Are metal fabricators having trouble sleeping at night?

It’s been more than four years since the end of the Great Recession, at least according to the National Bureau of Economic Research, the folks in charge of determining such things. With all that time to bring back workers, re-establish relationships with customers, invest in new capabilities, and attract new business, metal fabricators must be incredibly optimistic about the near future.

Not quite.

Despite two or three terrific sales years for many metal fabricators, they aren’t ready to talk about any future golden days. They are taking a conservative approach to their businesses, hoping for the best but preparing for the worst. In general, they don’t know what to expect.

The results of The FABRICATOR’s “What Keeps You up at Night?” survey reveals that very cautious optimism. Everyone recognizes that business is pretty good, but they have no idea how long that can continue. Many believe that any future prosperity is held hostage by the unknowns that might be lurking around the next corner. For many metal fabricators, it boils down to an ineffective federal government.

One metal fabricator didn’t mince words when asked what the biggest problem facing the metal fabricating industry is: “Government. They need to stay out of small business and let capitalism work. If we could be more in control of our own destiny and not have to worry about what regulation is coming next, then we could spend money on equipment, hire more workers, and grow our brand. Instead, we have to sit on money, worry about regulations, and waste time planning for ‘what if’ scenarios, like health care, minimum wage, taxes, etc. It’s ridiculous!”

Of course, that opinion was one of many. To give you a better idea of the general mood and outlook of the metal fabricating industry, we have decided to share some of the results of this year’s biannual survey, which was sent to more than 6,800 subscribers of The FABRICATOR and generated a response from slightly more than 1 percent of them. It’s not a scientific survey by any means, but it does provide valuable insight into today’s metal fabricating community.

What Keeps You up at Night?

2013

Availability of skilled workers 36%

Economy 19%

Availability of credit 10%

Growth of federal government debt 9%

Meeting increased customer expectations 9%

Other 17%

2011

Economy 34%

Availability of credit 19%

Availability of skilled workers 12%

Cost of raw materials 8%

Meeting increased customer expectations 5%

Other 22%

2009

Economy 48%

Availability of credit14%

Availability of skilled workers 6%

Meeting increased customer expectations 6%

Other 26%

(Editor’s Note: “Cost of raw material” was not provided as a choice in the 2009 survey.)

With this question, subscribers were asked to rank a series of concerns from 1 to 13 according to what was the most important issue that kept them up at night. More fabricators appear to be concerned about the availability of skilled workers as the economy has improved over the last several years, but the concerns about the economy have yet to subside. Also, although few survey respondents listed “cost of raw materials” as their main concern, 20 percent did cite it as their second major concern in this year’s survey.

In which of these areas do you expect to devote major resources in the next 3 to 5 years?

Automation 29%

Capital equipment acquisition 22%

Cost reduction 16%

Safety 12%

Quality control 6%

R&D/Engineering and design 6%

Other 8%

Survey participants were asked to rank 11 areas of organizational improvement over the next several years according to importance, and they responded in such a way that suggested few companies are interested in adding labor right now. “Lead-times throughput” and “industry standards/codes” ranked high for a handful of FABRICATOR readers, but were deemed less important by a majority of respondents.

Do you think the message that the government needs to implement policies that support U.S. manufacturing is being heard in Washington, D.C.?

2013 Yes 15% No 85%

2011 Yes 13% No 87%

Not too much has changed from the 2011 to the 2013 survey.

Would you recommend metal fabricating as a career choice to someone in your family?

2013 Yes 73% No 27%

2011 Yes 77% No 23%

2009 Yes 64% No 35%

In all likelihood, the support of metal fabricating as a career choice decreased when compared to the 2011 survey because of the uncertainty that surrounds the economic and regulatory environment in the U.S.

What areas do you expect to devote major resources to in the next 3 to 5 years?

Finding new customers 39%

Capital equipment 37%

Process improvement (lean manufacturing, Six Sigma, etc.) 14%

Employee development 5%

Other 5%

When asked to rank several activities from 1 to 7 according to what they considered to be the most important area of resources deployment in the near future, metal fabricators focused on the bottom line: They need a diversified customer base to survive. Focus on areas such as green initiatives and information technology didn’t rank as important to a large majority of the survey respondents.

How much does your company pay entry-level welders per hour?

Less than $10 4%

$10-$12.99 25%

$13-$14.99 31%

$15-$16.99 15%

$17+ 24%

Many experienced manufacturing workers and labor pundits believe the skilled-worker shortage is more of a cheap-skilled-worker shortage. In this survey, readers revealed that entry-level wages for welders run the gamut. Differences in the starting wages probably differ greatly according to industry and geographic location, but somebody looking for a start in a new industry has the chance to make a decent wage if they look for it.

Do you see your business …

Growing 54%

Staying the same 42%

Shrinking 4%

Ending 0%

In a glass-half-empty world, these results have to be pretty encouraging for the rest of 2013. Right?

What actions should the government take to support U.S. manufacturing?

Reform the tax code 40%

Reduce regulations 18%

Support industrial tech programs 17%

Impose more import tariffs 14%

Negotiate more trade agreements 6%

Formulate national energy policy 5%

Survey participants were asked to rank these six actions according to importance. One respondent had a more targeted idea when asked for general comments, “Lean, Six Sigma, and theory of constraints applied to state and federal governments.”

In the areas of human resources/workforce development, what areas do you expect to devote major resources to in the next 3 to 5 years?

Finding and retaining skilled labor 51%

Establishing/offering apprenticeships/internships 26%

Technology training for shop floor employees 13%

Sales training 8%

Other 2%

In ranking these areas of human resources/workforce development according to importance, readers focused heavily on getting new blood in their operations.

How would you sum up your current attitude about working in metal fabricating?

2013 Satisfied 63% Somewhat satisfied 31% Dissatisfied 6%

2011 Satisfied 63% Somewhat satisfied 29% Dissatisfied 8%

2009 Satisfied 57% Somewhat satisfied 26% Dissatisfied 17%

Metal fabricators may not be the profession to pursue in search of riches, but it appears to be a good choice for job satisfaction.

What end-use markets is your company targeting in an effort to diversify business?

Construction 41%

Oil & gas industry/OCTG 33%

Aerospace 29%

Bus, heavy truck & trailer/RV 28%

Food processing & food service/Beverage 25%

Military equipment & munitions 24%

Of course, metal fabricators are targeting many more industries, but these scored the highest after survey respondents were asked to choose all that were applicable. Obviously, many companies are waiting for the structural steel market to climb back to the levels prior to the Great Recession. Also, even with the constant threat of further government cutbacks, many fabricators still see the defense industry as a possible place to expand.