“To a degree, I wonder at times if I’m in the wrong line of work,” he said. With a full staff to pay and a family to provide for, Mowry admits he’s “scared to death. That’s my family, you know. And to potentially not be able to take care of that family burdens me greatly.”
It’s a burden that has been weighing down on dozens of surface finishers across the country. Gull Industries was affected a little later in the game, having only started to feel the pinch in March 2009. But some areas of the metal finishing sector began to crumble as early as the first quarter of 2008. And a lot of it is unprecedented, with some saying they’ve never before seen anything like this. It’s not all doom and gloom, though, with a few areas continuing to stay afloat, or even thrive. Either way, business owners are taking serious measures to trim overall spending and overhead, while keeping a close eye on the latest economic news and industry trends.
Over the last year, some companies have seen as much as a 45% decline in business. Bakersfield, Calif.-based AC Plating first saw revenue slip in early 2008, followed by a more precipitous drop in the second quarter. “We were in the tank by August 2008,” recalled Bob McBride, AC Plating’s president.
The refrain is familiar. Artistic Plating, based in Milwaukee, Wis., experienced a 41% drop between the first quarter of 2008 and 2009. Incoming jobs are unsteady, with orders changing week to week. In the past it would be slow, but there was a steady flow. Now the company could go for a week without any work. The firm was having a good year until November 2008, and just two months later, it barely broke even. “It’s been horrible,” said John Lindstedt, president. “I’ve been at Artistic Plating since 1974 and I believe this is the fifth recession that I’ve gone through. This one makes all the other ones pale in comparison.”
Even those facilities that were doing well have been surprised by the depth and severity of the downturn. Larry Dietz, general manager of Professional Plating in Brillion, Wis., said 2008 was shaping up to be a record-breaking year. “We’ve been around for 30 years, and last year was our highest sales year ever,” Dietz revealed. “We thought we were immune to what was going on.” But the company quickly realized it wasn’t.
Nor was Valley Chrome Plating, based in Clovis, Calif. According to Ray Lucas, owner, the company faced a 25–30% revenue drop in the last year. “I talked to a lot of people all across the country, and the average is off 40–45%,” he said. Lucas noted that the economic struggles are practically everywhere; what once might have been reaching only certain cities and states has swept through nearly the entire U.S. “Now I think everyone is affected—Seattle, New York, Georgia. It’s actually global.”
It’s Sector Specific
With major U.S. companies struggling (some folding), certain sectors face tougher battles while others have remained somewhat steady. Take the automotive field, for example, with its well-documented woes. Now the fortunes of those businesses that are tied to this bellwether industry are being impacted. Case in point: Palmetto Plating Company, based in Easley, S.C., has seen a substantial decrease. No surprise given that now-bankrupt Chrysler is one of its main auto clients. John Cutchin, president, said its automotive division is down 50%. At the same time, a reorganization plan could bode well for Palmetto. “If they survive, the outlook is very good because next year we’re scheduled to pick up Dodge Ram [parts finishing],” he said.
It’s that kind of uncertainty that has metal finishing owners scratching their heads as many sectors become more unpredictable. The gaming industry, including slot machines, for example, has been down on its luck. Same goes for general manufacturing in some areas, oil-related jobs and retail.
Despite overall losses, there are some areas that haven’t been as hard hit. Professional Plating’s Dietz said he’s seen agriculture only recently starting to fall. Lawn and garden and ammunition, for instance, seem to be faring well. And as Gull Industries’ Mowry attests, “medical continues to grow.”
Business has been steady for Tucker Industrial Coatings, located in East Berlin, Pa. “We haven’t seen declining orders,” said Bernie Tucker, founder of the liquid painting operation. “If we do the volume that we did last year, we’ll be right where we want to be.” Being in the paint and equipment business has served Tucker well. With military-related equipment making up 45–50% of his business, there has been steady work from the U.S. Air Force, Army and Marines.
In response to the economic downturn, many finishers first looked to cut back on expenses—a practice in place at many operations even before the recession. In an industry notorious for its tight margins, nearly every shop owner is making dramatic changes. Layoffs, cutbacks and debt repayment have all been part of both survival and precautionary measures.
Renee Hudgins, president of C.R. Hudgins Plating in Lynchburg, Va., said they have been cutting labor forces and going out to bid to “find the best price on everything.” Actively going out to find new business and diversifying services are other ways companies are coping with the slowdown. Palmetto Plating, for instance, is working with different vendors and also has plans to add two new processes this summer to further broaden its base. They’re currently doing municipal government-related work for stainless steel water pipes in New York City.
Then there are the changes taking place inside the plant. Many firms are trying everything they can to prevent layoffs. At Gull Industries, for instance, no strategic layoffs have happened yet, but they are losing some employees through attrition. “We haven’t replaced a single person,” Mowry said. On top of that, shifts have slowed, and non-essential spending has stopped.
Professional Plating’s Dietz also says the recession has directly reduced employees’ hours at his company, but they haven’t cut jobs or training yet. He says they’re taking jobs at lower prices “just to have something.”