An operator at Anchor Fabrication forms a cosmetically sensitive workpiece. Different companies within the Anchor Partners organization share capacities and capabilities (like brakes with specific tonnage capacities), often winning work that individual companies wouldn’t be able to do alone.

Metal fabrication is dominated by private businesses, many of them family-owned—or, at the very least, run like a family. Walk into a custom fabricator almost anywhere in the country, and you often get the impression that the employees have known each other forever. It’s part of what gives this business its refreshingly unpretentious character. It’s why people come to work every day, and it’s why some would never dream of leaving.

That said, not every family owner has kin that want to take over. The founder’s children might like certain aspects of the business—perhaps solving engineering- or machinery-related problems—but might have no interest in leadership. Or they might choose a different path—not an outlandish decision, considering the effects of globalization and the changes manufacturing’s been through after the 2001 and 2009 recessions. So what then? Succession planning can get tricky.

Willbanks grew up in this industry, working for his father at Fort Worth, Texas-based Anchor Fabrication. His dad retired in 2006, and Willbanks eventually acquired the business in 2011.

“I’m an accountant by trade,” Willbanks said, “but I also worked on the floor. I saw plenty of opportunities in our operations, but then I started looking out geographically.”

He saw that many businesses in this sector looked a lot like Anchor, but they also had owners who weren’t going to work forever. “I built on the wonderful foundation [my dad] gave me,” Willbanks said, adding that “my dad had a better succession plan than others. But I also realized that there are many who don’t have any succession plan.”

So he began looking for potential acquisitions, including family businesses. Willbanks made the first few acquisitions on the strength of Anchor Fabrication’s balance sheet. This included Abby Manufacturing, a company near Memphis that focuses on medium- to small-scale metal fabrication. But to grow more, Willbanks knew he’d need outside investors.

“We eventually found people who were willing to partner with us from a capital standpoint,” Willbanks said, “and that allowed us to execute on our strategy.”

Formed in August 2018, Anchor Partners purchased Anchor Fabrication; Abby Manufacturing; as well as Mandeville, La.-based BOH Environmental, which makes and distributes field pack-up (FPU) systems used for logistics in various industries. Although the companies are in very different businesses, “from a manufacturing standpoint they complement each other in unique ways,” Willbanks said, adding that Anchor isn’t solely tied to metal fabrication. “We’re always on the lookout for complementary businesses.”

Anchor Partners most recently made headlines earlier this year when it acquired Quality Industries, a large custom fabricator and stamping operation in La Vergne, Tenn. Willbanks remembers meeting Quality’s family owners in 2003 during an industry event.

In 2010 Anchor Fabrication collaborated with Quality on a project. “They really let me see behind the scenes,” Willbanks recalled, “and ever since then, they have been on our short list. About a year ago the family stepped up the process of looking to sell.” By September 2018 the negotiations began in earnest, and the deal closed Feb. 28. After the acquisition, Anchor Partners now employs more than 1,000 people across all its companies.

Quality Industries checked all of Anchor Partners’ boxes. It was in the Southeast, a growing area for metal fabrication. It was heavy into Class A and heavy industrial trucking. And it had a variety of sheet metal and plate processing capabilities, including laser cutting and punching, bending, welding, and extensive stamping. “The company just has a great customer base, great equipment, a great management team,” Willbanks said, “and they blend very well with a lot of what we’re trying to do.”

As an accountant and investor who grew up in custom metal fabrication and knows his way around the shop floor, Willbanks has an unusual skill set. He knows this business, and he knows how acquisitions can add value. But it’s not a straightforward business by any stretch.

Anchor Partners is a family office—financial jargon for a family-controlled investment group—and it looks for strategic investments, both long-term and, if the right buyer were to come forth, short-term.

“If you read Warren Buffett’s most recent letter to his shareholders, you might recall the line where he says that finding businesses with good management teams is very difficult. And when you do find one, you need to hang on to it,” Willbanks said. “And I’ll tell you that, overall, that’s our approach.”

The metal fabrication business is ever-changing. Most fabricators serve customers that have some manufacturing capability, and they work with sourcing managers who are looking to make their own operations more efficient while getting the most out of their supply chain.

“Rightly so, customers are constantly looking for ways to produce for less,” Willbanks said, “and that sometimes means bringing more fabrication capabilities in-house. It can be challenging in this business to create a sticky relationship with your customer.

“At the same time, you have market saturation in some areas,” Willbanks continued. “A guy down the street puts in a laser and now makes it a little cheaper than you do.

“And finally, you have the commodities. A fabricator is subjected to what happens in the steel market. So in 2018 the price of steel went up by 60 percent. That just increased the amount of cash that’s required to run the business.”

Combine this with the fact that metal fabrication is capital-intensive, requiring big machinery and software purchases, and then it becomes obvious: “There’s a reason you won’t find many successful private equity players in this space,” Willbanks said. “Anyone with a checkbook can buy a business, right? The hard part is running them.”

What exactly attracts Willbanks (or anyone else, for that matter) to this business? It might sound a little counterintuitive, but the very aspects that make this business so challenging—the high capital requirements, customer turnover, tight competition—also open up some big opportunities. It goes back to customer stickiness.

“I like this business because there are ways to create stickiness with customers,” Willbanks said, “and there are efficiencies when you start scaling up.” That said, the scaling up part can be quite difficult. “How many fabricators get above $20 million in annual revenue? Not many.”

Because of the dynamic nature of the business, combined with the high capital requirements, leapfrogging to the next revenue level can be quite difficult. Consider the FAB 40 in the June issue, a list that provides a statistical slice of the custom metal fabrication market. The revenue numbers are tightly packed until shops reach about $25 million in annual sales; above that, the gaps between reported revenue numbers widen; and above $100 million, there just aren’t that many players.

Here, Willbanks said, is where the acquisition approach can make sense. Scale has obvious benefits for purchasing, of particular interest considering the tumultuous materials market over the past year. Willbanks said that as a baseline the Anchor Partners businesses try to keep inventory as lean as they can. Anchor Fabrication, for instance, turns its inventory about 16 times a year.

The FABRICATOR is North America's leading magazine for the metal forming and fabricating industry. The magazine delivers the news, technical articles, and case histories that enable fabricators to do their jobs more efficiently. The FABRICATOR has served the industry since 1971.

The WELDER, formerly known as Practical Welding Today, is a showcase of the real people who make the products we use and work with every day. This magazine has served the welding community in North America well for more than 20 years.

The Tube & Pipe Journal became the first magazine dedicated to serving the metal tube and pipe industry in 1990. Today, it remains the only North American publication devoted to this industry, and it has become the most trusted source of information for tube and pipe professionals.

STAMPING Journal is the only industrial publication dedicated solely to serving the needs of the metal stamping market. Since 1989 the publication has been dedicated to covering the cutting-edge technologies, industry trends, best practices, and news that help stamping professionals run their businesses more efficiently.

The Additive Report focuses on the use of additive manufacturing technology in the real world of manufacturing. Today’s manufacturers are using 3D printing technology to create tools and fixtures, and some are even using AM for high-volume production work. Their stories will be covered here.

En asociación con la firma MR Technical Translations de México, FMA Communications ha introducido al mercado la edición en Español de la revista The FABRICATOR. Esta versión consiste del mismo tipo de artículos técnicos y sección de lanzamientos de nuevos productos que actualmente presentan el personal de primera categoría de FABRICATOR en Inglés.

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