The Welding Industry Forges Ahead
Industry leaders shed light on the current and future state of the welding industry By Katie Pacheco and Mary Ruth Johnsen The welding industry has consistently enjoyed a healthy physique since its nascency during War World I. Valued at $20.67 billion in 2016, the global welding products market is slated to produce $32.63 billion by 2022, with continued growths on the horizon. Not far behind, the global welding equipment, accessories, and consumables market is expected to fetch $24 billion by 2021. Despite projected growths, the welding industry faces some uncertainties due to the ever-growing skilled labor shortage, as well as the recent Section 232 tariffs. To learn more about the current and future state of the welding industry, the Welding Journal reached out to a random selection of its Sustaining Member companies to showcase their unique perspectives. These leaders represent welding equipment and consumables manufacturers as well as those who use those products. What is the state of your company/industry today? Nigel Scotchmer, president, Huys Industries: The welding industry in North America today is in both retreat and expansion. As an advanced and wealthy society, our costs are high, and a great deal of manufacturing has gone overseas — and the need for welding has gone with it. At the same time, the aging population of our welders is exacerbating the issue, as a shortage of welders further encourages offshore welding…however, our aerospace and defense industries, and our high-value technology companies, continue to invest and explore advancements in manufacturing. As such, there are many opportunities for advanced welding, and that segment is expanding.
Mike Meyer, vice president, sales and marketing, CK Worldwide: CK Worldwide is experiencing strong growth, especially in the first half of 2018. Most of our friends in the industry have shared similar views, and it relates to the strong economy and business environment.
Matt Cable, president, Bug-O Systems: We realize the industry is changing as technology improves and the demand for skilled labor and knowledge in the welding industry continues to increase. We must be willing to adapt to changing market needs and continue to produce the best product possible to meet the demands of our customers.
Christopher Mapes, chairman, president, and CEO, The Lincoln Electric Co.: Lincoln Electric is excelling in today’s environment after several years of shallow demand from our core markets. We are seeing improvements in many industry segments. Capital investments appear strong, aided by tax and regulatory reforms that are spurring growth. We feel well positioned to meet customers’ demands across with our leading technologies, application expertise, and automation and educational offerings.
Mark Rich, chief operating officer, Baltimore Fabrication: The general state of the industry is relatively healthy. This is due to a roaring economy. Builders and owners seem to have faith in the POTUS [President of the United States] and are willing to spend money to build.
Mark Leska, senior marketing coordinator, E. H. Wachs: Coming off several years of robust sales and rentals worldwide, E. H. Wachs is predicting continued strong domestic growth coupled with steady growth overseas. Wachs has added employees as part of our expanding Sales and Rental Center network, in addition to the strong market acceptance of our Orbitalum line of high-purity saws, facers, and orbital welding systems. We attribute these successes generally to overall U.S. economic strength, coupled with increased spending on new build and MRO [maintenance, repair, and operations] projects in our core markets. High-purity growth is attributable to a vibrant aerospace industry, combined with strong growth in semiconductor, pharma, and food and dairy.
Joe O’Mera, CEO, Weldcote Metals: Weldcote is in the strongest shape it’s ever been in, for three main reasons. 1) Our recent acquisition by Zika has added new products, international reach, and a new energy to our efforts; 2) the opening of our new Niles facility has greatly increased our U.S. manufacturing opportunities, as well as helping to streamline on-time shipping, fulfillment, and customer service; and 3) welding as an industry has seen growth in most sectors, as well as an increased awareness in the public eye.
Renee L. Campbell, director, investor relations and corporate communications, Valmont Industries Inc.: At Valmont, our commitment to Conserving Resources and Improving Life® is delivered around the world through our four key business segments: engineered support structures, utility support structures, irrigation, and coatings — Fig. 2. International expansion has positioned [the company] for leadership on a global scale. We pursue growth opportunities that leverage our existing product portfolio, engineering capabilities, and knowledge of our principal end markets and customers.
Richard Schwarz, CEO, SAFE Boats International: Long-term oversight looks very sustaining for aluminum boats in our overseas market. State and local builds as well as defense and homeland security, city and county projects, and a strong world economy help boat builders, including SAFE Boats, continue to build boats on an economic level.
What changes do you expect in the next five years?
Christopher Mapes, The Lincoln Electric Co.: Customers are demanding higher levels of efficiency and productivity from their welding processes and solutions. This is driving ongoing development in more efficient and “smarter” equipment, software, and consumable solutions. Demand for solutions that address the skills shortage will persist, and we see this as a long-term challenge in manufacturing. For Lincoln Electric, this will drive growth in more intuitive equipment interfaces, in automation, and in educational services. We have made tremendous investments in these areas to ensure we have the right solutions and capacity to meet our customers’ needs. We also see growth in data analytics and IoT (Internet of Things) to help customers achieve better efficiency and quality in their operations.
Nigel Scotchmer, Huys Industries: I believe these trends will continue, and actually increase as less developed countries continue to improve their infrastructure, training, knowledge base, and thus increase their skills. This is clearly supported not only with the increasing skills of developing countries (aircraft being built in China, for instance), but by the indisputable evidence of the increasing quality of papers written in developing countries for respected journals in the developed world…and the decreasing number of quality papers from developed countries. This is also corroborated by the sheer number of quality applicants and students from developing countries at their institutions and at respected institutions in developed countries. These new welders are increasingly returning to their own countries as opportunities further develop there…North America is losing the edge of manufacturing superiority as the less developed countries catch up.
Mike Meyer, CK Worldwide: We expect continued growth with new products being introduced and continued brand building efforts — Fig. 3. Our focus on independent distributors has led to many conversions and the expansion of our customer base.
Matt Cable, Bug-O Systems: As technology continues to improve, new product development will help to bridge the skilled labor gap in the industry. User interfaces will continue to improve and adapt to the needs of welders.
Mark Rich, Baltimore Fabrication: I expect this [see the first question] to continue for approximately 30 months.
Joe O’Mera, Weldcote Metals: I see more and more focus on the welders themselves as a key component to the process. Over the last few years, there’s been an explosion in PPE (personal protective equipment), ventilation, and consumables with lower emissions. This will continue, while also focusing on making sure that production and quality are not compromised. And that effort will be led by companies that get out of the lab and talk to welders.
Richard Schwarz, SAFE Boats International: In the next five years, there will be more competition as new boat manufacturers enter the boat building arena on the home front. Price pressure is forcing SAFE to become more efficient to reduce build times and better productivity as well as be cost competitive. Technology, new welding processes, autonomy, and different types of propulsion and incorporating them into our builds to decrease costs to our customers [are among the expected changes].
Mark Leska, E. H. Wachs: Looking ahead, E. H. Wachs anticipates a trend of increased spending in oil and gas, with steady spending in power generation. We expect an ever-greater emphasis on safety via remote operation, plus demand for greater efficiencies in turnarounds and outages characterized by shorter time frames. In high purity, we see strong demand for the latest welding technologies in select industries such as aerospace (where they can’t build new airplanes fast enough) and greater demand in food, dairy, and pharma (in response to population growth).
Renee L. Campbell, Valmont Industries Inc.: The next five years will be driven by our strategy that is focused on building pathways to growth through an emphasis on addressable market expansion, and disruptors within those markets. Along with market expansion, Valmont is also focused on lean initiatives within our factories and offices, and leveraging our manufacturing footprint to address growing market demand opportunities. We are building and aligning our organization to enable us to best serve our markets, with a dedicated focus on talent development to strengthen our culture of excellence and collaboration, and be an employer of choice in our communities.
Are the recently imposed steel and aluminum tariffs affecting your business?
Nigel Scotchmer, Huys Industries: The tariffs will not significantly affect our business as we are diversified, and it would have been foolish to only rely on one source for materials and parts. I think this is a short-term problem.
Mike Meyer, CK Worldwide: The tariffs that took effect on July 6th have impacted our business more by adding 25% to the cost of high-volume items, like tungsten. So far, we have absorbed these costs, but if these tariffs remain in effect, they will eventually need to be passed on to our customers.
Matt Cable, Bug-O Systems: We have had some vendors raise component prices, so we are noticing a small impact in our cost for items. We anticipate that this will continue to progress through all our vendors, and are watching it very carefully.
Renee L. Campbell, Valmont Industries Inc.: As of this date, the direct impacts of tariffs have been limited, as Valmont does not import any raw steel or aluminum. Indirect impacts of tariffs are largely evident in our North America irrigation business, where uncertainty around the effect of trade policies on end-market dynamics has contributed to U.S. farmers delaying their decisions to purchase irrigation equipment and other capital goods.
Mark Rich, Baltimore Fabrication: The steel and aluminum tariffs have had an impact on our profit margins. Prices went from being very consistent to very inconsistent. Being a smaller, miscellaneous metals fabricator, it did not work out well when we requested escalation from larger general contractors. Large jobs can have very long schedules, and we cannot purchase steel until our drawings are approved. During this construction process, the prices would often rise substantially above allocated budgets. I also believe the steel vendors saw an opportunity to raise prices and capitalize on the situation. At times it was very frustrating; a tweet from the POTUS or his staff about impending tariffs could cause an increase in prices for a few weeks. I would like to see the steel market stabilize.
Christopher Mapes, The Lincoln Electric Co.: Our U.S. business has been impacted by the Section 232 tariffs, especially in our consumables portfolio, which uses imported welding grade metal to fulfill a portion of demand. As new domestic mills come online, we are working to identify where we can transition to local sourcing; however, this is a longer-term solution. In the interim, we are facing higher costs. Recent Section 301 tariffs related to the trade disputes with China are affecting components used in our equipment to a lesser extent. While Lincoln Electric does not source a significant amount of components from China, our suppliers do, and they are driving inflation through the supply chain to cover their increased input costs. Our approach is to pass rising costs to our customers while we work diligently to find ways to relieve the tariff burden. In the case of consumables, we have applied a surcharge on impacted products with the expectation that the tariffs will eventually be eliminated.
Mark Leska, E. H. Wachs: As a machine tool manufacturer, E. H. Wachs makes use of the highest grades of aluminum, high-strength steel, and tooling steel to build our products. Unfortunately, either as a direct result of tariffs or not, we are seeing higher raw material costs and, in select instances, material availability concerns. Generally speaking, it can be fairly said that tariffs add uncertainty to our supply chains. From a broader perspective, tariffs put cost pressure on our contractors, especially for foreign sourced construction materials such as high-purity stainless steel tubing.
Richard Schwarz, SAFE Boats International: “We are very concerned that the export market is going to be affected by those direct tariffs.” Schwarz explains that the company has struggled to pass along rising costs to customers with current projects because of contracts that are in place months or years in advance. Many customers are operating with a set amount of funding from grants tied to SAFE Boats’ quotes. “What we find is that we also are in a position where we can’t increase prices on what will be a fraction of our future orders, because they’ve obtained funding based on our price quotes.” The company also has a substantial number of international customers and is facing pressure to keep prices the same to compete with shipyards outside the country that aren’t subject to the tariffs. “Even if you exclude sort of the rest of the world, you also face price pressure within our domestic market from Canadian builders that are not subject to the aluminum tariffs. There’s not much that we can do.”
What are the biggest challenges facing the welding industry today? And do you foresee those challenges changing within the next five years?
Joe O’Mera, Weldcote Metals: Unfortunately, the answer to this question would have been the same 5, 10, 15+ years ago — attracting new people to welding as a career. Fortunately, I think the next five years will see these efforts really gaining traction. Manufacturing Day, Helmets to Hardhats programs, an increased focus on apprenticeship programs, vocational education, and a general acknowledgement by the public at large of the necessity and nobility of this work is starting to turn the tide.
Nigel Scotchmer, Huys Industries: The greatest challenge is the increasing competency of foreign companies and countries, and they will increase in the years ahead. Our competitors have fewer labor laws, fewer pollution laws, and less political pressure on business’ plans and interests. Developing countries’ governments realize the future lies in manufacturing and are committed to long-term plans. When I go to the Far East, it is clear to see how published and publically available 25-year plans of South Korea and China are being carried out.
Mike Meyer, CK Worldwide: We’re confident that our business will continue to grow, but trade barriers could impact our ability to expand in global markets. Tariffs could also cause some of our markets, aerospace for instance, to experience a slowdown, which we would feel.
Matt Cable, Bug-O Systems: One of the biggest challenges our industry faces is the shortage of skilled welders. There is a lot of work to be done and less people able to do the work. There are a lot of schools training welders to fill the labor needs of the industry, and tools and technology will need to improve to facilitate this demand. Welding knowledge is becoming more essential and education continues to improve to provide this knowledge to the next generation of welders.
Mark Rich, Baltimore Fabrication: A big challenge for us is finding a facility we can expand to with the correct zoning, power requirements, overhead doors, overhead cranes, and outside storage. Due to this robust economy, the existing steel facilities and fabrication shops are being bought and turned into apartment buildings. Baltimore was a steel town with lots of steel shops — all being bulldozed to build apartments. A one-million-dollar building is now selling for three million so it can be used for a “multi-use facility.” Other issues include a lack of qualified man/woman power. Our industry needs more “blue collar workers” who understand that with the correct certifications, they can make a career out of being a fabricator.
Mark Leska, E. H. Wachs: As a portable machine tool manufacturer, E. H. Wachs is witness to the lack of skilled workers in the industry, both as a result of retirements and a shortage of new entrants into the field. In some critical industries, such as aerospace, this appears to be leading to the demand for quality workers outstripping the supply. Combined with ever-increasing weld quality standards and practices, Wachs has adjusted by striving to make our equipment more powerful, faster to set up, safer, and easier to operate than ever before, coupled with greater training opportunities, a boon for both new users and seasoned operators.
Christopher Mapes, The Lincoln Electric Co.: I am very positive about the state of the welding industry today. Ultimately, the most pressing challenge will be to have the talent pipeline to support growth. The welding industry is a good place for people to base their career. The industry offers attractive compensation and benefits, plenty of jobs to fill, and attractive career pathways. I am also encouraged to see our industry and customers working hard to market the benefits of a career in advanced manufacturing and the welding industry.
Renee L. Campbell, Valmont Industries Inc.: The skills gap will continue to grow over the next five years. Companies that do not address this will be challenged. A changing workforce that places higher value on work-life balance. This is increasing, and will continue to do so. The welding industry has traditionally not been perceived as a viable career path for many high school graduates. This is changing, helped in part by social media showing the “people side” of welding. We feel the perception will continue to shift in a positive direction.
Tim Binder, American Welding Society Certified Welding Inspector, QA tech 3, weld process specialist, SAFE Boats International: Our biggest challenge in this industry is recruiting people into the profession. Our world pushes this generation to obtain a four-year degree outside of the blue collar building trades. The welding/fabrication industry needs to combine its efforts in recruiting young, knowledgeable people into the trade. Over the next five years, I hope we can reverse this trend and bring a future core of skilled labor into our profession.
What factors are benefiting welding today? And why?
Nigel Scotchmer, Huys Industries: Welding is the least expensive method for making metallurgical bonds to join, modify the surface of, and to repair, similar and some dissimilar materials. Welding also has a large, installed base of knowledge and competent companies. As such, there will always be a demand for welding. Sometimes welding may not appear to be the most glamorous process, but, like the need for sausage casings for sausages, there will always be a need for welding.
Mike Meyer, CK Worldwide: For the [GTAW] market, we’re seeing an influx of young welders entering the market with a lot of excitement about the trade. There is a lot of sharing through social media with experienced welders providing tutorials and images that help others improve their craft. It’s really great to see, and CK Worldwide supports their efforts.
Matt Cable, Bug-O Systems: There has been a refocus on infrastructure and construction that is driving demand for a lot of metal fabrication. The rapid advancements in technology have made things possible that we could only dream about a decade ago.
Christopher Mapes, The Lincoln Electric Co.: The welding industry is benefiting from strong capital investments from an array of different end markets that are driving broad growth — whether in transportation, heavy fabrication, general industries, construction/infrastructure and, more recently, in the energy segment. Additionally, aging infrastructure presents good long-term growth opportunity for the industry — for both new projects and MRO.
Mark Rich, Baltimore Fabrication: Factors that are benefiting welding today are an increased demand for highly qualified and skilled workers. Increased demand also means better career opportunities. Qualified employees can make much more money than college graduates. In addition, technology also offers very exciting and promising opportunities for the industry. This includes software and CNC [computer numerical control] equipment. Fabricators need to do their due diligence on how to implement technology. Potential employees should also enroll in trade schools to build their skills so they can advance in the chosen career paths.
Mark Leska, E. H. Wachs: No doubt it would be strength in the overall economy, as a rising tide lifts all boats. But at Wachs, we believe a contributing factor is a new generation of tools for the welding industry that offers greatly increased productivity for the operator and faster ROI [return on investment] for the company.
Charlie Bishop, welding supervisor, SAFE Boats International: The new technology in welding machines is making it easier to produce a quality weld. With the pulse-on-pulse programs, it helps to run a more consistent sized weld bead. With this new technology, it does not require as high of a skilled welder as is needed with the older machines to achieve the same results with weld size and appearance along with the strength requirements.
Renee L. Campbell, Valmont Industries Inc.: Automation has made great advancements in recent years; the scope of what’s possible to automate is continuously expanding. Social media has helped positively change the perception of the welding industry and increasing the level of interest in welding careers. Improvements in video capacity have helped capture tremendous amounts of information into concise video clips. YouTube provides a platform to share video content on welding techniques and career opportunities. Diversity in welding is increasing, bringing new ideas and solutions into the industry.
What is your assessment of the welding industry today?
Nigel Scotchmer, Huys Industries: The welding industry today is moving very rapidly. I think it is very exciting, as I spend a third of my time in the laboratory with new materials, a third of my time with customers, and a third of my time trying to join their needs with what we are learning. There is no time to slow down and rest on your laurels. If you do that, you are toast and done.
Mike Meyer, CK Worldwide: There are always obstacles and challenges, but we’re very optimistic about the welding industry at CK Worldwide. This view was commonly shared at the GAWDA National Convention, where we heard a number of times that “it’s a good time to be in the welding industry.”
Christopher Mapes, The Lincoln Electric Co.: The welding industry in the United States is well developed, with strong channels to market, and leading technologies that deliver unparalleled welder safety, productivity, and quality. The industry does an excellent job collaborating with key partners, such as the American Welding Society (AWS), on improving technical standards, generating awareness and interest in the field, and addressing the skills gap.
Matt Cable, Bug-O Systems: The welding industry is changing at a rapid pace based on advancements in technology and demand for information. It’s a very exciting time to be in the welding industry!
Mark Rich, Baltimore Fabrication: It is on the rise to plateau with an economic downturn in 30 months. Overall, the welding, fabrication, and construction industry is healthy, and the future offers exciting advancements in technology.
Renee L. Campbell, Valmont Industries Inc.: The welding industry has historically been a slow adopter of technology and change. The last ten years have brought great improvement in automation, perception, and redefining what’s possible. Continuous improvement in these areas will be necessary over the next ten years.
Tim Binder, SAFE Boats International: The welding industry today is benefitting from technology. New advancements are making weld processes and procedures easier and faster. Robotics and new processes like pulse on pulse (dual pulse) make it easier to weld thinner material and be successful. Here, at SAFE Boats, we see welders with a diverse background and different depths of knowledge. We work with each welder to improve his/her abilities and skills by using a skill matrix to ensure each welder gets proper training to advance.
Charlie Bishop of SAFE Boats added: The new generation of fabricators/ welders does not have the same skill set as previous generations. The welding machines are advancing as new technology comes out; however, the skills required to fabricate seem to be going the opposite direction.
Conclusion
With decades of experience and knowledge between them, these industry leaders have shed light on the current and future state of the welding industry. They agreed about the industry’s robust pulse thanks to a booming economy coupled with emerging technological advancements. The majority also identified the Section 232 tariffs as major challenges. However, the shortage of skilled welders remains welding’s greatest challenge. That fact was mentioned again and again, but several of the respondents were optimistic that the efforts being made to bring young people into the industry will pay off soon. Overall, they were also optimistic that despite current obstacles, the welding industry will continue to adapt as it forges into the future.
References
- Zion Market Research. 2018. Welding Products Market to Accrue Revenue Worth US$ 32.63 Billion By 2022.
- Research and Markets. 2016. Welding Equipment, Accessories, and Consumables Market by Technology (Arc Welding and Oxy-Fuel Welding), Equipment Type (Welding Electrode, Filler Metal, and Oxy-fuel Gas), Accessory, Consumable, End-Use Industry, Region — Global Forecast to 2021.
