Growth Report 2017: Valley Manufacturers Are Optimistic
YOUNGSTOWN, Ohio – Manufacturers across the region, heartened by reinvigorated energy and steel markets along with new investments in advanced-production processes, point to a strong and transformative year ahead, their executives say.
Strong in the sense that overall business has improved recently for steelmakers and the producers that serve the energy industry, both of which have foundered the past two years.
This year is likely to be transformative, others say, as forays into 3-D printing redefine the very nature of manufacturing in this region.
“We’re bullish,” says Rick Organ, CEO of Hynes Industries, Austintown. “We’re going into the year with a lot of optimism.”
Much of this optimism Organ and others hold is reflected in the new investments announced by the steel industry in the region – highlighted by an $80 million improvement at NLMK Group in Farrell, Pa.
Activity in the energy sector is also encouraging and producers associated with that market, such as Vallourec Star in Youngstown, signal that the recent downturn might be over for that industry. Plus, Royal Dutch Shell’s $6- billion ethane cracker plant project in Monaca, Pa., is likely to arouse some interest among global petrochemical and plastics manufacturers.
Still, employment in the manufacturing sector, while fairly stable, continues its downward trend of the last decade, statistics show, while the nature of production in the Mahoning and Shenango valleys is changing. This is evidenced by advanced manufacturing technology such as 3-D printing.
For long-time manufacturers such as Hynes, the market appears resilient and likely to strengthen in 2017, Organ says.
Hynes manufactures custom roll-form metal products – much of it steel framing – for the trucking, appliance and solar-energy industries as well as cold-rolled custom flat wire shapes for customers across the country. Another segment of the business is its steel service center that slits and cuts to length steel from the coils that steel mills make.
“In late 2016, we saw a softening in the truck market, but we’re hearing that they’re beginning to see more quotations and orders,” Organ says. “That benefits us when it comes to production. So by the middle of the year, we’ll start to pick up.”
And, while Hynes’ solar-energy business is largely project-driven, Organ believes that the North American market will continue to grow. “The reality is that solar is here to stay,” the CEO says.
The industry can expect further consolidation of steel service companies, Organ says. “There’s some evidence that they are bringing more value and services to the end user and looking to go beyond their traditional capabilities,” he says.
Service centers today seek opportunities to increase sales by manufacturing an end product rather than be limited to processing steel. Much of this expansion typically is accomplished through acquisitions, he notes.
In August 2015, Hynes completed its acquisition of American Roll Form Products and consolidated six production lines inside Hynes’ plant on Henricks Road. “We have sufficient capacity to meet the demands of the marketplace,” Organ says, noting that his company is implementing programs to improve productivity in the workplace.
These efforts include the introduction of the “lean manufacturing principles” at Hynes, says Les Shearer, senior vice president of manufacturing. “It trains people to think how to maintain an orderly workplace,” he says. “We’ve seen about a 10% pickup in productivity since August.”
The process implements measures that allow employees to make optimal use of their time as they operate a machine or are elsewhere on the job. This can range from where parts are located for machine operators, how fast a piece of equipment should run and tracking the quality in relation to customer’s needs.
“We’re training our employees to the point where they’ll be able to train other employees,” Shearer says. “It creates a team approach to solve problems. It changes the mindset on the manufacturing floor.”
Hynes operates 47 production lines at its 290,000-square-foot plant, Shearer says, and employs 250 companywide. About 150 are employed in Austintown.
Steel prices have risen over the past several months and analysts expect this to continue well into the year, especially in the wake of the election of Donald Trump as president. An executive order Trump signed, for example, requires that the Keystone XL and Dakota Access pipeline projects use steel manufactured in the United States. However, other analysts have pointed out, the order likely violates international trade law.
At the same time, the president’s tough talk on curbing steel imported from countries such as China and his pledge to spend billions of dollars on new infrastructure has led to additional confidence in the steel market. Demand for construction projects in China is likely to increase this year, driving up steel prices worldwide.
Some of the rebound in the steel industry reverberates through the Mahoning and Shenango valleys. Russian-owned steelmaker NLMK Group, which operates a major steel mill in Farrell, Pa., announced in late December that it would invest $80 million to construct a new walking beam furnace at its plant on Roemer Boulevard. “The construction of the new furnace is a major project for NLMK Pennsylvania aimed to bolster the market presence of the company,” Bob Miller, CEO of NLMK USA, said in a statement.
“We’re looking at all kinds of different incentives,” says Randy Seitz, president and CEO of Penn-Northwest Development Corp. “We were able to secure a multimodal transportation grant for $1 million to refurbish 13 miles of rail spur to that location.”
Some 700 are employed at NLMK, Seitz says, and “we have to do whatever we can to retain those 700 jobs.” Moreover, the mill provides opportunities for local and regional suppliers, which has a more significant trickle-down effect on the economy.
“This $80 million investment sends a message to those in the steel industry or other global suppliers to look at Farrell and this region,” Seitz says.
Meanwhile, an uptick in the energy market has helped producers such as Vallourec Star in Youngstown boost production. Vallourec, which in 2010 commissioned a $1 billion rolling mill expansion to its complex along Martin Luther King Boulevard, manufactures pipe and tube used in the oil and gas industry.
That sector was hit hard when oil prices started to collapse in 2014 and energy companies scaled back exploration activities – especially in the Utica shale in Ohio and the Marcellus shale in Pennsylvania. In 2015, Vallourec began to place workers on layoff as demand for pipe weakened, but the market has since improved.
“We’ve seen signs of improvement in the U.S. oil and gas market where the rig count and oil country tubular goods demand have increases for the first time since the end of 2014,” says Jean Gaetano, spokeswoman for Vallourec Star. “This increased demand has resulted in increased production at all Vallourec Star locations.”
As such, Vallourec is looking to start filling positions on all shifts for skilled production workers, maintenance employees and electronic technicians.
“This progressive market recovery is anticipated for 2017,” she says.
The energy sector is likely to draw more manufacturing interest in the region over the coming years, officials say, particularly since Royal Dutch Shell has started work on building a $6-billion ethane cracker plant along the Ohio River in Beaver County, Pa. The petrochemicals plant – expected to create upward of 6,000 construction jobs for tradesmen and about 600 permanent jobs – is planned to begin operations early in the next decade.
“The project and site preparation are coming along according to schedule,” says Jack Manning, president of the Beaver County Chamber of Commerce. “What we’re focused on is training employees in preparation for energy and advanced-manufacturing entities.”
Shell’s cracker plant takes ethane feedstock from the Utica and Marcellus shale formations and “cracks” the molecules to form polyethylene. The plant will include a large manufacturing operation able to produce billions of plastic pellets each year. Such pellets are used as a base ingredient in myriad consumer products.
“We’ve had a lot of inquiries from companies, some of them related to relocations,” Manning says. “There are a whole lot of properties for sale, especially along the Interstate 376 corridor,” which stretches north into Lawrence County.
“There are some European plastics manufacturers that are clearly looking at this area to take advantage of cheaper material supply,” he adds.
Nevertheless, the manufacturing sector in the Mahoning and Shenango valleys has more than its share of challenges.
Weakened demand for the Chevrolet Cruze led to the furlough of 800 workers at General Motors Co.’s Lordstown Complex in January, while overall employment numbers are well below levels of a decade ago.
Data from the U.S. Bureau of Labor Statistics show that the Youngstown-Warren-Boardman Metropolitan Statistical Area – Mahoning and Trumbull counties in Ohio and Mercer County, Pa. – employed 29,300 in the manufacturing sector in December 2016, down from 38,900 the same month in 2006 – 9,600 fewer jobs.
As of December, manufacturing jobs made up 12.9% of the total nonfarm workforce in the regional economy, the government reports.
And the very nature of the workforce and manufacturing is changing rapidly, evidenced by public-private partnerships that push forward technological advances that will clearly affect production methods well into the future.
Brandon Lamoncha, sales manager for Humtown Products Inc., Columbiana, says additive manufacturing capabilities stand to completely change his business, which manufactures sand molds for the casting industry.
On Jan. 24, the company hosted a ribbon-cutting at Humtown’s sister location at the World Trade Park, Leetonia, in a new plant that will be used specifically for 3-D printing. There, representatives from Humtown, Youngstown State University and America Makes unveiled a new ExOne S-Max 3-D printer, a large-scale sand core printer capable of making complex molds that manufacturers use to cast and produce metal components.
“This opens up all kinds of opportunities,” Lamoncha says. “Right off the bat, we’re able to save tens of thousands of dollars in hard tooling.”
Brett Conner, director of advanced-manufacturing workforce initiatives at YSU, says the device enables the company to reduce tooling costs when they schedule limited or low-production runs for a particular mold.
The conventional method in the manufacture of sand cores is to create a sand-and-resin mold around a pattern or a model of the component or part. Once the cavity and detailed imprint is left in the sand, molten metal is poured in the mold and left to harden, creating the part. Once used, the mold is discarded and cannot be used again.
Additive manufacturing stands to turn this method upside down, especially with sand cores used in limited production, Conner says. Pattern tooling is costly, and sometimes a design requires several modifications. That means a new pattern is created for each new adaptation, he says. And, it doesn’t make sense for a company to invest in a pattern tool that will create just 10 parts.
With the S-Max printer, the sand-resin mixture is dispensed through a nozzle guided by a programmed computer file. As the nozzle zips across a large build pad, it dispenses the material, essentially building the sand core from the bottom up, layer by layer.
“This revolutionizes low-volume production because you don’t have to invest in hard tooling,” Conner says. In this case, a computer-aided-design file, not a pattern, acts as the tool. “It makes it more cost-effective and faster to do prototyping, so you could make multiples of those before you actually go into production.”
For Conner and others engaged in the technology, this is just the beginning. “Today is really the dawn of a new day for manufacturing in the Mahoning Valley,” he said at the ribbon-cutting.
Pictured: Using “lean manufacturing principle” at Hynes Industries has improved productivity about 10%, say Plant Manager Jeremy Gurski and Vice President of Manufacturing Les Shearer.
Copyright 2017 The Business Journal, Youngstown, Ohio.
Published by The Business Journal, Youngstown, Ohio.
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