Home Industries Manufacturing Twin Disc faces labor challenges to meet demand as oil and gas...

Twin Disc faces labor challenges to meet demand as oil and gas market returns

Twin Disc
Twin Disc

There were a number of things for executives at Racine-based Twin Disc Inc. to be happy about in the company’s latest earnings report. Sales for the second fiscal quarter of 2022 were up more than 23% from the same time last year. The company’s six-month backlog has grown to $98.9 million, up from $86 million

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.
There were a number of things for executives at Racine-based Twin Disc Inc. to be happy about in the company’s latest earnings report. Sales for the second fiscal quarter of 2022 were up more than 23% from the same time last year. The company’s six-month backlog has grown to $98.9 million, up from $86 million in September and $70 million at the end of June. It’s the highest level since August 2019. Up and down business cycles are nothing new for Twin Disc, which makes power transmission equipment used in oil and gas exploration and drilling along with marine and industrial markets. The company’s revenues went from $356 million in fiscal 2012 down to less than $170 million in 2016 and 2017 before recovering to $302.6 million in 2019. In addition to improved sales, Twin Disc is also seeing some other signs of improving demand, including aftermarket orders from the oil and gas industry. Those orders are typically a precursor to additional demand as customers repair equipment that was previously idled ahead of buying new rigs used for exploration and drilling, John Batten, president and chief executive officer of Twin Disc, said on the company’s earnings call. “We are optimistic that recent aftermarket orders, combined with higher oil and gas prices will support a growing investment cycle over the coming quarters for new pressure pumping rigs in North America,” Batten said. “In addition, with a robust inventory position of finished pressure pumping transmission systems, we believe we are well positioned to capitalize on expected improvements in the oil and gas industry.” While Twin Disc may be in position to take advantage of improvements, it might prove challenging to meet demand if it reached its previous peaks from the past decade, Batten acknowledged during the earnings call. “To support growth back to our prior level … we will need more internal capacity on assembly and test and primarily in North America,” Batten said. He said those resources would need to be found either in Racine or at the company’s facility in Lufkin, Texas. Twin Disc moved some of its work from Racine to the relatively new Lufkin facility to free up capacity at its local plant. On a previous earnings call, Batten suggested the company may move some production to Italy to free up additional resources in Racine. “Sometimes we feel like a duck swimming upstream,” Batten said on this week’s call. “There’s a lot of activity on the feet going underneath the water, just replacing retirements here.” While manufacturers have faced challenges in hiring for a number of years, the COVID omicron surge in December and January and the pandemic generally have only made things more difficult. Batten said Twin Disc has been challenged with quarantines and people being out sick. “The one that we have to work on the hardest is making sure that we have the people in the shop to make it all happen and get product out the door,” Batten said. “I think we’ve crested there and that’s getting better.”

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