Machining Suppliers of the Future Will Be Both Bigger and Smaller
But what about the future? What will the leading shops look like that we identify in the years to come?
I have been thinking about this, both because of our annual selection of Top Shops honorees and because it’s time to look ahead. Forecasts about the future generally fail to anticipate things like, say, pandemics. As we look hopefully toward emerging from this year’s disruption, it is a good moment to see where we are and to look forward.
Here is one thing I expect to see in the future: domestic shops doing domestic work. This isn’t hard to forecast. In the years to come, North American machine shops will benefit from a reduction in outsourcing overseas. On both sides of the ocean, the increased reliance on automation means the cost savings from labor are not what they once were, while 2020 has highlighted the fragility of supply chains spanning global distances
First, bigger. We’ve come to a time of increased acquisition activity among machine shops — I’m seeing this.
There are various drivers of acquisition
Marvel Machining, owned and run by Brad Thomas, is an example of a one-man shop.
Meanwhile, shops are also trending smaller. Another development I see is the rise of the one-person independent shop. There have always been tiny startup shops run by the owner, but in the past these shops have had to add people to grow. Today, the one-person shop (perhaps with some part-time help) can deliver greater output than in the past, and can do much more sophisticated work than such a facility could before thanks to automation such as five-axis machining and robotics, which have become much more accessible to small users. The one-person shop can stay one-person farther into its journey, and can find enough work to thrive through relationships with a relatively small number of customers nearby. In the future, an increased share of tooling, prototyping, replacement parts and short-run production will come out of these very lightly staffed businesses plugged into customers in their immediate region.
The implication of these developments is that the independent, standalone, midsize job shop — the heart of machining work for decades — will be crowded from both sides. Large machining organizations built out of multiple shops will be able to support large orders from major companies and in many cases serve them as single-source providers. Local, sophisticated, single-person or very small shops will be able to respond nimbly to companies’ small, unpredictable needs. How will the job shop as we recognize it today compete? A final development to watch in this area is that job shops won’t sit still. These are innovative businesses, and many will find new answers — specialization in particular niches perhaps — that will allow them to continue thriving.