Photos: Ian Vincent (Left) Brian Hanson (Right)
The Area Partnership for Economic Expansion (APEX) spent the past year conducting a in-depth survey to better understand the heat treatment, plating and powder coating industry. Discussions with 100 area businesses revealed that more than $12 million annually leaves the region to be spent on these services in Southern Wisconsin and Minnesota, along with Ohio and Indiana.
This type of research makes APEX unique, said President and CEO Brian Hanson.
"It is what differentiates us from other economic development agencies. We take the extra step to research and really understand the industry," he said.
Regional company owners repeatedly said they had to send their materials outside the region for finishing services, which isn't their first choice, said APEX Business Developer Ian Vincent, who conducted the survey during the past year during the course of business retention visits.
"Ninety-nine percent of the businesses wish they could source these services locally. Our goal is to play a role to make that possibility a reality," he said.
To further understand the industry, APEX distributed surveys to 100 firms. Fifty-five shared data, and 25 had information that was pertinent. Vincent feels the $12 million of lost impact might be underestimated.
The survey discovered additional details about the heat treating, plating and powder coating industry by breaking down the $12 million by treatment. About $4 million was spent on heat treating, $5.5 million on metal plating and 2.5 million on powder coating. And additional $20,000 went towards treatments. The survey also determined products were sent 270 miles one way to obtain those services.
Once the data was complete, APEX shared the results of participants. Hibbing Fabricators President Sandy Bryant was one of them. Powder Coating is something his company has been considering for a while, but this data really peaked my interest.
"It's a venture we've considered before as a separate entity, but this study made it a bit more interesting," he said. "I was surprised by how high the number was"
Bryant shared the survey results with investors but is unsure if an expansion will ever happen at Hibbing Fabricators. If they move forward, APEX has volunteered to help identify which area companies would use the service and how Hibbing Fabricators might best connect with them.
APEX wants to be part of the solution but doesn't want to plat favorites.
"We developed these materials to create conversation around the topic," Vincent said. APEX is open to having further conversations with companies such as Hibbing Fabrications to spark a solution, but ultimately, APEX wants to maintain neutrality.
The complexity of this industry suggests there isn't one solution that will ensure products aren't shipped out of the region to be treated. In some cases, it might help always make more business sense to ship very specific projects outside the market. But Vincent is confident the survey may spark enough interest within the region for a company to expand its efforts to capture some of the outsourcing.
"We've received a lot of interest within the region as people have learned about the survey," he said. "We want to support these regional expansion efforts first."
If that effort is exhausted, APEX will spend time looking outside the region to identify a firm that might want to address a need. If successful, the end result would reduce transportation costs and time for area customers. Hanson said they also would regain quality control. That's because once a product is shipped out of the region for treatment, it often continues on to its destination versus coming back for a final inspection.
Hanson and Vincent are optimistic about what the future holds for regional heat treating, plating and powder coating and the role. APEX can play in a keeping $12 million from exiting the area. The group has reason to be optimistic. Its other recent successes include recruiting AAR and Involta to the Twin Ports. In both cases, staff were dedicated to ;learning about the industries - aviation maintenance and data storage - and then played an active role to ensure the companies made the Twin Ports their home.