Many fabricators, job shops and OEMs consider the energy market viable for business today–and tomorrow

OEM Report: Energy

Fueling the future

Many fabricators, job shops and OEMs consider the energy market viable for business today–and tomorrow

May 2010 – On any given day in the United States, millions of people wake up, hop in their car and head to work. When they get home, they will probably eat dinner, watch some TV, maybe read a little, then go to bed.

In the course of that 24-hour period, although they might not have been conscious of it, all those individuals used some form of energy probably every second of the day.

From the electricity that powered their alarm clocks to the oil that fueled their cars, people rely on energy. And it is everywhere.

Between its ubiquity and all the emerging technologies related to both more traditional and alternative sources, energy holds–and has held–promise for different sectors of the manufacturing industry, according to Richard Hadley, president of Esab Canada, Mississauga, Ontario, and general manager for Esab Welding Automation North America, Florence, S.C.

“Energy makes the world tick,” he says. “We’re going to always need energy, and in the future, and maybe even today, you’re going to see different forms of energy, including wind. [And there are also] hydrogen-based fuels, gas-to-liquids–very complex production systems that will convert, for instance, the heavy oil in northern Canada to natural gas from the Middle East to liquid fuel. You’re going to see more and more things like that.”

Opportunities for OEMs
Esab was founded more than 100 years ago, and it has been involved in energy-related work from the start. Today, energy is the largest segment of Esab’s entire business, and the company serves oil, gas, wind, electricity, liquified natural gas and hydro dams, among others.

“We supply our products to builders and customers who actually transform it–we supply welding and cutting products,” says Hadley. “For example, pipelines. We make the products and machinery to make pipes, then we also make the machinery to weld the pipes as they install the pipelines in the ground; pressure vessels, which are used for refineries and cracking fuel and many other purposes. We do a lot of welding for offshore drill rigs and offshore drill platforms, which are used to drill to recover oil and gas under sea. These industries drive secondary industries, which are very important, such as earth-moving equipment to install pipelines and shipbuilding to support the offshore work.

“And, of course, there’s wind energy and wind tower, which is a very, very large sector. It’s growing worldwide but especially in North America.”

Hadley also says he sees energy overall as a large growth area for Esab and that wind, solar and gas-to-liquid fuels, among others, seem to offer a lot of opportunity.

“Some of these are fairly new and emerging technologies, and we certainly plan to grow right along with them,” he says. “Wind is a good example. Wind energy was popular in Europe for the last 25 years. Our company was largely European-based in those years, so our technologies and skills grew alongside our customers in the wind energy business in Europe. Around 2000 or so, wind became much more popular in North America, especially in the United States. So when it started to really grow here, of course, we were absolutely ready.”

Esab provided all the cutting, welding, material handling and positioning products at the world’s largest wind turbine factory, which is in Colorado and owned by Denmark-based Vestas.

“That was about a $350 million project, and it completes Vestas’ expansion in North America,” says Hadley.

In addition to benefiting individual companies, energy has the potential to boost the overall manufacturing industry, according to Hadley.

“Back in the 1970s, North America kind of stopped making big and heavy products, which is quite a shame,” he says. “But what we’re seeing now, especially with things like wind energy and nuclear, North America is rebuilding its heavy industry base. And that’s a good thing.”

Another OEM that has found success with wind power is Faro Technologies, Lake Mary, Fla. The company recently partnered with ATI Casting Service, Alpena, Mich., a foundry and machine shop that has been involved with wind-related work for 15 years.

Bill Anderson, Northeast regional sales manager for Faro Technologies, says ATI Casting Service uses the Faro Arm and Laser Tracker to measure hubs it creates for the wind energy market.

“These tools give ATI the ability to measure their parts on the machine and gain valuable information,” says Anderson. “This allows them to catch and address issues, making engineering decisions based on this data. The tolerances on these cast hubs are extremely tight. It is critical that they are built to the correct dimensions to ensure fit, safety and reliability.”

In addition to wind, Faro Technologies serves the hydro industry, as well as the oil and gas industry. In regard to the latter, this relates to oil rigs and refineries, according to Anderson.

“All facets of the energy market have a need for accurate portable measurements,” he says. Appleton, Wis.-based Miller Electric Mfg. Co. and its parent company, Illinois Tool Works, also serve a wide range of energy sectors.

Within Miller itself, one business unit is primarily geared toward oil and gas for pipe fabrication, field construction of refineries and petrochemical plants, pipeline construction and pressure vessels.

“To me and my group, [energy] is very important because that’s what we’re focused on,” says Michael W. Roth, marketing manager for pipe welding products. “It was important enough for ITW and Miller to say, ‘We want you to focus on this,’ so they carved out a group of people to go work on it. I think that speaks for itself.”

Miller provides welding, cutting and induction heating products to myriad customers in the oil and gas industry all around the world. And in North America, there is a great deal of potential, according to Roth.

“There are several unique fabrication opportunities due to the use of new materials and extreme work environments,” he says. “[For example], the use of higher-strength materials to reduce fabrication costs and corrosion-resistant materials to increase the pipe life in sour gas applications is creating the need for newer, innovative welding and heating processes.”

Machine shops make it happen
Walco Tool and Engineering, Lockport, Ill., machines products for a variety of customers, mainly OEMs and first-tier suppliers, in a wide range of industries.

Its niche is high-quality, high-value-added, low-volume production, and it is capable of manufacturing parts small enough to fit in a person’s hand to as large as 33,000 lbs.

Walco Tool and Engineering has been serving the energy market since its inception in 1968, and because its co-founders were machinists for Argonne National Laboratory, much of its early energy-related work was for the nuclear industry.

About two years ago, the company began to branch out and serve the wind market too. Karen Schultz, business developer, says Walco Tool and Engineering has worked closely with The Timken Co., Canton, Ohio, to support its ramp-up of new bearing products for the wind industry with its green machining efforts.

“Given [our] growth of talent and capabilities over the years, moving into wind-related work was a natural development,” says Bill Bucciarelli, president of Walco Tool and Engineering. “We started producing smaller complex parts, with smaller equipment. And as we’ve grown, we’ve done so in size, adding our ninth addition in 2006, but also in adding larger-capacity machines.

“Looking at the wind industry specifically, these are typically large parts that require this kind of large capacity. And only recently, in the last five years, have we added both building capacity and larger machines that would be capable of doing these parts. So strategically, our growth is in this larger equipment, and it’s a good fit for the wind industry.”

Additionally, Walco Tool and Engineering is in communication with other interested companies regarding potential wind-related work and recently participated in roundtable discussions about the midsize wind turbine industry.

“It’s somewhat of a missing niche, and it’s definitely a big opportunity for our company to be involved in, supporting the economics of new wind turbine products,” says Schultz. “These are going to be very critical markets going forward. Energy is a limited resource, and it’s going to be more important each year.”

Michael Mallwitz, president of Milwaukee-based Busch Precision Inc., strongly agrees that the energy market is viable for his company, as well as the overall manufacturing industry.

Busch Precision has a long history of serving various energy sectors, specifically, oil, gas and electric. “We’ve served electricity since the 1960s–we repaired Babbitt bearings for utilities,” says Mallwitz. “And since 1980, we’ve worked for the oil industry, machining components for the wells.”

Last year, Busch Precision began serving the nuclear industry.

“For these sectors, we machine components and the polishing or hand scraping of bearings,” says Mallwitz. “In some cases, we weld or remachine components, as well as assemble components. For the most part, the work that we do is of a very precise nature–close-tolerance type of work. Occasionally, we work on prototypes.”

In addition to these markets, which make up about 10 percent of its business, Busch Precision seeks to serve the wind power industry.

“The U.S. population is growing, and there will be greater need for energy,” says Mallwitz. “There’s also a stronger emphasis on the environment, so cleaner, alternative sources of energy will constantly be the focus, as well as the traditional ones, which we’ve already been in.

“And because we have future mandated alternative energy requirements in our state, we feel wind is something that is going to grow in our area. But how fast, we don’t know. We don’t have a crystal ball.”

Busch Precision has taken the initiative, though, participating in wind-related conferences and expos, with plans to attend more. It was through one of these events Mallwitz and his associates made a contact at New North Inc., De Pere, Wis., and eventually toured a wind farm.

“And last fall, Gov. Jim Doyle and Mayor Tom Barrett of Milwaukee toured our shop, along with a wind manufacturer of rooftop units, as well as the Milwaukee Area Technical College (Mequon campus), to talk about the partnering of government, education and manufacturing to promote energy and that industry in the city and state,” says Mallwitz. “It was a first-effort, exploratory type of tour and meeting.”

Focus for fabricators
At Mequon, Wis.-based GenMet, a 70-person metal fabricating plant that does custom steel, stainless steel and aluminum work, CEO Eric Isbister sees a great deal of opportunity in alternative energy for both his company and the overall manufacturing industry.

“My employees and I have a passion for alternative energy, and we have started to manufacture parts for the wind industry–we make lifts and tower internal parts,” says Isbister. “The alternative energy industry is well suited for metal fabricators. We are excited at the amount of light-gauge (less than 1/2 in. thick is GenMet’s niche) cosmetic parts needed that are similar to the parts GenMet already fabricates.

“Parts for the wind industry are often large or integral with large parts. The size makes transportation difficult, and this will fuel growth of local metal fabricators located in proximity to wind farms. The established wind industry OEMs are largely European. They are seeing the U.S. market potential, and many are establishing facilities in this country. This synergy will be beneficial for local manufacturing companies.”

Isbister also says he hopes GenMet’s passion for alternative energy will be contagious and help inspire young people to get into manufacturing, something he considers critical for the long-term health of the industry–and the country.

“I use any excuse I have to get in front of young people and tell them about manufacturing,” says Isbister. “Because the country that manufactures innovates, and the one that innovates is going to prosper. If we’re all just service trades or pushing paper around, and nobody’s manufacturing, the good ideas, the improvements, are going to be made in some other land. I’m convinced that we need to manufacture in the United States to support our lead position in the world.

“If you go to a job fair or college career day and say, ‘Hey, I’m a job shop, I’m a custom metal fabricator,’ that’s one thing. But if you say, ‘I’m a custom metal fabricator that’s making parts for wind turbines,’ the students that are interested, that have a passion for wind–they perk up and ask more questions. It will give them a job they have a passion for that will help the country, as well as give them a paycheck and a challenging career.”

Anchor Fabrication, Fort Worth, Texas, also serves the wind industry, in addition to oil and gas, as well as nuclear.

Tra Willbanks, president and CEO, says the company makes frac tanks and wind tower components, among other products, and that being based in Texas has helped shape Anchor Fabrication’s participation in energy-related work.

“Since our business is located in a hub for energy production, exploration and supply, we should continue to see a strong demand from the energy industry,” says Willbanks. “Even during times of relative slowness, we have experienced a great deal of manufacturing in this industry. 2008 was unique, but obviously, when the price of oil was at nearly $150 per barrel, we saw record manufacturing from this sector.”

He acknowledges challenges associated with delivering energy from wind generation but also says there seems to be potential for this sector of the energy market.

“We will continue to service the industry as opportunities arise,” says Willbanks. “We are definitely seeing things pick up in the wind sector.”

Schuff Steel Co., Phoenix, the largest structural steel fabricator and erector in the United States, also considers alternative energy to be a source of great potential.

The company has about 1,600 employees at 10 steel fabrication plants and two steel joist manufacturing plants across the country, and it built University of Phoenix Stadium, home of the Arizona Cardinals, and Chase Stadium, where the Arizona Diamondbacks play baseball.

Schuff Steel has been involved in alternative energy manufacturing for about six years, starting with solar energy.

“We could see there are a lot of things going on with wind, and it looked like a developing, emerging industry,” says Dennis Randall, executive vice president and general manager of Schuff Steel, Midwest Division. “So we looked into it as sort of an extension of our involvement in alternative energy, and I was given the directive to research wind and how we could participate. I’ve been doing that for about a year.

“During that year, we’ve determined that it really is an emerging industry and there’s just tremendous potential out there for U.S. manufacturers and the U.S. wind market. So we’ve actively pursued getting involved in building wind towers.”

Schuff Steel plans to build a plant in Bismarck, N.D., and successfully applied for and received manufacturing tax credits under the American Recovery and Reinvestment Act for the project. “We’ve always been innovative at looking at ways to come up with new ideas and new concepts for utilization of our skills, and there seems to be some adaptability into the alternative energy markets,” says Randall. “Alternative energy, as a concept, is growing at probably a faster rate than a lot of industries in the U.S. right now, and we’re simply trying to position ourselves to take advantage of what we see as a growing market.” FFJ