The economic crisis has left the manufacturing sector traumatized, with some companies scrambling desperately to stop the financial hemorrhaging. The efforts, while not all successful, have led some to rely on maintenance, repair and operations (MRO) work to carry them through to an eventual turnaround.
Machine tool manufacturers and machine shops say they are hanging on despite the recessionary economic conditions that have been felt most deeply in the manufacturing sector. They're able to do so by stressing MRO work or because they have a narrow niche for products and services.
One company in Texarkana, Texas, for example, specializes in replacing parts for German-made paper mill equipment. "We don't make parts for them, but we are a competitor for replacement parts," said Steve Petty, president of Texarkana Machine Inc., which purchases plate, flat bar, tubing and other types of steels. The company also performs tool-and-die work for the steel industry, specifically for welding electrodes, which he says "are very complicated and very expensive."
The February announcement by Pittsburgh-based U.S. Steel Corp. that it would idle its electric-resistance welded tubing operations in Lone Star, Texas, worried Petty, "but the maintenance people are still working and we are still shipping orders," he said. Texarkana Machine also provides tool and die work and short production runs for the Red River Army Depot in Texarkana, which performs maintenance on ground combat vehicles and tactical systems.
The company's product diversity and global reach will help sustain it, Petty said.
"We design and make the paper mill equipment ourselves, by reverse engineering. Then we catalog over 6,000 parts that we manufacture, warehouse and distribute. We have sales staff in the United Kingdom, Australia, Brazil, India, Israel and the U.S.," he said.
Copelands Inc., a carbon steel, stainless and aluminum plate fabricator and job shop in Ooltewah, Tenn., also has a diversified customer base, but Mike Copeland, general manager, remains a bit nervous about economic conditions. "During the past six to eight weeks, we have seen a lot of quoting opportunities, but they are not ready to pull the trigger," he said. "I'm not sure whether (these inquiries) will lead to new business or if they are looking to quote for greater competitive pricing."
Copelands serves such markets as power generation, truck aftermarket, bridge construction, industrial pumps and commercial mowing, but it also makes specialty linings for the boring and mining industries.
Among mining companies, some that ceased operations toward the end of 2008 have since reopened, he said. "Normally this would be their busiest time, but they are not booking some of the business they typically have. Perhaps the equipment people don't want to spend the money. If they aren't running 24/7 like they did in September and October, there is no need to replace consumables, chips, cutting tips and other parts as quickly."
Petty said that some of the equipment at Texarkana Machine is getting less use, but he has put his employees on MRO tasks rather than laying them off.
In Georgia, the owner of a machine shop agreed that lower operating rates among customers means that parts aren't wearing out as quickly. "We do repairs of large industrial machinery," particularly for rock quarries, the heavy construction industry, scrapyards and printers. "The economy is in the pits. Compared with last year, our business is way down—off about 25 percent," she said.
"We have idled some equipment and laid off employees," she added, crediting her metals suppliers for "working with me. We plan to hunker down and survive this market. We have to get on with it." CORINNA PETRY