder continues. “They wanted a 10 percent reduction but did give us room to give another option—so much for we’re all in this together.”

Suppliers have for the most part remained consistent, Richards Sheet Metals’ Jensen says. “We do handle them a bit differently as far as allowing them to wait in our yard, access our buildings, and have the necessary PPE,” Jensen says. “That goes both ways when we have to be in a customer or vendor’s facility. Lead times have not changed for the most part.”

Some vendors have experienced delays supplying materials to Southern Metalcraft because of COVID-19. “On several occasions we’ve had to extend fabrication lead times due to both availability and vendor lead times because of logistics,” Williams says. “Once this became apparent, we made sure to confirm these details before quoting new requests from our customers.”

Inbound lead times rose 5 to 10 percent on some raw materials, Shields says. “This is built into our [outbound] lead times when quoting our customers.”

Going forward, Weaver Fabrication’s Lauer believes outsourcing jobs overseas should be reassessed. “We need to bring work home. That would be a huge boost to the economy and would solve a lot of problems,” Lauer says.

Before COVID-19, Noble Industries was on pace for its best fiscal year yet. Due to the shortage of coronavirus tests in the United States, fabricators remain overtly cautious.

“We were very aware that [an infected person with] a fever or contact could mean a spread in the plant, so we send people home for 14 days if there is even a whisper of being in contact with someone who might possibly have COVID,” Snyder says. “This caused us to be short of manpower. Work slowed down, but we have caught up and attendance is now very good.”

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FPG is adding several protective items to its offerings, including products like sneeze guards, to help communities across the U.S. protect employees and customers.

Stress relief

Communicating and reducing anxiety among employees is paramount. “One of the most challenging tasks as a leader is keeping employees safe while reducing fear and maintaining a positive culture,” FPG’s Shields says. We do this by constant and clear communication with our employees and remind them that we are all in this together.”

By keeping employees’ daily routine as normal as possible, “they take less stress home with them,” Jensen says. “We are doing things to improve our facilities, streamline workflow and make adjustments to allow us to be more efficient.”

Southern Metalcraft has not had any suspected exposure cases. “To help protect our team, we closed our doors to outside visitors starting in April, except for scheduled deliveries,” Williams says. “We also meet weekly to update everyone on the current state of the virus and the ramifications” if it were to penetrate the walls.

As states permit the restart of economic activity, the consequences of an infection rate spike should remain a serious concern. “Patience has not always been a characteristic of the [manufacturing] industry and the U.S. collectively, displayed during times of anxiety and stress,” Williams says. “It would benefit us all to think of others and realize in this instance the potential [repercussions] of a bad decision that might reach much further than our bottom line.”  FFJ

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