The Prosperity Fund offers Jasper firm support amid coal downturn
November 14, 2017 | Southern Research
JASPER, Alabama — A&A Machine & Welding has been operating for nearly four decades, but the last few years have brought challenging times for the family owned business in the heart of Alabama’s struggling coal country.
While A&A never performed much work directly for coal companies, it has felt the impact of the industry’s damaging decline in Walker County. That’s because many other machine shops in the area worked only for mines that shut down, touching off a fierce fight for survival.
“As soon as that work dried up for them, you know what happened? Competition came out for us in every direction,” said Scott Aaron, who operates A&A with his brother, James, and sister, Patty Sanders.
As a result, it became tougher for A&A to win work. And when the company did secure a job, prices were lower, driven down by all the new competition. “Last year was the toughest year we’ve ever had,” Sanders said. “Really, 2015 and 2016 were tough years for our company.”
The siblings who operate A&A are working hard to regain a firm footing for the business founded in 1978 by their father. They have a partner in this undertaking: The Prosperity Fund, an initiative founded by Southern Research to assist small businesses and spur job creation in four Alabama counties hit hard by the coal industry downturn.
“This effort is about getting in the trenches with businesses like A&A, getting out on the shop floor, understanding how their processes work, and finding solutions for them so they can boost productivity,” said Steven Puckett, The Prosperity Fund’s managing director.
“It’s a very hands-on approach to help these businesses reach the next level.”
Though it has been operating for only three months, The Prosperity Fund has become active in the Alabama counties most severely affected by the collapse of the nation’s coal mining industry: Walker, Fayette, Tuscaloosa, and Jefferson.
The negative effects in Alabama’s coal country have been severe. Overall, the industry’s downturn has cost the four counties nearly 16,000 direct and indirect jobs, wiping out more than $800 million in wages.
Since joining The Prosperity Fund in August, Puckett has engaged in discussions with 18 small businesses in the four counties, and he has been working with aspiring entrepreneurs looking to start new businesses.
Puckett has also connected with universities and colleges in the region about getting students directly involved in working with businesses. He’s recruited community organizations and others to lend support as partners throughout the region.
Corey Tyree, Ph.D., director of strategic growth initiatives for Southern Research and a co-founder of The Prosperity Fund, said areas that see their traditional economic base weaken must embrace innovation and new job-creation approaches.
“Alabama knows how to turn its assets into jobs. We did it with coal. Our state’s natural resources fueled massive industries like steel and electric power that were the backbone of America’s growth. Luckily we have other assets that can be a source of job creation. Small businesses like A&A are one of those assets. Let’s invest in them. Let’s deploy resources to serve urban and rural Alabama. That’s what The Prosperity Fund is about,” Tyree said.
Southern Research launched the 30-month, $2.4 million public-private partnership earlier this year with partial backing from the Appalachian Regional Commission.
At A&A Machine, the owners are encouraged by the assistance they’ve already received from The Prosperity Fund.
Sanders said the early focus of the collaboration has been on introducing efficiency to the company operations, which include precision machining, welding, and fabrication at locations in Jasper and Cordova. The firm has 20 workers and mainly serves customers in the wastewater treatment industry.
“What we’re initially going to do is get a hold on the business and get it working more smoothly,” Sanders said. “After we get through the initial phase, hopefully we’ll be able to grow and find new customers. We have already started working on that.”
Puckett has been working to deploy on a smartphone app that will allow the workers on A&A’s shop floor to record time spent working on a particular project, replacing an inefficient paper-based system. He also plans to line up Bevill State students to help transform A&A’s website into a more effective marketing tool for the company.
Aaron said the fresh ideas are already paying positive benefits.
“This is a family business, so there are limits on where we have gotten our training,” he said. “It’s really been right here between these four walls since we were probably 14 years old. We grew up, and that’s how we did things.”
Puckett has been working with A&A to add new processing capability that they currently sub-contract. Welding or grinding stainless steel can make the material susceptible to corrosion. As a result, customers require machined or welded stainless parts to be passivated before they are shipped.
This could be a burdensome and expensive process for A&A, which sometimes had to ship stainless steel components to a shop in Texas for cleaning. Puckett has identified an environmentally friendly, citrus-based cleaner that A&A can use to make the passivation process more affordable.
The change could result in big savings for the company.
“Some of the stainless products we work on are pretty large, so we were spending a lot on that,” Sanders said. “We felt it was taking customers away from us because we could not come up with a good way of getting it ready to ship.”
In addition, The Prosperity Fund is working to identify new markets and customers for A&A. Procurement agents from new potential customers visited the shop, and the siblings are eager to pursue the potential of winning jobs from these new customers.
“I think Steven and The Prosperity Fund can really help us over the long term,” Aaron said. “He is helping us manage what we have going on in the business now and setting us up for when we can grow. Right now, I think we have the potential for a lot of good growth.”
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