by: Tony Carrol, sourced from the April 2001 edition of the Welding Journal
Many articles focus on large companies doing spectacular types of welding on space stations and giant structures.
But much of the real-world business of the welding industry is conducted by small firms – job shops and specialty welding companies with less than 50 employees, usually started by an entrepreneur with a dream, a few skills and not much more.
The Welding Journal focused on four of these smaller companies and the people who founded them. How did they get started? What challenges did they face along the way? How are they surviving? Have the dreams that helped form these companies survived the reality of day-to-day competition in the welding industry? And perhaps most importantly, what advice do these entrepreneurs have for those who might consider following in their footsteps?
Wagner Plate Works
John Peters was general manager of a steel plate distributor in Houston when the company went out of business in mid-1999. Peters saw an opportunity. He and Eric Wagner, who had been national sales manager of a Tulsa, Okla.-based cylinder supplier, got together and bought the distributor’s heavy plate rolling equipment. They arranged to keep the same location and opened Wagner Plate Works, LLP, Houston, Tex.
Less than a year and a half later, the company has 11 employees. It builds and sells rolled and welded cylinders (Fig. 1) to the pressure vessel industry and to boiler manufacturers, and also sells some tubular products to the offshore oil industry. Wagner Plate Works welds longitudinal and circumferential joints in cylinders from 21 to 168 in. in diameter. It mainly uses submerged arc welding and has three automatic machines in-house. The small firm works two shifts a day, six days a week, with X-ray crews checking the welds at night and on Sundays. The future looks positive.
“The pressure vessel industry is booming,” said Peters. “Natural-gas-fired boilers are in the works all over the country. All the refineries are going through facelifts right now and that’s more work. We’re projecting a good five years to come.”
Asked about the biggest challenges the small plate welder has faced, Peters cites three. Financing was probably the toughest area, he said. He and Wagner brought in a third partner, then bought him out in August 2000. Securing suppliers’ help at the start was also difficult. “Some suppliers gambled on us,” Peters reported. “That’s something you never forget.” The third challenge was the same companies of all sizes face today – getting and keeping good workers.
“The customers have been great,” he noted. “It’s an advantage to be as small as we are. We can turn the company on a dime, and it¹s nothing for us to turn our operations around to meet specific customer needs on data packages and materials identifications.”
Peters’ greatest reward? “Watching it grow from absolutely nothing, from just two guys looking at each other. We were able to bring in six good employees from the previous company. They’ve stayed with us, we’ve rewarded them and we plan to keep doing so. They’re the heart of our business, good craftsmen with good work ethics. Signing checks for workers’ families; that’s the greatest thing.”
Arc Dimensions, Inc.
Arc Dimensions, Inc., Largo, Fla., shares one thing with Wagner Plate Works – growth. The six-year-old company builds cable racks and plasma chambers for the electronics industry and does some general fabrication with several arc welding processes.
“We started on a shoestring and one welding machine,” said Paul Boucher, one of three partners. “Now we’re up to about a dozen machines and six people. Next year we’re looking at getting into robotic welding, as well as increasing production on our cable racks.”
One unusual thing about Arc Dimensions is that it began with three welding students. The three – Boucher, Robert Pope and Dave Kulak – were all superior welders enrolled at Pinellas Technical Education Center (PTEC) of Clearwater, Fla. All competed in the SkillsUSA (formerly VICA) vocational championships, one winning national prizes and one winning an international gold medal.
“We saw welding growing, and we wanted to take a welding business to the next level and do some precision welding. So we all met one afternoon and agreed to try it. We bought a Miller welding machine and rented some space for $400/month. We’ve been growing ever since,” Boucher recounted.
Probably the toughest challenge so far has been working with employees, Boucher claimed. “You feel committed to making the payroll. It’s tough to find good employees. We’re fortunate to have PTEC, one of the finest vocational-technical schools in the country, nearby. It’s like a farm for good welders.”
Have the rewards outweighed the challenges? “Oh, yeah,” exclaimed Boucher. “It’s nice to know that you control your own destiny and that you get back what you put into it. We’ve never borrowed money, never had a bad month. None of us took a salary the first two years; we just reinvested everything into the business.”
Precision Flange & Machine
Precision Flange & Machine, Inc., Houston, Tex., started as a dream in Mike Allen¹s mind. Allen had worked for several steel distributors and fabricators when he decided to form his own company in 1989. He borrowed $50,000 to buy equipment and began growing.
Today, the company has 35 employees and a 70,000-sq-ft building on 8.5 acres. It fabricates special fittings and flanges for the petroleum industry, and even has its own product line. Maintenance and modification work from refineries keeps the company busy with submerged arc, gas metal arc, gas tungsten arc and some pulse welding.
“There’s quite a bit of refinery shutdown work right now,” Allen explained. “There are no long lead times for this stuff. You work day and night, Saturday and Sunday if you have to. You spend a lot on overtime, but you can make decent money.”
“Being profitable is tough, though,” he continued, outlining the challenges Precision Flange has faced. “If you keep inventory, you get taxed on it; if you don’t keep inventory, you may not get the business. The taxes get to me.”
The second big challenge, as expected, is dealing with workers and keeping them happy, which, Allen said, sometimes includes serving as a “marriage counselor and loan officer.”
But there are rewards. “The personal relationships with the customers, and being proud of the quality of finished product going out the door. The dollars are important, but satisfaction with the product is the greatest thing,” Allen asserted. “We’ve had customers fax us notes congratulating us on the quality of jobs we’ve done for them. We immediately post them by the time clock for everyone to see.”
Gary Neumann may never slow down. He worked 31 years for a major welding equipment manufacturer before taking advantage of an early retirement offer and launching GEM, Inc., New London, Wis., in 1996.
GEM does light manufacturing and metal fabricating (Fig. 2), and builds and sells its own line of small welding carts, cabinets and test equipment. GEM uses gas metal arc and gas tungsten arc to weld carbon steel, aluminum and a little stainless steel. Neumann, his oldest son, his oldest daughter and one helper comprise the entire work force.
It all came from a dream that crystallized at the time of the early retirement offer. “The feeling was that if I didn¹t do it then, I never would,” said Neumann. “There is a burning desire to be on your own. It’s a lot more fun. I put in 7580 hours a week, and don’t know where the time goes. Sometimes I think, why go home, there are still so many interesting things to do here.”
The company has been growing. The year 2000 saw a 2223% increase in sales over 1999. Starting from an 8000-sq-ft city warehouse four years ago, GEM recently moved into a new 12,000-sq-ft building, which is already generating new business.
Asked about challenges, Neumann puts two at the top of his list.
- Finding the right people to help start the business in terms of financial help, insurance, legal help, government agencies, accounting and the like. He points out that these things are very hard for small businesses to learn.
- The time crunch. “You spend a lot of time with the business that you should spend with family and friends. That’s a hard balance all the time,” he said. “Also, how do you duplicate yourself? You have to hire people to do your job. In a small business, you tend to do everything yourself, but that makes it hard to grow.”
Rewards are not hard to find, though. “It’s not money. I could have made more money where I was, and worked less hours. It’s the satisfaction of seeing the business grow, then sitting back and watching it all happen,” the executive asserted. “I’m not sorry I did this at all – there’s nothing better than running your own business. It’s neat to have something you can do with your kids, too. Soon I’ll be able to turn it over to my son. Then I can go off and start inventing things.”
Advice from the Entrepreneurs
Our four entrepreneurs offer advice to welders and executives who may be thinking of opening their own businesses.
John Peters of Wagner Plate Works. “First, if your family is not behind you, it won’t work. They have to be able to see the big picture. Second, you’ve got to have quality people, and you’ve got to trust them. Third, you need the support of suppliers; suppliers are your lifeblood. Whatever you¹re made up of, that’s the rest of it.”
Arc Dimensions Paul Boucher. “Don’t get in over your head. Don¹t borrow a lot of money to do it. If you open your doors and produce a quality product on time for your customers, you will do well.”
Mike Allen of Precision Flange & Machine. “First, look for an area where the market is weak and people aren’t being taken care of. Second, quality is essential. You’ve got to have pride in your work.”
GEM, Inc.’s Gary Neumann. “The paperwork portion is terribly important. Talk to someone in a similar business who’s willing to give you some sage advice and who can point you toward other people to help you. You need a mentor. Finally, do it and don’t look back. Focus forward on your goal. You will make a lot of mistakes – just keep going.”