Growth Report 2: Swamped With Orders, Manufacturing Rebounds

YOUNGSTOWN, Ohio – Seeni Congivaram doesn’t mince words when he describes the importance of his global company’s operation in the Mahoning Valley.

 “It’s the lynchpin of our company when it comes to higher-end products,” Congivaram, the executive vice president for global commercial and international operations for Xaloy LLC, says of its Austintown plant.  “It plays a very critical role.”

Xaloy, along with local manufacturers Dearing Compressor and Pump of Boardman, Brilex Industries in Youngstown, and Starr Manufacturing in Vienna Township, point to surging demand in their respective markets that’s keeping shop floors busy. 

The reshoring of automotive components and chip manufacturing to the United States, strong output from steel producers, and a rebounding energy sector all point to healthy order books for 2023, industry executives say.

That’s not to say there aren’t challenges. Higher interest rates, higher prices for raw materials, unresolved supply-chain issues and an anemic labor force complicate what would otherwise be a bustling overall economy.

When R&D Matters

Xaloy is a global manufacturer of high-end barrels and screws used in plastics extrusion and injection-mold operations. This equipment is both highly engineered and very big in scale. Precision machining methods and the use of two induction furnaces create components so large that they require flatbed trucks to transport, Congivaram says. 

What sets Xaloy’s process apart is that it uses bimetallic material – fused together in its furnaces – to manufacture large industrial screws and barrels able to withstand high pressure and high temperatures.  The company was the first to develop bimetallic barrels in the 1940s.

“There are just two such players in the United States who do what we do,” Congivaram says. “We’re the biggest of the two. Globally, only a handful can do this.”

To help accelerate development, Xaloy is considering constructing a world-scale technology center in Austintown, Congivaram says. The center would include a new laboratory and a demonstration floor for customers and potential customers.

“We’re exploring a couple of options,” he says. 

One option is to create the R&D center within the building.  The other is to expand into a new building outside of the existing plant.

 “We already have a garage facility that’s quite big, but it would require more capital investment,” he says. 

Creating a new tech center in Austintown would also require additional employees used in R&D and running trials.

“Overall, a new technology center is good for Austintown, good for Youngstown and good for the industry,” he says.

Congivaram says Xaloy has another U.S. operation in Pulaski, Va. The company’s international locations are in Thailand and Germany.

Still, Austintown is considered central to Xaloy’s entire international operation, Congivaram says.  “Austintown is roughly half our global capacity,” he says.  “We did well in the U.S. last year.”

European markets are rattled by higher energy costs and the war in Ukraine, while Asia is dependent on China’s actions, he says.

In contrast, positive trends in the United States such as a movement among domestic manufacturers – automakers and chip manufacturers, for example – to re-shore production, a stable political framework and lower energy prices, bode well for Xaloy’s business.

Congivaram says the company has poured “tens of millions of dollars” of new investment over the last two years into the Austintown plant.

Among these investments were two new induction furnaces that enable the Austintown operation to fuse metals such as tungsten carbide and cobalt into material that creates a product resistant to corrosion and abrasion.

Most of Xaloy’s customers are original equipment manufacturers that produce plastic components for the automotive industry, the consumer products sector, and those that produce extrusion products for medical tubing and countless other applications.

“The good news is that we’re not overly dependent on one industry,” Congivaram says.

Xaloy in 2018 combined its screw and barrel manufacturing operations in Youngstown, New Castle, Pa., and Pulaski, Va., into a “center of excellence” at 375 Victoria Road in Austintown. It has since reopened the location in Virginia. The company employs approximately 275 in the United States and about 220 in Austintown.

Among the greatest challenges, Congivaram says, is securing the skilled talent needed to staff positions at Xaloy.  “At the end of the day, we’re a high-end machining facility,” he says.  “These are really high-end machines from Austria that you’ll need skills to operate.”

Demand Rebounds in Energy Sector

Local manufacturers tied to the energy sector say business is improving from the dramatic slump that hit the oil and gas industry during the pandemic. Plus, these companies have found ways to work around cumbersome supply problems, setting the table for a successful year.

“The order book is filling up,” says Becky Wall, CEO of Dearing Compressor. The company designs and builds large compressor equipment used throughout the energy sector, including natural gas midstream operations and renewable energy processes. 

“The traditional gas compression orders from midstream are coming in and we’re seeing more of a traditional flow,” she says.

Oil and gas prices plummeted during the pandemic, causing energy companies to curtail production and reduce investments.

The downturn forced companies such as Dearing to explore other revenue streams, Wall says. In this case, the company found opportunity in design/build projects for renewable energy operations that convert bio-waste into clean gas.

“We’ll build all size units,” she says.  “We do a lot of R&D at Dearing, and it’s provided us opportunities that sometimes get overlooked in the big midstream business.”

In fact, as the gas market stalled, Dearing’s air compressor distribution business accelerated, Wall says.  Since 1945, Dearing has provided sales and service for Gardner Denver air compressor and pump equipment.

“During COVID, that business unit increased sales and became a service provider for companies that placed their own staff on layoff,” she says. “The intent was to leverage our distributed products line to help level out the swings in the oil and gas industry.”

Local manufacturers, finding it difficult to hire experienced service technicians, now rely on Dearing for its maintenance work. “All of these local manufacturers can’t find proper maintenance staff because of the labor shortage, so they look to us,” Wall says.

Oil and gas prices have since rebounded significantly, and Dearing is working to satisfy demand. Furthermore, Dearing has resolved most of the supply issues that dogged the manufacturing sector last year, Wall says. 

“Some of what’s on the floor today we’re still shipping from 2022,” she says. “We had to push out deliveries, which wasn’t good. But together with our clients and partners, we’re working our way through that.”

As orders for new equipment come in, so too are requests for reconditioning and rebuilding older compressors, Wall says. This is equipment that was commissioned in the field beginning 15 years ago as oil and gas exploration accelerated in the Marcellus and Utica shale plays.

“The units are all getting older,” Wall says.

Since most were placed into action in the same time period, the bulk of this equipment is due for maintenance or reconditioning. These efforts include a major overhaul of compressor power systems. On a February morning, for example, workers at Dearing were busy converting a large compressor from a gas engine to an electric motor.

“They all started with engines and are now being converted to electric motors because the infrastructure is now built out in areas where these compressors are located,” she says.

The energy sector’s rebound has also led to a jump in business at Starr Manufacturing in Vienna, says sales manager Matthew Foerster. 

“Toward the end of 2022, things were calmer than average,” he observes. “As soon as the New Year started, the switch got flipped and the workload shot up drastically in a very short period of time.”

Starr fabricates and manufactures components such as production separators, dehydration equipment, filters, pipeline inspection gauge launchers, and other products found at oil and natural gas well pads. Most of these products are installed in newly drilled wells, Foerster says. 

After approximately 18 months of low volumes, energy producers have opened the spigot and increased production.

However, production at many of the older wells has naturally declined, causing exploration companies to step up their drilling programs.

Between 60% to 70% of Starr Manufacturing’s business is within eastern Ohio’s Utica shale play and the Marcellus shale in Pennsylvania and West Virginia.

“We also supply to Colorado, North Dakota and some Texas,” Foerster says. 

A sister company – Hudson Industries – has also witnessed an increase in orders for its oil and water separators from companies seeking compliance with federal environmental regulations, he says.

Other major areas of growth include the renewable energy sector. “The general push for energy is back on,” Foerster says.

Starr Manufacturing employs 50 at its plant. The company is assessing how the recent flood of new orders will impact employment levels there.

“We’ve received so many orders so quickly, we’re still trying to ascertain just what the impact is. We know it will require some hiring.”

Finding the Workers

Among the most critical challenges facing the region’s manufacturing sector is the available workforce, executives say. 

According to data from the U.S. Bureau of Labor Statistics, 24,900 were employed in manufacturing in the Youngstown-Warren-Boardman-Mercer, Pa. metropolitan statistical area, or MSA, as of December 2022.

That represents a 21.6% drop compared to June 2012, when 31,800 were employed in the industrial workforce, data show.

Moreover, the overall workforce across the Mahoning Valley has dwindled over the last 10 years, according to BLS data.  

Yet there are signs that the tight labor market is beginning to loosen, says Danielle Wilson, human resources coordinator at Dearing. “The labor market is coming back stronger, much better than 2022,” she says.

Last year, Dearing held its first career fair in which 50 applicants attended, Wilson says.  “We had 20 available positions and ended up hiring five of those who came through the door.”

Wilson says Dearing is looking for candidates with mechanical, welding or assembly skills, while its distribution business is interested in service technicians. The company employs 200 total and 170 at its Boardman plant, she says. 

Employment has been volatile over the last year, Wilson says.  While some employees left for other opportunities, others joined the workforce at Dearing. “We probably hired between 30 and 35 people last year – some stayed and some left.”

Luke Medvec, an assembler, left the company during the COVID outbreak to start his own woodworking business.  A year later, he was back on the job at Dearing.

“I decided to come back,” he says.  “It feels like all is back to normal.”

Key to developing new manufacturing talent is encouraging younger people to pursue the industrial trades, says Ryan Engelhardt, plant manager at Brilex Industries and president of the Mahoning Valley Manufacturers Coalition. 

As president of the MVMC, Engelhardt says it’s his job to spread the word any way he can about careers and opportunities in manufacturing.

“My passion is youth outreach,” he says.  “I had a manufacturing class my senior year in high school and that sparked my interest.”

The area’s career and technical centers have done a superb job in preparing secondary school students for future careers in manufacturing.

“We need enrollment,” Engelhardt says.

“I want to see Brilex grow,” he says. “2022 was a record year for us and 2023 looks pretty strong. We’re still hiring for major positions and have as much work as we’ve ever had.”

Brilex manufactures mostly new heavy fabrications for the steel and metals industries and energy sector – especially components used in natural gas turbines at combined-cycle electrical plants, he says.

In order to expand, Engelhardt says it’s imperative that more young people move into the manufacturing trades – not only for the sake of his company, but for the future of the Mahoning Valley’s industrial economy.

“If there’s a student looking for a job, my biggest concern is hooking them up with a company and training them,” Engelhardt says.  “Then they’ll start honing their skills and trade, and hopefully spend the rest of their lives in the Mahoning Valley.”

Pictured at top: Sparks fly as Matt Hostetler, a welder at Dearing Compressor, practices his craft.

Copyright 2024 The Business Journal, Youngstown, Ohio.