That's right. I said Michigan. And yeah, I mean in or near Detroit. And no - these 3 small- and medium-sized manufacturers (SMMs) aren't just surviving ... they're THRIVING.
This past weekend, The New York Times ran an article titled "In Detroit, Is There Life After The Big 3?" Its author Pete Engardio deserves a medal for portraying the path to success for today's modern manufacturing shop. He covers the stories of 3 former automotive machining and manufacturing suppliers that moved into new markets and found prosperity.
Diversify, or die.
Before I go any further, this is not about the legitimacy of buyers running hog-wild to low-cost countries to save a few coins, and what it costs a company, a country and a culture in the process. This is about pragmatism, creativity, savvy and ingenuity and how they can still win the day. The outsourcing cow's out of the barn (and may come back to some degree) - but this is about what to do NOW. In Michigan, or anywhere else ...
The article begins - where else? - on 8-maile Road, where the carnage left in the wake of US Automotive retreat is everywhere:
"But pull into the bustling headquarters of W Industries, a compound of imposing black structures at 8 Mile and Hoover Street, and you’ll encounter a more hopeful vision of Detroit’s future. Once an exclusive supplier to the auto industry, this machine tool and parts company is rolling in new business.
In one section of the cavernous shop floor, machinists use powerful lasers to slice thick steel plates. They’re making parts for Humvees and Stryker combat vehicles destined for Afghanistan and Iraq.
Elsewhere, they are assembling a 60,000-pound apparatus for testing the Orion space module by simulating the violent vibrations of liftoff. Other workers are finishing a steel mold that will be used to make 70-foot-long roof sections of Airbus A350 passenger jets.
Dozens of Michigan manufacturers like W Industries are discovering there is indeed life beyond the auto industry. Over the last two years, multinationals and start-ups alike have been coming to the state to build, buy or design a hodgepodge of products, whether aircraft parts, solar cells, or batteries for electric cars."
The second company, McLaren Performance Technologies, experienced an even more dramatic transformation:
"In September, for instance, NTR, a solar energy company from Ireland, awarded contracts to two Detroit-area auto suppliers, including the race-car engine developer McLaren Performance Technologies, to make components for thousands of SunCatcher solar dishes.
'It should be no surprise we went to Detroit,' says Jim Barry, NTR’s chief executive. 'The standard of manufacturing in the automotive industry is extraordinarily high, and that is the only place you can find such a concentration of skills.'"
The last - and perhaps the best - example of the lot is a 40+-year-old automotive tool and die shop:
"Dowding Industries, a family-owned company in Eaton Rapids, is also wagering its future on diversification. It was founded in 1965 as a tool-and-die shop for Oldsmobile and later expanded into metal auto parts. The company branched out into tractor and rail car parts in the 1990s, as the Big Three pinched costs to compete with overseas rivals and 'started getting real brutal' on suppliers, says Jeff Metts, Dowding’s president.
He said that after Dowding had invested in new machine tools and perfected a part, the work was often shifted to China six months later. 'There seemed to be a real effort to remove our profit,' Mr. Metts recalls.
In 2006, he attended a wind-power trade show in Los Angeles. 'We were really shocked at how big this industry was becoming,' he says. That year, Dowding won a $5 million contract from Clipper Turbine Works of Cedar Rapids, Iowa. Other wind customers followed.
After the recent recession, in which it laid off 130 of its 280 workers, Dowding made a bigger bet on wind, forming a venture with MAG Industrial Automation Systems in Sterling Heights to develop tools for turbine components.
MAG also makes machines used to fabricate carbon-composite airframes for planes like the Boeing 787 Dreamliner. In October, the venture will introduce a system that Mr. Metts says can make better-performing wind turbine hubs in one-fifth the time of current methods.
The next goal is a machine for carbon-composite blades that, he says, will be 30 percent lighter than fiberglass blades and last 20 years or longer. Mr. Metts says Dowding has commitments from several turbine makers, and he sees opportunities to use similar machines and technologies for bridges, expressways and ships — for which production methods and materials haven’t changed much in decades.
'This will be as big as the shift from metal to plastics,' Mr. Metts says."
As the examples set by Dowding and these other SMMs show, innovation and the courage to change can make a difference. But while those kinds of moves come with risks, the rewards can be even greater.
"Five years ago, W Industries had $15 million in annual sales. This year, it expects at least $150 million, two-thirds of it from military and aerospace contractors. It has bought three old factories in the area and is looking for more, and it plans to double its work force to 500 by 2011."
Reviving an area like today's Detroit will take time, capital and a lot more industries to take advantage of (what's left of) its unique industrial base. But the human element of manufacturing has always payed the most dividends by way of its most difficult-to-define commodities - discovery and talent.
"To illustrate how difficult that talent would be to replace, Bud Kimmel, vice president for business development at W Industries, points out Jason Sobieck. A 30-year-old machining whiz sporting a green tattoo, gray T-shirt and jeans, Mr. Sobieck manages the Spirit and Orion projects.
'Jason is like an artist,' Mr. Kimmel says. 'We built our whole program around him.'
Mr. Sobieck began work at 17 at a small Detroit welding shop. He then worked for tooling companies, where he learned to program automated systems and manage projects. 'These skills really aren’t taught in school,' Mr. Sobieck says, dragging on a cigarette. 'This is a trade you learn on the shop floor.'
That’s one reason that W Industries wants to snap up as many good machinists and engineers as it can afford.
'If we don’t re-engage the automotive workers soon in major programs,' Mr. Kimmel says, 'this set of skills will be lost.'"
The answer for your manufacturing business - like those from this article - likely lies in the same determination to diversify that these shops found. It's difficult. Change always is. But it's not nearly as difficult as the alternative.