Fabricator growth strategy: Lower cost brings greater profit

Figure 1: Hi-Tech Industries of New York invested heavily in technology over the past two years, including this 4-kW laser cutting center. Photo courtesy of Amada America Inc.

Doug Gardner recalled one request for quote on a telephone booth-sized component. It was chockful of location points, with complicated square tubing needing to marry up with base plates precisely. The tolerances were so tight that Gardner, president of Hi-Tech Industries of New York, almost disregarded the RFQ as a no-quote item.

Then he paused. What if the shop could fabricate the component out of fewer pieces? He discussed it with the customer, and then took the redesigned part to his engineers, who promptly entered the file into software that produces an almost immediate time study showing exactly how long it would take to fabricate the component. “It’s really easy to quote when you know exactly how long it is going to take,” Gardner said.

He then sent that quote to the customer. “And I was honest. I told him I was making more profit [with the unitized-design approach] than if we were to go with something similar to the original frame design.

“I told him: ‘My profit went up, and your costs just went down. What a country!’”

This approach dominates Gardner’s sheet metal job shop in Johnson City, N.Y.: Save customers money and increase Hi-Tech’s profits. If the shop’s not accomplishing both, something is ripe for improvement.

Gaining the Tech Edge

An energetic manager, quick to laugh but getting to the point like a no-nonsense New Yorker, Gardner explained that the shop probably couldn’t offer some of the design for manufacturability (DFM) options without significant equipment investments. The manufacturing floor reveals that this isn’t a typical, 45-employee sheet metal job shop. At one end sits the company’s laser, a new 4-kW Amada LC-3015F1NT machine that switches out cutting tables in less than a minute, maximizing beam-on time (see Figure 1).

He then turned to something even more unusual in a small, North American job shop: a large robotic bending cell, an Amada Astro II 100NT (see Figure 2). Two tool-positioning devices, one on either side of the brake bed, changed out special segmented tools quickly (see Figure 3). If a bend requires a tool that’s 260 mm wide, the tool-positioning devices on either side of the bed may stack four 50-mm-wide tools, a 40-mm-wide tool, and a 20-mm-wide tool together to produce the wide tool. Instead of traditional backgauges, the brake uses specially designed potentiometers that feed back part position information to the controller.

Manufacturing Roots

Gardner recalled his cell phone ringing several years ago shortly after the company bought the new laser. It was his father, who said he heard he made a major machine purchase. This was in 2008, when Hi-Tech employed a little more than 20, so the decision to buy didn’t come lightly. As Gardner recalled, “He asked, ‘Do you think that was a smart idea?’ I told him, ‘It was either the smartest or dumbest thing I’ve ever done.’” He paused. “It turned out to be smart.”

When speaking, Gardner doesn’t pause often, but at this moment he had reason to. His father—a trained machinist who brought up his son around machine tools—passed away in early 2010. Gardner’s father launched a machine shop called Akraturn Manufacturing 40 years ago in Kirkwood, just outside Binghamton and about 10 miles east of Endicott, the birthplace of IBM.

“It was like fishing at the hatchery, really,” Gardner said.

Figure 2: Doug Gardner stands next to the shop’s latest investment, a robotic bending cell. Photo courtesy of Hi-Tech Industries of New York.

The company focused on precision lathe work and cylindrical grinding but eventually branched out to milling, honing, and other metalworking. Meanwhile his son Doug caught the entrepreneurial bug. He ramped up the company’s prototype business, purchased its first laser cutting system in 1998, and then went out on his own to launch a stand-alone prototype shop called Protofab, bringing with him two employees, Doug Sterns and Barry DePersis. Gardner then sold the assets of Protofab to another company, and Sterns and DePersis left to launch Hi-Tech Industries of New York.

In the early 2000s Hi-Tech grew its customer base and served Akraturn’s sheet metal needs. Then in 2005 tragedy struck. DePersis died in a car accident.

“Barry was the front man, the salesman,” Gardner recalled. “He was everybody’s buddy. More than 3,800 people signed the guest book to his funeral.”

In 2007 Gardner went back to work for Akraturn and Hi-Tech, and in 2008 his father retired. So that year the shop’s current ownership was solidified: Gardner, his brother Dave, and Sterns became one-third owners of both Akraturn and Hi-Tech Industries of New York. Managers hope to merge both companies into one corporate entity in the near future.

What began as a small sheet metal prototype operation now makes up more than half of Gardner’s overall business volume between the two companies. Hi-Tech kept busy even during the depths of the recession. Did the company keep busy because of strategic equipment investment and vision?

Gardner gave the answer of a realist. “Not really. I’d love to tell you [we made a strategic investment] because I’m a really smart guy, but that’s not true. The truth is we were able to work with a customer that had a two-year contract making parts for the government.” The government was one of the few customers that continually demanded work even during the credit crisis. “We were running 24 hours a day, and our 2-kW laser just couldn’t keep up.”

That contract led to the company’s 4-kW laser machine purchase and associated software upgrades. If a clean DXF file comes in the door, front-office personnel can send that job to a nest within hours—and sometimes even within five minutes.

Customer Communication

New technology alone doesn’t bring business in the door, Gardner said. What’s key is spreading knowledge of that technology to customers. This is where DFM comes into play. If a part can be manufactured quickly and for less money, everyone benefits. The unitized-design frame that Hi-Tech suggested is one example.

For another customer, engineers suggested changing several components to an all-stainless-steel design. “We can cut 0.028-inch stainless steel at 6 inches a second,” Gardner said, explaining that increased manufacturing speed, combined with the fact that the components no longer needed powder coating, made stainless steel the less expensive option.

Managers tout their ability to premachine with the laser and then finish-machine using the mills on the Akraturn side of the business. The company produces one product made out of 0.375-in. steel plate. Previously it placed that plate within a mill, which spent about an hour hogging out and finish-machining the holes and contours (see Figure 4). Today Gardner sends the plate to the laser, which takes three minutes to cut the hole features and plate profile. He then sends it to a mill, which now needs only 20 minutes to machine features to precision tolerances.

Figure 4: This horizontal machining center can finish-machine plate previously cut on the company’s laser.

The company also continually stresses the importance of clean drawings and DXF files. With a clean file upfront, the shop can jump into production faster. And as a small job shop working with various customers, the engineering department sees various part drawing formats, from 3-D design files to PDF scans of old, paper-based blueprints.

According to Chris Dascano, applications engineer at Hi-Tech, creating a flat-pattern DXF can take anywhere from a few minutes for simple components to a few hours for complicated ones. Once the flat pattern is detected, software nests parts per the due date.

Argument for Automated Bending

Conventional wisdom states that automated bending requires long runs—but Hi-Tech didn’t follow conventional wisdom.

Hi-Tech uses its automated bending system to process a great number of small lot sizes. The main reason why the job shop bought the system was for a large job—but that job required the shop to produce four assemblies a week, and each assembly required 150 different parts.

He then pointed to one of those parts, a toaster-sized stainless steel filter component requiring 13 bends. The robotic brake requires 15 minutes to set up before running production parts. Previously operators spent half a shift setting up and trying out parts. “At the end of the day, we get 50 percent more parts [out of the automated system],” Gardner said. “It never stops. And it also sets itself up.”

Gardner, despite his optimism, was careful not to sugarcoat the situation. The shop can’t send every part through the automated bending system. Because the company doesn’t have gooseneck tools for the system, if a part has a deep return flange, part clearance issues may arise. So these parts may be sent to one of the company’s manned CNC press brakes.

In addition, engineers and operators did face a significant learning curve when bringing the automated bending system online. As Dascano explained, he follows a detailed process to ensure the automated bending system has a good program. It’s complex technology. One robot moves material while another performs bending; meanwhile two positioning devices change out tooling—and everything must be synchronized.

“We’ve got to make sure the robot knows exactly how to load and unload parts, make sure it’s using the best combination of tools, and so on,” Dascano said. “Yes, it’s an automated system. But you still need skill. You’ve got to make sure you’ve got a good program.”

No longer do brake operators spend time shimming tooling and performing tryout bends. In essence, the system shifts the skill requirement from shop floor operation to programming end. As long as it has a good program, the automation runs smoothly.

Automation, Skill, and Material

Just one operator monitors both the laser systems and the automated bending cell. Parts are cut, shuttled to the bending cell, and then off to another technician who manages robotic welding. In all, two people move a large portion of the company’s product from cutting to bending to welding. But despite the automation, the shop’s head count is larger than ever. Hi-Tech employs about 45, and the entire organization (Akraturn and Hi-Tech together) employs about 90.

As sources explained, automation has changed the shop’s needs when it comes to skilled labor. Personnel focus on areas that can’t be automated easily in a high-mix, low-volume environment. Overall, they focus less on repetitive tasks, more on quality, programming, and—perhaps most important—material movement. Automation can add great productivity, but without proper monitoring of part flow, the machines also can flood the floor with work-in-process (WIP).

Because the company can predict accurately the cycle and setup times for each job—and because those setup times have been dramatically reduced—managers can schedule based on a customer’s current demand. Say a customer wants 100 parts, but he wants only 10 a week. (These days no customer wants to hold extra inventory, after all.) Previously the shop would have processed those 100 parts all at once, housed them in finished-goods inventory, and then sent 10 out a week to the customer.

Now it’s different. Producing on forecasted demand, even if it involves just 90 extra parts, still results in excess inventory. If a customer requires 10 parts a week, the company fabricates only 10 a week. The automation dramatically reduces setup times, so there’s little or no value in producing the complete order to avoid extra setups.

For maximum efficiency, Hi-Tech shares its machine production schedule with its metal supplier. “We have a great relationship with our [metal] supplier,” Gardner said. “We share our machine schedule with them, so it shows what material we need and when.”

All this creates an environment of minimal inventory and quick turnaround. For many simple, repeat components, Hi-Tech turns around work in one day; for new or more complicated components, lead-times can go up to two or three weeks, but not much beyond that.

Wraparound Service

So much in this business is driven by short lead-times, and that’s something Gardner had in mind for his latest technology purchase: an automated powder coating line. The line has 300 feet of chains to hang parts, and it’s all going into a recently purchased building across the street from Hi-Tech.

The expansion will speed lead-times and increase on-time delivery rates. The sheet metal shop’s on-time delivery rate is a little more than 90 percent, and Gardner expects it to jump beyond 95 percent after bringing the powder coat system online.

“Our goal now is to laser-cut and bend today, powder coat tomorrow,” he said.

Some customers are moving away from doing their own manufacturing entirely. For certain low-volume work, this makes business sense. Demand for some products may rise and fall, so why maintain a manufacturing operation? Such companies hire talent to engineer, design, and market products, and leave the entire manufacturing process—from fabrication to assembly—to companies like Hi-Tech.

Gardner described how one client takes a totally hands-off approach to manufacturing. The customer monitors product quality periodically, of course, but for the most part, he leaves the entire manufacturing process in Hi-Tech’s hands. “We buy and fabricate the component pieces, powder them, assemble them, and box them,” he said. “He then sends us an e-mail telling us how many to ship and where. He has no inventory and no warehousing.”

Process automation has allowed the job shop to produce parts very quickly, from print to paint; and perhaps most important, it all happens in a predictable amount of time. All this leads to Gardner’s ideal: lower costs for the customer and greater profits for Hi-Tech.

“These days the profit has already been beaten out of the job,” Gardner said. “The only way you can get the profit out of the job is to make it cost less.”