CHICAGO - From the seed of an idea only two years ago, privately owned ONeal Industries Inc.s manufacturing subsidiary has gained traction, logging double-digit revenue gains during the companys first full calendar year in operation and boasting at least one capacity expansion on the way.
ONeal Manufacturing Services (OMS), a sister company of major metals distributor ONeal Steel Inc., was started up during the first half of 2011 as Birmingham, Ala.-based parent company ONeal Industries looked to separate the companys value-added processing functions from its core distribution business.
By splitting manufacturing from metals distribution, both companies have done a better job of capturing new business that fits each of the models, OMS sales and marketing vice president Gerald Brockman told AMM.
OMS, which supplies fabricated metal components and welded sub-assemblies to original equipment manufacturers (OEMs) from 11 facilities, saw 2012 run-rate revenues jump 25 percent from a year earlier, Brockman said. Some of that growth is attributed to its acquisition of Iowa Laser Technology Inc. (Jan. 3, 2012, amm.com), which laser cuts, welds, machines and forms sheet, tube, stamped and spun metal parts.
OMS, which operates facilities throughout the United States as well as in Monterrey, Mexico, is now working to expand its Greensboro, N.C., facility. It is primarily a facelift and expansion of space to house our expanding operations support team there, Brockman said. We have added, or are in the process of adding, more capacity of flat lasers, tube lasers, metal forming and robotic welding to support customers who are localizing their manufacturing activities back to the U.S.
Nearly all of whats made in Mexico is shipped back to U.S. customers, he said.
OMS was created to be separate from ONeals distribution arm, but the sister companies do collaborate on materials purchasing, Brockman said. We use the same supply chain management team as the distribution business unit. We leverage that sourcing group and that buy for OMS. Our inventory turns are about the same as the distribution business, but we have to build in some safety stock to account for delayed mill deliveries. We are supporting production lines for large OEMs, and we cannot afford to allow their production lines to stop.
The vast majority of OMS work is custom manufacturing under short- and long-term contracts. We have almost no transactional business. That is one of the fundamental strategies in our business model, Brockman said. Contracts vary from one month to multiple years, depending on the particular customer and product line, he said.
The primary end markets OMS serves range from agricultural, construction and material handling equipment to mining, power generation, forestry machinery and railroad equipment. We have done some renewable energy projects with wind and solar, Brockman said. What we produce can range from (a) cut-to-shape component to a fully fabricated frame for some type of equipment, like a large forklift.
OMS does outsource some processes that cannot be performed in-house and when its own equipment is running at capacity, but that is less than 10 percent of the services provided, he said.