- Buyer's Guide
It often takes up to a year and a half for mining equipment makers to receive the large gears, often 40 feet wide, or casting molds for them because of the boom in the industry in the past few years, said Raymond Monroe, executive vice president of the Steel Founders' Society of America.
The blast December 6 at Falk Corporation halted production there indefinitely, causing many to wonder how long the company, one of the largest steel foundries that make large gears, couplings and castings, will be down, Monroe said.
"A month or two months would begin to have real repercussions because there would be people who need equipment and they're going to other places that are already backed up," Monroe said. "So there would be some real economic disruption."
Bob Hitt, chief executive officer of Falk's parent company, Rexnord Corp., said company officials are still waiting to tour Falk's sprawling complex near downtown Milwaukee while investigators sift through the rubble. The building destroyed in the blast held some of the company's inventory, he said, though it is not clear how much was lost.
"From a customer standpoint, obviously we want to be running as quickly as we can," Hitt said.
Falk's approximately 700 workers will be paid while operations are halted, he said. Whatever the damage to the complex, he promised the company would be back.
"We intend to rebuild here and they should be patient and take that to heart," Hitt said of Falk's employees.
Three longtime employees died in the blast, which injured nearly four dozen. Authorities are investigating the cause, though it is known there was a propane leak before the explosion that flipped over cars and sent debris throughout the area.
Rexnord, also based in Milwaukee, makes power transmission products and other motion products, with about 6,000 employees worldwide. A private equity firm, Apollo Management, announced in May it agreed to buy Rexnord for $1.825 billion. Rexnord's handful of divisions posted a sales increase of 9 percent to $298.1 million in the most recent quarter.
The company acquired Falk in May 2005 for $295 million from Hamilton Sundstrand, a subsidiary of United Technologies Corp.
There are about 2,100 casting plants in the U.S. but Falk is one of only 10 to make such large pieces, said Alfred Spada, spokesman for the American Foundry Society.
"If for some reason their production were to be shut down for an extended period of time, there are some worries about the production capabilities in the U.S.," Spada said. "The other players will have to obviously pick up the slack."
Monroe said companies in Australia and South Africa make competing products, though they typically use less durable cast iron as opposed to Falk's steel.
It's too soon to tell what the impact will be in the construction industry, said Joe Hummel, executive director of Allied Construction Industries, a trade group. It could take months for equipment makers - and then commercial construction companies - to feel the impact of a slowdown of a major manufacturer.
"If they're affected, ultimately commercial construction could be affected," Hummel said. "The arc could be a long time out."
Mining supply company Continental Conveyor & Equipment Co. had an order in with Falk, a company it has worked with for 30 years, said Jim Smothers, president of the Winfield, Ala.-based company.
He said he expected to speak with Falk officials next week about the situation, though there's no danger of a slowdown for him because Continental generally keeps its assembly line well stocked.
"We're obviously concerned but Falk is a very good supplier," Smother said. "They have been a very good resource for us, their people and decision makers, and I'm sure we'll be able to work out something."