Metal Fabricators: How Diversification Can Distinguish You from the Pack

Demand for products from metal fabricators has long been driven by the needs of other industrial sectors. The industry – distinct due to its size and contributing role to countless other major markets – is certainly no stranger to typical intra-market flux and demand variability. But competition is tight, and the need for companies to distinguish themselves in the market is absolutely essential for success.

Currently, metal fabricators see a huge need for increased flexibility and efficiency in the scope of their overall production. The post-recession U.S. economy is slowly growing, and production in a number of industries is in the process reshoring. This presents many fabricators with a unique opportunities to manufacture more intricate products, advance through shortened production times and manage shortcomings in their own output.

Post-recession deficits still strain many in the industry, and it’s falling to fabricators to pick up the slack. Savvy players in the industry are optimistic, however, and many have taken hold of this shift by diversifying the way they do business, allowing them to get a jump on competitors in a number of ways.

Investing in Smarter Equipment & Infrastructure

Given the transition towards reshoring and increased production in the U.S., there has been an increased focus on investing in capacity-building equipment. Metal fabricators are investing in new production infrastructure, which allows them to:

  • Increase the capacity and efficiency of production
  • Reduce lead times
  • Take on a wider client base

Fabricators are now investing in a variety of new infrastructure beyond new production equipment. Advancements in machinery have recently taken off by leaps and bounds, and, in an effort to maximize production efficiency, many fabricators have found increased value in digital solutions for both production and organization.

Getting the Most from Your Account Base with Metal Fabricators

As metal fabricators focus on increasing their capacity, many are also placing a new focus on their accounts. With increased capacity, many fabricators (especially SMEs and boutique-sized manufacturers) are taking stock of their current customer base and seeing where they can take on new business and gain a more diversified client base.

The vast majority of metal fabricators are boutique shops with an average of 80 percent of their revenue coming from only a few large accounts. The discrepancy between the revenue from one or two large contracts versus significantly less revenue from a few smaller contracts places metal fabricators in a precarious position. The loss of the one major contract could mean life or death.

Relying on one major contract does metal fabricators a disservice: it’s like keeping all their eggs in one basket. It is critical for SMEs and boutique shops to shift their focus towards developing a strong, diversified customer base. Building a healthy, diverse portfolio of customers places small metal manufacturers at lower risk of losing the majority of their revenue when a contract is terminated.

Partnering for Mutual Success

While it may not be a current business practice, there is a growing post-recession need for partnerships between boutique firms. By partnering with customers – or even competitors – small metal fabricators will be able to best utilize their existing infrastructure and equipment while maintaining long-term relationships and contracts.

Overall, increased output capacity and an openness towards partnerships and other forms of collaboration are key to unlocking newer and greater market opportunities for metal fabricators. The United States will always represent a massive market with significant opportunity for metal fabricators of all types and sizes, but as the economy remains volatile fabricators must be proactive in building a strong and diverse client base.

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