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Sustaining fabricating success

Continuous improvement applies to shop management as well as the shop floor

Figure 1
P&A Metal Fab President Dan Aronson knows that part of being an award-winning supplier of fabricating services is keeping an inventory of key tubular components for its fitness equipment customer. Photos courtesy of P&A Metal Fab Inc.

Starting up a metal fabricating company is a noteworthy achievement. Sustaining it successfully over several decades is a remarkable accomplishment.

The proof is in the statistics. The Small Business Administration (SBA) consulted the Bureau of Labor Statistics’ Business Employment Dynamics data and surmised that about half of new businesses last five years or more. By the 10-year mark, that number drops to one-third.

Beyond that marker, however, these businesses appear to have a good shot at long-term success. The SBA reports that little has changed statistically over the past 20 years to alter that trend.

From a strictly metal fabricating perspective, that type of long-term survival is something to be celebrated given the nature of the business. Job shops that often start in the garage can afford to leave those homey environs only when a customer commits to larger and more consistent orders. Growing with a customer is arguably the most common way that a metal fabricator is able to attain larger manufacturing space and modern CNC equipment. In fact, that scenario remains commonplace for many fab shops; the Fabricators & Manufacturers Association’s latest “Financial Ratios & Operational Benchmarking Survey” revealed that participating metal fabricators had about four customers making up 50 percent of company sales. Of course, if that customer decides to reduce or even cease its orders, that metal fabricating business can be harmed tremendously.

Employee recruitment and retainment, material costs, government regulations, and credit availability are a few other factors that greatly influence a fab shop’s destiny. Simply put, it’s no easy task.

P&A Metal Fab Inc., Clackamas, Ore., is one of those success stories. Founded in 1978, it has weathered multiple economic downturns and a change in ownership. It has grown to become a $17 million-a-year operation (based on 2013 revenue), which allowed it to grab the No. 28 position in The FABRICATOR’s 2014 FAB 40 list, and the shop has achieved this growth outside the hotbed of metal manufacturing that people normally associate with the Midwest.

P&A doesn’t claim to have a secret. In fact, company management believes it is the experience of the staff, with the core group of 75 full-timers averaging more than 10 years with P&A, that allows it to find production efficiencies and maximize existing fabricating technology to meet customers’ demands.

The company has made some very good decisions over the years that have allowed it to sustain its success. What follows are some of the highlights.

Building a Sound Financial Foundation

Like so many other shops, P&A began in a two-car garage. Phil Aronson decided to strike out on his own and poured his life savings into his new business endeavor in 1978.

Aronson’s commitment to precision and high-quality fabrications helped to grow the company to almost 100 employees by 1990. By that time it had become a key supplier of fabricated parts to all-terrain vehicle, computer furniture, fitness, and air-handling equipment industries.

Figure 2
Two BLM LT-712 tube lasers help the fabricator to stay on top of customers’ variety of tube fabrication orders.

As most will remember, the 1990s were a decade of Japanese companies looking for investments in the U.S. Japan’s government had begun deregulating aspects of the country’s economy that provided more opportunity for domestic and overseas investments. Japanese companies jumped at the opportunity, grabbing headlines and causing a bit of hysteria in the U.S. (Remember Pebble Beach golf course being sold to a Japanese investor group for more than $800 million?)

Oregon was no stranger to the overseas investors, and one Japanese businessman knocked on P&A’s door after being referred by one of the metal fabricator’s customers. In June 1991, Aronson began his retirement; he sold the company to Kyoshin Giken Co. Ltd.

Dan Aronson, Phil’s son and someone who either had been hanging around or working in the shop for most of his adult life, continued to work for P&A after the ownership change. The new owners and the core staff helped to grow the company to the point where P&A needed a new 80,000-square-foot facility in 1999.

In 2007, sensing that P&A’s Japanese parent company might be open to the idea of selling the business, the senior management team led by Tsuguaki Takahashi and Dan Aronson bought the fabricating operations. P&A was putting a new spin on the traditional family business.

During that time of foreign ownership and in recent years, the company has developed tremendously strong relationships with its core customers, one of which is the fitness equipment manufacturer that has named P&A a star supplier for several years in a row (see Figure 1). As with many metal fabricating operations, as the customer grew, so did P&A.

As the growth has occurred, P&A has invested in key equipment to support efficiencies tied to producing newer and more complex fabrications for the fitness equipment-maker and new clients (see Figures 2 and 3). All the while these investments most assuredly never put P&A in a financially unstable situation. Almost a quarter-century of Japanese ownership has helped to create a very conservative management approach.

“We are very careful in how we spend our money and having a very strong balance sheet,” said Dan Aronson, the company’s president.

The management team is constantly keeping tabs on P&A’s financial performance. They know if jobs are making money. They know if jobs are running late. They know of potential scheduling challenges before jobs are sent to the shop floor.

“A lot of shops kind of run by the seat of their pants,” Aronson said. “How that hurts us is that they don’t understand their cost structure. They underbid jobs. They don’t make enough money.”

P&A has a relationship with two banks, one a national corporation and the other a locally owned lender. The owners don’t really require a line of credit for business operations, but they view having an easy-to-access credit line as a good business practice. It provides financial flexibility and maintains good relations with business partners, both nationally and in the local community.

Figure 3
This Motoman robotic welding cell is one of five that handle welding for higher-volume jobs.

“We are ahead of the curve in terms of financial strength,” Aronson said.

“It’s always better to impress the bankers with your financial stability when you don’t really need them rather than trying to make the case when your company really needs assistance,” Aronson added.

Flexibility Supports Responsiveness

A solid financial balance sheet affords P&A the luxury of being able to invest in state-of-the-art fabricating technology that not only delivers quality first-run parts, but also production efficiencies that might not be possible with older equipment. The latter is of increasing importance as the company strives to be competitive with overseas and, in some instances, Midwest suppliers of metal fabricating services.

A good example of this is the company’s BLM Dynam3 bender (see Figure 4). It can produce bends in the same tube without straight sections between the bends. It also can produce bends of different radii in the same part—even in a program that calls for standard draw bending. This feature is especially handy as the operator normally would have to remove the part and continue the next bending sequence on another machine or wait for a new setup on the same tube bender.

The bender, which was installed in 2010, also has a camera to ensure quality bends during each job. For instance, if a tube has holes in it, the camera will look for the interior etch mark and then position the tube. When the tubing is bent, the holes align in the right location.

Aronson said the equipment reliably produces quality tube bends in an efficient manner. The programming software that came with the machine even provides a real-time simulation that selects the shortest and most efficient bending cycle to minimize production time and labor cost. Even an experienced operator using manual tube bending equipment would have no way of keeping up with the machine’s versatility and speed, he added. It has the ability to hop from one job to another without missing a beat.

In the building’s forming area, across a parking lot from the tube fabricating department, Aronson pointed out P&A’s press brakes as another example of flexibility. The company has standardized on Amada’s HDS series of press brakes (see Figure 5). All four press brakes now have the same controls and setup requirements, which allows an operator to learn one approach to parts bending, not the multiple ways that often occur with shops that have collected press brakes over the years.

The press brakes have features that give newer operators a much better shot at producing acceptable first bends than previous generations of machines. The touchscreen controls provide information related to tool setup, bend sequences, and even a 3-D simulation, if needed. The brakes also feature a 5-axis backgauge the speeds up positioning of the part for the next bend.

Aronson added that the company’s core group of full-time employees really make the production operation run smoothly over two shifts (see Figure 6). Even when shop floor challenges emerge or rush jobs need to be addressed, employees step up to see that what needs to be taken care of actually gets done.

“We flex that core group with contract labor,” Aronson said. “That’s worked out well for us because trying to bring on permanent hires and then having to lay them off when we have a dip in work, that’s a lot of work.”

Figure 4
The Dynam3 tube bender is able to produce tubes with bends of different radii, a task that historically involves two different setups on the same machine or two entirely separate machines

Choosing the Right Team

P&A actually started using temporary employees about five years ago after it experienced a spate of employee injuries. It wasn’t anything really serious, but the company’s workers’ compensation insurance did increase as a result.

Aronson said that when the management team explored just what led to the accidents, they found that mostly newer hires were involved. They were inexperienced and a little more careless than others who had been around sheet metal manufacturing for any length of time.

“We stepped back and said that we were going to strengthen our hiring practices,” he said. “We now do background checks, physicals, and integrity tests.”

Even as the company leaned more on temporary help and had the placement agency conduct more aggressive screening, it took the step to have these contract employees complete a basic skills assessment. P&A wasn’t just going to hire someone who could pass a drug test; it wanted someone who had the ability to accomplish the most basic of mechanical tasks, such as reading a tape measure or a caliper.

P&A also has instituted drug-testing for individuals who have been involved in some sort of accident while at work. If they are found to have had banned substances in their systems at the time of an accident, those individuals may find themselves at risk of being terminated.

Since these new hiring and testing procedures were implemented, P&A has seen its workers’ compensation rates drop dramatically and the number of injuries decrease as well. Aronson said he could recall only two small injuries recently, a scratch and an eye injury, and he believed that the low rate of incidents is attributable to shop floor workers being more engaged.

“I have a little motto: Hire the right people and let them do their job. I don’t try to micromanage them,” Aronson said.

He did admit to recently turning to a headhunter to hire a regional salesperson in 2013. Aronson thought he wanted to hire an industry veteran that had experience selling metal fabricating services, but the recruiter met a 30-year-old man who had spent the better part of a decade selling bicycle components to independent shops. Instead of a seasoned fabricating sales professional, the headhunter found a mechanically inclined individual who had a knack for quickly understanding how a metal fabricating shop worked and just what types of manufacturers would be good prospective clients. The job candidate was energetic, technology-literate, and people-savvy, and P&A probably would not have hired him if it had not used a professional recruiter.

Aronson said he learned his lesson. If he ever needs to find another key member of the staff, he won’t hesitate to invest in the hiring talents of a third-party specialist.

Growing With the Other Customers

Without a doubt, P&A’s business has grown because of a handful of large and long-standing customer relationships. That doesn’t preclude smaller customers from playing a more important part in the fabricator’s future, however.

Figure 5
Because P&A Metal Fab has invested in newer press brakes from the same manufacturer, operators can move freely from one machine to the next, no matter the tonnage, because they all have similar operational features. This keeps production up and running, even when someone has to cover for a co-worker.

It wasn’t too long ago that P&A revenues outside of the company’s top two customers were fairly insignificant in comparison. That ratio is changing now.

“It’s nice to see some of these smaller companies start to grow,” Aronson said.

The customers that used to make up his third-, fourth-, fifth-, and sixth- largest customers are no longer organizations that barely represent $100,000 in business to P&A. They have emerged as companies that now spend $500,000 with P&A on an annual basis.

They also help to diversify the fabricator’s customer base, which is always helpful in weathering down periods when one customer cuts back on outsourced metal fabrications because of market realities. Aronson said these growing customers make items such as air-handling equipment, dental equipment, industrial pumps, and power transmission components.

Aronson said he believes his company’s ability to take on complex fabricating jobs, to produce the parts at a competitive rate, and to offer value-added services that other shops may not be able to offer (see Figure 7) will keep these growing customers from seeking other sources for fabricating services. After all, it follows the same scenario that has allowed P&A to grow with its No. 1 customer in the fitness equipment industry.

What Office?

Aronson has the conversations and the information technology necessary to keep tabs on what is happening in the business on a daily basis, but when it comes down to it, he makes sure he’s in the middle of the mix. He’s got a cubicle smack dab in the middle of the other cubes in the front office.

“My purchasing agent is across from me. My vice president of manufacturing is right next to me. Accounting is behind me. I can hear what’s going on,” he said.

“Sometimes we’ll have a conversation, and if I hear something that I disagree with or if I have a different idea or a big disagreement, maybe we go in a different direction,” he added.

He doesn’t want to micromanage. He wants to ensure that all alternatives are considered before a final decision is made. For example, if someone brings up sandblasting to meet a customer’s corrosion-resistance specification, he might suggest pickling and oiling.

“I try to advise more than criticize,” Aronson said.

Figure 6
Finishing stainless steel takes a skilled hand, particularly when the parts are destined for high-visibility areas on end products.

That willingness to engage in open discussions enables the front-office team to tackle complex design challenges from customers. They can quickly consult each other to derive real-world fabricating solutions to what may seem like pie-in-the-sky requests.

Aronson shared the tale of a customer that was looking to bend 1-in.-OD tube on a 1.25-in. centerline—a really tight bending job. Aluminum kiln draw-quality tubing was looked upon as being the only material that could stand up to the job, and hot-rolled tubing just couldn’t do it. That type of conversation is a natural extension of P&A’s intimate working confines.

Aronson said he thinks P&A is in a good position to build on several years of successive growth, even if this year’s revenues retreat a bit from 2013 levels. Like any fabricator, the company is looking for qualified welders and upgrading its blanking capabilities, but P&A’s future is not being threatened because of either factor. It has a business approach that Aronson believes can sustain success, and in the Pacific Northwest, sustainability is a trend that’s never going away.

Figure 7
P&A has run a powder coating line for almost 20 years. The line can accommodate parts 30 by 72 by 108 inches.

About the Author
The Fabricator

Dan Davis

Editor-in-Chief

2135 Point Blvd.

Elgin, IL 60123

815-227-8281

Dan Davis is editor-in-chief of The Fabricator, the industry's most widely circulated metal fabricating magazine, and its sister publications, The Tube & Pipe Journal and The Welder. He has been with the publications since April 2002.