According to the Small Business Association, about 627,000 new companies start up each year. Likewise, however, a similar number of companies, about 595,000 of them, go out of business each year. One would have to assume the companies that endure are the ones that launch with a rock-solid business plan.
“People start businesses all the time – in general and even in the fabricating industry,” says Kathy Conrad, head of marketing at Salvagnini America Inc. “It’s the successful ones, however, that look seriously at positioning themselves and strategizing to get the greatest market opportunities available.”
Before opening their doors, new business owners should identify their customer base and what those customers will need from them, including particulars, such as part dimensions and requirements. Are the parts big or small, light-gauge or heavy gauge, and in what type of metal? They’ll also need to determine the level of flexibility required based on the potential for high-mix, low-setup production. In doing so, they will ultimately be able to identify their niche in market and the type of equipment in which to invest.
Under- or overinvesting can be detrimental to the success of a new business. It’s essential, therefore, to spend time researching and investigating the options and set a growth plan.
The right mix
The risks involved in opening a business are real – especially when considering the level of investment required for a fabrication shop and its equipment needs. Fortunately, Conrad and her colleague Peter Kitzler, panel bending project manager at Salvagnini, can offer cut and dry advice on which equipment to start with and which equipment to adopt later as a company grows and expands.
Specifically, the two recommend a laser cutter, press brake and panel bender as essential for any new fabrication business. The same advice holds true for a fabrication shop that is replacing an outdated equipment fleet with newer technology.
“Whether you’re revamping an old shop or launching a new one, you have to have an 8- or 10-ft. laser with minimal automation to not overshoot the budget,” Kitzler says. “You also need a 10-ft., heavy-tonnage press brake as well as a 7- or 8-ft. panel bender where the operator loads and unloads material. Keep it simple yet efficient.”
Although Kitzler recommends minimal automation early on, it’s important to understand that this does not mean investing in outdated equipment nor does it mean to avoid investing in equipment that has some automation already built in. He is simply cautioning a new business to not be overly enamored with the idea of a lights-out operation too early in the process.
“I want to underscore the fact that you need to stand out against the competition,” Kitzler says. “But that doesn’t mean overinvesting. Invest in technology that’s geared to make operations easier and deliver higher quality results. This will help to differentiate a new business from its competitors – even those that have been long established in the marketplace. It will also make sure that your products are at the right quality and price, which will help you be profitable.”
He goes on to say that any downstream processes not covered by the initial equipment mix can be handled by partner companies. If a new fabrication shop needs to offer additional services, such as welding, grinding and painting, those services are important to consider and understand.
“For many new businesses, it’s not feasible to take on all potential downstream operations right away,” Kitzler says. “Therefore, forming an alliance with other companies is a good strategy to be able to market as a full-service business.”
To some, the combination of a panel bender and press brake might seem redundant. But, Kitzler explains that there is an important distinction that needs to be made between the two bending technologies.
“The panel bender is a very flexible machine, but it can’t do everything,” he says. “Similarly, the press brake is an essential machine, but it can’t always keep up with today’s aggressive turnaround times.”
The panel bender, which was invented in 1977 by Guido Salvagnini, the founder of Salvagnini, boasts processing speeds about three to five times that of a press brake. The reason for the significant increase is primarily based in the machine’s automatic setups versus the press brake, which needs complete tool changes every time a new part needs to be produced.
“Time to market is so important,” Kitzler says. “Imagine you’re working on a contract from one of your customers and they need a certain amount of parts to be produced in a short time frame. Today is Friday and the parts need to be shipped out on Tuesday. With a press brake, you might not be able to fulfill that contract in time. The panel bender, however, can achieve that. A job shop can’t be competitive if it’s not able to quickly turn around orders.”
In addition to speed, the panel bender offers flexibility. This is particularly helpful for fabricators that hope to carry out what’s referred to as kit production: Producing the various components of a kit one at a time instead of in batches.
“Using a metal cabinet as an example, with a panel bender, you can produce a front, a back, a top and a bottom, each individual part one at a time,” Conrad says. “This is opposed to producing100 tops and 100 sides, as is typical on a press brake. With a press brake, you have to do them in batches because of the tooling changes that are required. When you’re done making one part of the cabinet, you have to remove those tools and do a new setup before you can process the next piece.”
With a panel bender, the tool change is automatic, so a fabricator can produce one full cabinet in less time and at the same cost than it would take to produce 100. Time, after all, is money.
Whether an equipment purchase is being made by a new startup or a company that’s been in business for decades, it’s important to get the most for your money. Panel benders have historically been highly productive and with less labor costs – another important factor when considering equipment purchases.
“We typically see a three-to-one ratio where a panel bender can handle the work of three press brakes,” Conrad says. “Think about that from an operator standpoint, especially considering how difficult it is to find and hire qualified workers. When you’re looking at this from a job shop and fabricator perspective, you have to consider ROI not just from a pure machine cost, but also from a labor cost. Point blank, press brakes cost you a lot more in labor than panel benders do.”
Smart investments that take into consideration all pertinent factors – labor costs included – will help a new business quickly establish itself on the market. By establishing that firm foundation, the potential for future investments in automation or downstream operations will be greatly increased.
“The more that fabricators look to technology, flexible automation and batch-to-kit strategies, the better equipped they will be to ride out any issues the economy may throw at a new business,” Conrad says. “They have to do their homework, talk to a lot of people and make sure that what you’re putting on your floor is going to work for the customers that come to you.”
More often than not, fabricators need to be flexible; they need to be able to turn on a dime, if customer requests call for it. And to make sure that those dimes go as far as they possibly can, investing in the right equipment will be the first order of business.