Consolidations Keep Changing Fabrication Landscape 

Mergers, acquisitions, and consolidations—they’ve been a mainstay of American business in general and the metal fabrication sector in particular for a long, long time. 

However, in recent years, that trend has continued to make what has been a small-ish list of big players in the steel service center and fabrication markets feel downright tiny.  

Big Players, Big Moves 

Take, for example, Morton Industries’ recent acquisition of Davenport, Iowa-based tube fabricator Superior Tube Products. Or the just-completed merger of Ryerson Holding Corp. with Olympic Steel (and the purchase of fabricator Norlen Inc. just two and a half years ago). And, of course, Worthington Steel’s announcement just days ago that it will purchase service center heavy Kloeckner & Co. 

These and other movements of giant pieces on the metals industry chessboard make for three interesting (some would say worrying) scenarios to ponder for the small and medium-sized enterprises that make up the vast majority of U.S. fabrication operations.  

Price Watch 

First, of course, is pricing.  

With fewer sellers comes less competition to keep raw material prices in check (in theory). Combined with the ups and downs of tariffs on steel in recent months, smaller shops (again, theoretically) stand to absorb some sticker shock this year, which they must pass on to customers who may or may not welcome the news. Mills and service centers are aware that they can only charge what the market will absorb, so it’s never a free-for-all. All the same, purchasers at SMEs could be harder pressed to find deals on raw materials in the near future as fewer players get a feel for new market realities. 

Competing for Fab Business 

Second is competition among service centers with each other and with their own customers for value-add business.  

Because OEMs want as few suppliers as possible for any given part, service centers have for a long time invested in the same lasers, plasma cutters, saws, and welding machines that their customers use as they seek the large-run business that’s easier to manage than the high-mix, low-volume business that has become the norm for smaller shops. Some of those shops would indeed like those longer production runs to keep steady cash flowing in, but the cap-ex budgets of bigger shops and service centers means they can invest in the higher-end machinery and absorb more and more of that business. With consolidation continuing apace, that disparity in cap-ex budgets will only grow. 

Tech Gap Could Grow Larger 

Related to that competitive landscape shift is a third issue—the resulting technology (and productivity) gap between the haves and have-nots.  

Behemoths like Ryerson and Morton, again, have more money to invest in the latest difference-making technology, be it high-end panel benders, software, laser welders, or automated material handling systems. Beyond the number of machines, those technology improvements give bigger players yet another advantage because now they can do just as much or even more work with fewer employees, freeing up even more cash for even better machinery in the future. 

As has been noted in The Fabricator and elsewhere, AI is shifting the software game in favor of the Everyman because it can create custom-coded systems for even the smallest shop in minutes. For free. However, AI can’t laser-cut ½-in. steel plate. Shops still need actual machines to do that, and the larger players are buying the very latest machines connected to the best automation systems to do it.  

Takeaways 

All this to say, SMEs savvy to the game still have a vitally important role to play in the fabrication economy, and they’re not going anywhere soon. Anyone who can get quality parts out the door on time consistently will always have work in this business—granted that they can do it profitably and keep enough good people on hand to maintain quality and delivery time. 

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