Cleveland Ohio Manufacturing: companies’ patience is paying off

Northeast Cleveland Ohio manufacturing companies have been doing pretty well in recent months.

Some of this, of course, can be attributed to an improved economy. But some of it is certainly due to the companies themselves, many of which used the slower years of late as a springboard for innovation and change.

A lot of companies cut back when times are tough, but that “catches up” to them eventually, said Materion Corp. president and CEO Jugal Vijayvargiya. But Mayfield Heights-based Materion makes sure to invest in research and development when times are good and when they’re bad, so the advanced materials supplier can benefit from it long-term. And it has paid off.

“Our new product pipeline is the proof,” Vijayvargiya said.

For example, the company’s second quarter saw record sales for its ToughMet high-strength alloys, which the sales team has been working to get into new markets like aerospace and oil and gas in recent years. New product sales made up 15% of Materion’s total value-added sales, according to a news release. Value-added sales don’t include so-called pass-through sales of precious metals to customers, Vijayvargiya said.

Materion’s value-added sales grew 14% to $176.1 million in the second quarter of 2017. Net sales for the quarter were $295.8 million.

Although not every company had a strong quarter, Materion was far from alone in seeing sales jump in recent months.

Other public Northeast Ohio manufacturers that reported strong sales in their most recent quarterly reports include Ferro Corp. of Mayfield Heights, which saw net sales increase by 17% compared to the same time last year (boasting revenue from new products and acquisitions); Nordson Corp. of Westlake, which saw sales increase by 20% compared to the same quarter in 2016 (attributing that to organic growth and acquisitions); and TransDigm Group Inc. of Cleveland, which saw net sales increase by almost 14% compared to this time last year (net income also increased due to those sales, improved operating margins and lower refinancing expenses).

At Canton-based TimkenSteel Corp., net sales increased to $339.3 million in the second quarter of 2017 from $223.1 million in the second quarter of 2016. Net income grew to $1.3 million, compared with a loss of $6.6 million in the like period a year ago.

The steelmaker began expanding its product horizons in the second part of last year, said chief financial officer Chris Holding. The company is now putting a stronger focus on products with a lower alloy content. That doesn’t mean it’s not still producing its special bar quality steel, but it’s opening its sales up to other kinds of steel to allow it to better use capacity at its plants. TimkenSteel had gotten tired of seeing low melt utilization rates, Holding said.

“This is just not the path to victory,” he said.

Melt utilization for TimkenSteel was 76% in the second quarter, according to a news release. It was just 45% in the like quarter last year.

While TimkenSteel was looking for new products to offer, Cleveland-Cliffs Inc. is seeing success after narrowing its area of focus. Lourenco Goncalves, chairman, president and CEO, made note of businesses and geographies, like Canada, the iron ore and mining company has left in recent years under his leadership.

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