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Opportunities in Welding

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Welding's in a State of Flux By Dan Markham, Senior Editor A small but growing number of service centers are venturing into welding. Is it the right move? Always looking for a little better margin, a way to stand out from the competition, or perhaps simply to stay afloat in a challenging market environment, a growing number of service centers are adding welding to the menu of services they offer their customers. According to Metal Center News circulation data, there are at least several hundred service centers in North America that offer welding services ranging from simple repair work to more complicated production welding using the most sophisticated machinery. The business opportunity is apparent. The American Welding Society estimates the U.S. will face a shortage of 374,000 qualified welders by 2024 unless government and educational institutions succeed in recruiting and training a new generation of workers. The fact there is more welding work than welders also poses some significant challenges for service centers and toll processors looking to venture further into fabrication. Getting into the welding business calls for a significant commitment that involves a capital investment in new equipment, the hiring of hard-to-find talent, and the tact not to upset customers who already offer welding. Indeed, warn executives, competing with existing customers could cost a service center more business than it gains from the new service. Service centers that are already offering a range of value-added processes often add welding at the request of certain accounts. Altitude Steel in Denver is one such company that heeded the customers’ call. “We got into it because there was a lot of demand. We were turning down a lot of welding jobs,” says Altitude’s Doug Cohan. “We’re not putting together the World Trade Center, but a pergola for a guy’s backyard.” For many, it’s welding at its most basic; for others it’s highly complex and even automated. “I’d say our investment was in the $8,000 to $10,000 range for all our equipment. You can spend $100,000 on a shear, so welding’s far more affordable,” says Cohan, who also purchased a plasma cutting table at the same time to complement the wire-feed welding. Dennen Steel, Grand Rapids, Mich., had a similar entry into the welding business, though its efforts go well beyond simple arc welding. The service center was already offering stamping, so executives felt it made sense to join metal parts, as well. The company offers both hand welds and robotic welding, the latter a much larger investment. “Resistance welders can run from $20,000 to mid-six figures. Robotic mig weld cells start around $85,000 and run to high six figures, depending on the size of the part and the number of robots involved,” says a spokesman for Dennen Steel. Cost is just one consideration for service centers moving downstream into fabrication, say both service center executives and welding equipment suppliers. There are a number of potential pitfalls for the neophyte welder, and such an expansion should be undertaken with much care. A local welding distributor or equipment manufacturer can answer many of the initial questions, says Kenneth L. Alrick, senior welding technical manager for ESAB Welding and Cutting, Florence, S.C. Among the most pressing issues is finding qualified welders. “Anybody can say they want to start up a welding business. That’s only part of the stakes. The second part is finding people that are qualified and trained to do the welding. That’s the biggest task the industry is running into right now,” says Dan Klingman, customer training instructor for Lincoln Electric, a Cleveland-based manufacturer of welding equipment. The technical knowledge required to weld is growing along with the number of alloys that service centers stock. Welding all the different kinds of materials—from mild carbon to new high-strength steels, and from aluminum to stainless—can challenge even the most experienced welders, Klingman notes. In addition to acquiring equipment and personnel, service centers may need to make some changes to their facilities. Welding operations require ample space, a reliable power source and proper ventilation for welding fumes. Other employees must be protected from both the heat and brightness of the cutting torches. “Whether you’re stick welding or mig or flux-cord welding, you need some way to pull the fumes away from the welder. There are a lot of different options for source capture, including portable ones if you have a big, open shop,” says Klingman. To Cohan, another challenge was figuring out how much to charge for the service. “The learning curve for us was trying to evaluate the time and effort, the man-hours, it would take to produce specific jobs. In the beginning, we underestimated a bit. We’re not doing that anymore,” he says. For Dennen, stepping up from basic manual welding to robotic operations for some OEM customers proved daunting. Maintaining the necessary quality and passing the scrutiny that came with validating the process “was very intense and took a lot of time and effort,” the spokesman says. Of course, as suppliers of metal products to fabricators that offer welding, service centers must take care not to venture too far onto their customers’ turf. Cohan has found the basic welding services he offers as complementary, not detrimental, to his customer relationships. Altitude Steel handles spill-over weld work when his fab shop customers get too busy, and he refers business to them when a job is beyond Altitude’s capabilities. “We’re not trying to step on our customers’ toes. We sell to fabricators. Obviously, some jobs come in that are too big for us, and we give them to customers who are more capable of doing that kind of work,” Cohan says.

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