Abicor Binzel USA: Sustainable Growth for the Long Term

SUPPLIER PROFILE

by Joe Hazelton and Rachel Duran

When you have been part of a company for more than 30 years, you have no doubt seen a multitude of changes, both within the company and your industry — in this case the welding sector. For John Kaylor, that includes starting as a machinist at ABICOR BINZEL USA all the way to president in 2009. ABICOR BINZEL USA in Frederick, Md., provides exceptional welding industry solutions and expertise, offering products such as welding guns, robotic welding solutions, laser welding optics, as well as a variety of welding accessories and peripherals. The company is part of Alexander Binzel Schweisstechnik GmbH & Co. KG, headquartered in Buseck, Germany. ABICOR BINZEL is part of a larger company, IBG Group, based in Cologne, Germany. (See “A GROUP IN A GROUP” at end of this article.)

ABICOR BINZEL USA provides products and services to a variety of industries such as automotive, energy, general industries, shipyards and heavy industries. In Kaylor’s 30-plus years, the most significant change has been the growth of ABICOR BINZEL. “In that period, we started up six or seven new production sites globally, major production sites,” Kaylor said. “We’ve made multiple acquisitions as well as from scratch startups. When I started in 1987, we had 20 locations globally, so we were already a global company. But it’s clear, at least in the last decade, we’ve made a real push to increase that footprint.”

Another significant change has been the way that ABICOR BINZEL develops its products for companies around the world. Twenty years ago, the strategy was to, “Develop a product; one size fits all; try and cover the major markets,” Kaylor said. The major markets were and still are Asia-Pacific, Europe, and the Americas. Kaylor added that the idea was: “Let’s try and develop things that hit all cylinders for all locations.”

However, ABICOR BINZEL realized the strategy had a flaw. It assumed that a Chinese welder and a German welder wanted their torches designed the same way. More generally, the strategy assumed that workers in different regions all wanted a product designed the same way.

As it turned out, the idea was wrong. So, ABICOR BINZEL started to develop products that considered the different preferences of customers in the different major markets. “We’re not a $5 billion company, so we know we can’t develop everything, so it’s key for us to pick the right developments, and the right strategic partners to remain competitive,” Kaylor said.

And the main preferences in the three major markets? Kaylor stated the main preferences can be stated generally:

• In the Americas, customers want products that subscribe to KISS: Keep it simple, stupid.
• In Europe, customers typically like their products to have more features.
• And in Asia, customers want their products to be inexpensive. Consequently, the products tend to have simpler designs.

However, there are two exceptions when regional differences may fall away. One exception is when ABICOR BINZEL looks at a market segment. “When we look at market segments,” Kaylor said, “we see some common denominators across the global regions — for example, shipyards.”

Kaylor explained that regardless of whether shipyards are in Japan or Italy, they generally use the same types of parts, and face generally the same issues. At that point, ABICOR BINZEL can say: “We think we can develop a product — and a marketing campaign to go with it — that hits across all these regions,” Kaylor said.

He noted the other exception is when the work requires automation: “When you get into automation, sometimes — because robots don’t care — it’s easier to hit across the regions. But, in a lot of products, it’s still: ‘We have to develop different products for different regions.’”

RIDING THE TRENDS
Kaylor mentioned two trends the industry leading welding experts at ABICOR BINZEL USA have noticed: 1) greater use of welding robotics and automation, and 2) greater extraction of welding fumes. He said both trends result from the same international problem. “There’s a really bad welder shortage,” Kaylor said. “This is global.”

Now, greater use of robotics and automation isn’t new; however, greater, more accelerated use is, particularly in the last five years, Kaylor said. “I think Covid actually put it in a higher gear.” In this trend, you can see how cause and effect are related. If there’s a shortage of welders, then make up for it as much as possible by using welding robotics and automation.

ABICOR BINZEL is well positioned to meet the greater, more accelerated use of welding robotics and automation. For starters, the company isn’t new to the technology and has been involved in welding robotics and automation for decades. “When robotics first started, back in the early to mid-’80s, we got into the game early on,” Kaylor said.

To this day, “Probably 60 percent of [our] R&D efforts are around automation,” Kaylor said. “That’s mainly robotics. We’ve also been very aggressive looking at either acquisitions or partnerships.” Naturally, ABICOR BINZEL looked for companies with technologies or products that can be used in welding robotics and automation.

In another trend, cause and effect are related, but they’re related indirectly. The extraction of welding fumes makes for a safer, healthier work environment for a welder. And in many cases, companies are extracting the fumes because government regulations require them to do so. However, Kaylor said that smart companies are extracting the fumes in order to attract welders. “A lot of companies, even though they haven’t been mandated by OSHA, are doing it to create a better atmosphere — a safer atmosphere for welders,” he stated.

Kaylor provided a hypothetical scenario. Say companies need 100 welders, but there are only 50 of them available — every company will try its best to attract those welders. And one way of doing that is by offering the safest, healthiest working environment, for example, an environment in which welding fumes have been removed.

So, ABICOR BINZEL can help those companies. IBG acquired a company that makes systems that extract welding fumes: HERR Industry System GmbH (Burbach, Germany). HERR offers compact systems and high-vacuum systems for extracting weld fumes. What’s more, Kaylor added that ABICOR BINZEL themselves has also focused on developing technology that mitigates weld fumes.

THE ONLY CONSTANT IS CHANGE; IT’S HOW YOU ADAPT TO THE CHANGES
Another trend is a continuing change: consolidation among OEMs. “Over, I would say, the last 10 — maybe even 15 years — there’s been a lot of consolidation,” Kaylor said. The consolidation has involved larger distributors buying up smaller ones. However, Kaylor added that it hasn’t affected ABICOR BINZEL: “We don’t see a huge impact from our perspective.”

He explained that in the welding industry, many of the distributors being acquired have been ones that weren’t offering the ABICOR BINZEL brand. “We have relationships with the large distributors as well as smaller ones,” Kaylor said. The large distributors have been buying up distributors that weren’t offering the ABICOR BINZEL brand: “So, it’s not going to be a threat.”

Moreover, as Kaylor explained: “A fair amount of our work is with the end-user.” The direct contact with end users means that distributors are needed more for follow-up after a sale and for local support of ABICOR BINZEL products.

However, there are still potential threats of consolidation among distributors: “Less competition and more price pressure,” Kaylor stated. “The bigger they get, the more volumes they get, the more control,” Kaylor said. He explained greater control and its result with an example: If Ford bought GM, Stellantis, and three other automakers, “the price of cars would go up overnight.”

Kaylor also pointed out two long-term changes, both involving the supply chain, Covid-19, its variants, and their combined outcomes. He said there is going to be a reset in the global supply chain, which involves less reliance on manufacturing in low-cost countries. However, he isn’t necessarily talking about taking a large factory in India and moving it to the United States, as an example. Rather, ensuring there is enough manufacturing capacity in both countries. “Even though it might not be the most cost efficient, we need that redundancy to have a robust supply chain,” Kaylor said.

Also, Kaylor expected that more manufacturing in high-cost countries would involve more automation. “At the end of the day, we still all need to be competitive,” he said. Now, being competitive means making and offering a product at a competitive price. In high-cost countries, one way of keeping prices competitive is to minimize a high-cost component, labor. “So, I think that’s going to be driving this long term, even faster in automation,” Kaylor said.

Another aspect of resetting the supply chain focuses on materials. Disruptions in a supply chain can happen at any time, including a disruption in the mining of raw materials. However, Covid-19, its variants, and their persistence around the globe make disruptions seem like a more routine part of our new normal. Of course, sometimes, a company can foresee a disruption and can prepare for it, but a company can’t foresee all crises. So, if at least some crises are going to be unexpected, then best to prepare for the unexpected.

Unfortunately, as Kaylor pointed out: “It takes a lot longer to ramp up to produce those materials, raw materials. So, I think that will be on the horizon, but it won’t happen as fast as manufacturing.” Purchasing more raw materials offers the possible return of larger, in-house inventories. “Inventory and those carrying costs, I think, are going to be re-evaluated,” Kaylor said.

THE FUTURE IS NOW
ABICOR BINZEL’s sales have grown significantly in the past 10 years, where sales in the Americas have nearly quadrupled. The company’s sales growth is still significant when considered as a part of IBG sales growth. “When we look at the total percentage in the whole global group sales, we’ve doubled — in the Americas — our contribution to total sales,” Kaylor said. “So, there’s been huge success and growth.”

Kaylor expected ABICOR BINZEL’s sales will continue expanding. “We’re really well positioned globally,” he said. “And we have a clear strategy for sustainable growth, tying into what we see as — long term — where the trends are going. Our growth projections are quite aggressive, but I see where the company is positioned both locally, here in the U.S., and globally. And those goals are obtainable.”

www.binzel-abicor.com

SO MANY MARKETS
ABICOR BINZEL USA offers products and services to many vertical industries, said the company’s president, John Kaylor. He added that there are many industries in which things need to be welded, so: “We’re into all those.”

Kaylor listed the main industries that are served:

• automotive,
• energy (oil and gas),
• general industry,
• heavy industrial,
• shipyards, and
• structural.

In terms of sales, though, Kaylor said of those six industries, the three biggest are:

• automotive,
• general industry, and
• heavy industrial.

A GROUP IN A GROUP
ABICOR BINZEL USA is based in Frederick, Md., and is part of Alexander Binzel Schweisstechnik GmbH & Co. KG, headquartered in Buseck, Germany. Likewise, the ABICOR BINZEL group is part of an even larger group of companies, the IBG Group — technically, IBG Industrie-Beteiligungs-Gesellschaft mbH & Co. KG of Cologne, Germany.

Regarding the IBG Group: “Total, within the group, we have 72 production and sales companies, and I would say 98 percent of those are wholly owned subsidiaries,” Kaylor said. “We’re in 34 different countries. And, we have roughly 2,400 employees globally.”

The IBG Group is diverse and consists of three business units: welding technology, construction chemicals and components. The welding technology unit consists of six companies in addition to ABICOR BINZEL, Kaylor noted.