For The Fulton Companies, it’s all about making adjustments in the midst of pandemic storm
By Lou Sorendo
Successfully adapting to market conditions is certainly a priority for any business.
But the ability to pivot has never become more of a necessity than in today’s pandemic-wracked business environment.
With nearly 500 confirmed cases and three deaths attributed to COVID-19 as of Sept. 27, the Oswego County industrial community is not taking the global pandemic lightly.
“Certainly we were preparing for the worst as COVID-19 hit and the economy was shut down,” said Bram Palm, president and CEO of Pulaski-based The Fulton Companies.
He said reflecting back to February and March, he foresaw the need to lay off 100 or more workers. The Fulton Companies employs about 350 workers in Central New York. It employs about 300 workers in Oswego County, ranking it eighth among the largest private employers, according to the Business Guide, published by this magazine.
The Fulton Companies represents a group of companies that primarily has been involved in sales, service and manufacturing of commercial and industrial heat transfer equipment for the past 70 years.
“We have a wide-ranging customer base from small dry cleaners to food processing to all forms of health care,” Palm said. “As an essential business, we have been extremely busy supporting hospitals, food suppliers, pharmaceutical companies, disinfectant manufacturers, N-95 mask makers, and many more with products and services,” he said.
Some other businesses like dry cleaning, hotels, and those involving energy development have shut down completely, he noted.
Palm said the company did not reduce its workforce in Upstate New York — primarily Oswego County — because of COVID-19.
However, employees were working reduced hours in one of the company’s five plants in the county due to the drop in dry-cleaning demand.
“We have been shocked at how resilient our business has been,” he said. “Our operations in China went through a steep slowdown in the first quarter but have snapped back sharply to levels above the pre-pandemic rate.”
The Fulton Companies has manufacturing plants in the U.S. and China and operates on five continents, reinforcing its reputation as a worldwide leader in the development of heat transfer products.
Fulton UK in Great Britain is facing both COVID-19 and issues relating to Brexit, or its departure from the European Union.
“Business there is very slow now,” Palm said.
Tip of iceberg
“We are only beginning to see the impact on the economy within our business, because it involves expensive capital equipment with long planning and buying cycles,” he said. “Certainly government stimulus will have a positive short-term effect.”
Palm said he is seeing strong demand in some areas and some extreme slowing in others.
“There is fear to invest in areas that are assumed to be impacted long term by this pandemic, so we expect some degree of permanent buying changes,” he said.
Due to the impact of COVID-19, The Fulton Companies anticipates achieving about half its profit goals for 2020, Palm said.
He said limitations on shipments in the first two quarters was simply “too much to make up without extraordinary luck and execution.
“Most companies earn between 5% to 20% before they pay taxes with the average probably at or below 10%.”
He said from a common-sense standpoint, that means one-month loss of business cuts profits to zero.
“It is a fine line in a competitive world,” he said. “We may have been able to minimize our profit loss by laying off workers, but we had to bring them back a few months later.”
Palm said the business model at The Fulton Companies will definitely change as a result of COVID-19.
“We have learned how effective we can be working mostly remotely with our office staff,” said Palm, noting he has been isolated in northern California since February as a Type 1 diabetic.
He said the company holds many meetings using Microsoft Teams — a Microsoft-operated business messaging and collaboration platform — with participants scattered around the world.
“I do not think we have ever communicated as well at the leadership level when we were all trying to get everyone together in a central office,” he said.
“Our efforts over the past decades to support health care, education and food processing with our product developments is an element of our business model that has been validated by the experience in 2020.”
Fulton Boiler Works, Inc. was founded in 1949 by Lewis Palm to provide vertical tubeless boilers for dry cleaners. Since then, other companies such as Fulton Thermal Corporation and Fulton Heating Solutions, Inc. have been formed, offering products to many other industries including food processing, health care, and commercial heating.
Fulton’s headquarters are in Pulaski, where the fourth generation of the Palm family has begun taking on active roles in the family business.
Economic Downturn: Significant and Real
The region and country has experienced the longest economic expansion in U.S. history, followed by the largest unemployment since the Great Depression.
“The economic downturn was significant and real,” said Randy Wolken, president and CEO of the Manufacturers Association of Central New York during MACNY’s virtual 107th annual Celebration of Manufacturing.
U.S. gross domestic product, the broadest measure of the American economy, shrank by a rate of 5% between January and March.
It was the worst performance for the economy since the final quarter of 2008, when America was in the midst of the financial crisis, and put an end to six years of uninterrupted economic growth.
However, the worst was yet to come.
GDP then decreased at a record-setting annual rate of 31.7% in the second quarter of 2020, according to the Bureau of Economic Analysis.
The amount of joblessness as a result of COVID-19 was 10 times larger then the ’08 global financial crisis.
In August, the statewide unemployment rate did decrease from 15.9% to 12.5% a month before. Jobless rates peaked at around 16% in May.
Unemployment in the manufacturing sector is about 13%, the largest jobless rate for all sectors of industry in the state.
Wolken said there are about 2,500 fewer jobs in Central New York compared to this time last year, while there are 50,000 less manufacturing jobs in the state.
In the Syracuse Metropolitan Area, which encompasses Madison, Onondaga and Oswego counties, the unemployment rate stood at 9.8% in August compared to 4.2% in August of 2019.
Only about a third of manufacturers nationwide reportedly have a positive outlook for their company, the lowest reported positive outcome since the first quarter of 2009, Wolken said.
“They are also expecting growth rates and full-time employment to be lower as well as,” he noted.
Capital improvements and prices for companies’ products and inventories are all trending lower, Wolken added.
