Collaboration with Other Shops Helps with Finding High-Value Machining Work
In a Maryland manufacturing co-op, the allied businesses sell one another’s services and support one another. The co-op even enables direct competitors to cooperate, as described in this video from the Top Shops Conference.
How does an independent shop aiming to specialize in critical and challenging parts find this kind of work? Carl Livesay of Land Sea Air Manufacturing says one of the factors that has helped his shop is a co-op the company is part of, an alliance of Maryland manufacturers. The companies support one another, sell one another’s services and expand one another’s capabilities by providing complementary capabilities.
Mr. Livesay spoke about this at Modern Machine Shop’s Top Shops Conference. Land Sea Air is a Top Shops Honors Program winner, and Mr. Livesay appeared on stage at the conference in a Q&A session with representatives of other Honors Program companies.
He notes that the co-op even includes at least one competitor, but no loss of business has resulted to either company because “a rising tide lifts all boats.”
Watch the video to hear his thoughts or read the transcript below. (You might also be interested in a related article about a coalition of tooling companies in Michigan.)
Question for Carl: How do you guys do your sales and sell that heightened quality advantage, if you will? And then sort of a subset of that is, with an owner who is very active in the shop, how do you manage to keep focus, if you will, on that sales, as you obviously would get difficult jobs that would come in that, he would most likely be interested in?
Carl Livesay, Land Sea Air Manufacturing
The business owner really gets excited at jobs that are in other people's “too-hard” box. And in the industries that we’re in, we've earned a lot of reputation, if you will, for getting the stuff that other people have failed at or it's in their too-hard box and they'll get it no-quoted, and people call us. But to your point, it's a different type of business when the business owner is on the shop floor and the things that are important to him are frankly—it's his name. It’s his reputation. Yes, it's all of ours, but it is his name at the bottommost line on all the documents. So quality matters. So cutting that tolerance in half, frankly, is him. He's decided, “No, that's too loose of a tolerance; we’re better than that.” And if we can't maintain the tolerance that we've established for ourselves, in our opinion, we've lost control of the machine.
And to your point of talking to customers and how do we go about sales, the co-op actually helps us with that. I think I mentioned that we formed a co-op. It’s a force multiplier. So all of us are selling each other services. And there's no disadvantage to that collaboration. So if you were one of our partners, you never have to worry about me contacting your customers, so you're going to invite me in because you still have account control and it gives you another reason to talk to your customer. That's how we get into so many different industries. That's how all of us get into so many different industries.
The other thing that happens with the co-op: We don't step on each other's invoices, so if you're one of my suppliers, you’re one of my partners. Whatever you charge me is what I pass through as the cost. I'm not stepping on it, so it drives the overall cost to the customer down a little bit, but I don't have the overhead that other people have, right? So, I don't have to pay commission on commission and a large sales staff. I mean, you’re looking at our sales team, you know, and I'm the VP of ops. The president, he's not a good sales guy, he's a great technician. So, you know it's kind of like tee ball. My job to set that ball on the tee and hand him the bat and then he'll knock it out of the park 100 percent of the time.
So, we spent a fair amount of time working on building relationships with companies and we go in and we ask for the ugliest part you've got, the one that you have the most trouble with. Give us a whack at that. Once you do that, in our case, that causes them to have a conversation because they feel like they have nothing to lose. If we're looking for, you know, high-margin low-hanging fruit, frankly, there are 3,650 manufacturers in the state of Maryland and there are easily 500 that are machine shops.
Peter Zelinski, Modern Machine Shop
Carl, the co-op, are there competitors among those six companies?
There are. It's a great question, in fact. The only ultra-precision shop, which is what we aspire to be from a quality perspective, is actually in the co-op and one of the founding members and a good friend, but our approach to the co-op, and frankly to our competitors is: “Come on in the shop and we’ll show you,” because we are all calling on different customers. We do a lot with trochoidal machining and probably most of you are familiar with that. [Our] president's broken the code on that, I mean, we've figured that one out. So, we gravitate toward things where there’s a lot of hogging out and, in particular, harder metals we are really, really good at that. Others not so much, but we're happy to share that technology with anybody and everybody because there's plenty of work out there and as a result you get other people that become advocates for your business. So, we're firm believers in the whole teamwork aspect, both internal and external, and that the rising tide lifts all boats. For us, it's working.