April 2007 Edition

Job Shop Showcase

Scratching a Niche

Jay Pierson began his business making mountain bike parts, but unintended consequences drove him into manufacturing for a small, but successful market

by Pete Nofel, Editor

Sometimes the unintended consequences of an idea have a much wider impact than expected. Henry Ford thought he was an automobile manufacturer. His production line method brought the cost of cars down to where almost everyone could afford one. But, the unintended consequence was that he changed American sexual customs.

Ford probably didn’t think he was changing American courtship rituals by introducing the Model T, but that’s what he did. His automobile allowed couples to get out from under their parent’s scrutiny in the parlor. Couples could “spark” in their flivver.

A case could be made that this freedom led to the sexual revolution of the 1960s that eventually created the hippie movement. Henry might not be pleased to think of himself as the father of Flower Power, but that was an unintended consequence.

The Incentive of Market Failure

The mountain bike craze of the late 1990s had an unintended consequence: it resulted in the success of a job shop entrepreneur.

Jay Pierson, originally started his shop while in college so he could manufacture mountain bike accessories of his own design. Using his own machinery — some of which he inherited from his father’s sheet metal shop — he could speed through the prototyping process, maintain quality control, manage delivery dates, and keep manufacturing profits in-house. It all worked well until the high-end mountain bike industry tanked. He turned to job shop work to pay the bills, an unintended consequence.

Pierson was an engineering major during his college tenure. He left academia after a couple of years to turn his attention to his business. After the mountain bike market segment evaporated, he continued his work in his shop.

“I was forced to take on job shop work to pay the bills,” he said. “I job-shopped exclusively for the next three years or so. It was the hardest I ever worked in my life, for the least money I ever made, because it was a learning process,” Pierson said. It was an uphill climb, but he said he enjoyable the struggle.

But, his time in college had a beneficial unintended consequence. It taught him how to learn. He applied that skill to learning machining and the skills to make a go of a job shop business.

“I had one customer I acquired through word-of-mouth. He sold microwave communications components,” Pierson said. “He had closed down his manufacturing effort and concentrated on design. He gave me enough work to get by and to learn. I still have him as a customer.”

Pierson had some machining background, but much of his expertise came from self-education.

“I had worked summers in my dad’s shop. We had a two-axis Bridgeport kneemill. I knew the machining basics. I ran that during summers for a couple of years, but had no formal training,” Pierson said.

Self Education

“In the beginning, I just went online and searched and read every type of article that pertained to metal and machining. If it were metallurgy or cutting tool geometry, I was reading it. I was educating myself up to 18 hours a day.

“My college work in engineering gave me a background. I’d like to say that I use more of it now, but honestly I think the biggest thing I took away from college is the appreciation of learning on your own and how rewarding that is.

A Second Opinion

“Of course, there are a lot of gaps a full college education would have filled, but what I really took away from college was the work ethic it takes to buckle down and learn. I learned some basics from the engineering studies, but the biggest thing was appreciating how much a person can learn on their own.”

Pierson didn’t do his learning in a vacuum, he was able to tap into the expertise — and generosity of knowledge — of the metalworking community.

“I bugged a bunch of guys in the business park on a daily basis, asking them things about machining,” Pierson said. “I think I subscribed to, and read, every manufacturing magazine out there. I saw trade shows as my college education. I realized that if my business was going to get off of the ground, I’d have to work hard and learn by whatever means were available in the real world.”

As other work came in, Pierson faced further challenges.

“I had some medical prototyping jobs that had close tolerances. The biggest challenge was drilling small holes in plastic. That was a little tricky and stressful. It took a lot of calls to tooling manufacturers and sales guys to find the right tooling. The CAM package tells you the speeds and feeds, but in real life, it’s not perfect; you have to gain knowledge and experience. That goes back to the learning-by-doing mode and getting your education from the real world.”

“10 Percent Inspiration, 90 Percent Perspiration”

His first 18 months on his own were the hardest, although he had some assistance and luck. His father helped him find his first customer.

“My dad had done sheet metal manufacturing for years. He told me to call someone he knew who might have work for me,” Pierson said. “The timing was perfect and I got the microwave manufacturing work.

“I tried MFG.com for a year, but I didn’t have a lot of success because it was more competitive than I thought. I didn’t retain any current customers from that. Some bigger shops in my area gave me overage work.”

CNC machining had become Pierson’s focus.

“I went with CNC and a high-end CAM package,” he said. “I had the advantage of not having to unlearn bad habits — whether it was a poor work ethic or old-fashioned ways of doing things.”

Pierson’s biggest hurdle on the business side was one that a lot of start-ups face: there’s more to running a successful job shop than operating the machinery and producing a good product. A job shop owner has to have business acumen as well.

“The number of things you have to learn about taxes, bookkeeping, marketing, quality standards took me by surprise,” Pierson said. “I was shocked at how much time that took. A lot of guys who start a business are good at machining, but not at the business.

“I saw how much time attending a machine actually took away from me while I was trying to run a one-man shop and cover both the machining and business side: creating quotes, invoicing, calling on customers, and the rest of the administrative portion of running a business. I found machining was a time-stealer,” he said.

“My first three years let me witness, first hand, some of the needs and inefficiencies of small job shops,” he said.

Pierson searched for higher machining efficiency, with workholding as a prime area for improvement.

“I look for the most efficient way of doing things,” he said. It often led to investing in equipment.

The turning point of his business came when he stepped back and analyzed his inefficiencies. Although he loved hands-on machining, that and the setups held him back.

Working Smarter

He considered adding another employee to relieve him of some of the machining load so he could devote more time to business development, but that wouldn’t increase his shop’s efficiency.

“A lot of shop owners, especially when they start expanding their employee base, find it easier to give work to an employee and not care how efficient or inefficient that person does the job, as long as it gets done,” Pierson said.

Instead of another employee, Pierson searched for a workholding system that would allow the machine to run unattended while he took care of business responsibilities.

“I went to westec, looking for a solution and found I would have to piece together what I wanted,” he said.

With no single solution on the market that would satisfy his needs, Pierson began developing a workholding system to use in-house.

“Once I created it, it really did allow me to walk away from the machine for two hours at a time while it was cutting 30 parts, instead of manually doing two at a time,” he said.

Stress Relief

“It took a lot of stress out of my life. My profitability almost doubled. It let me be more hands-off of the machine and more hands-on the business side, making the business more efficient and doing things like building a quality website. That first workholder evolved into my company manufacturing workholding systems.”

“I was saving $25 per hour . . . For me it translated into the equivalent of a new and faster machine.”

Pierson’s workholding system consists of a universal cast-iron base that bolts like a vise to the machine table. The holding mechanism is spring-powered and the release is air-powered.

It holds aluminum pallets from 6"×12" to 10"×16".

“Early-on, I would custom-cut these pallets to hold different sizes of bar stock and different part shapes. I would hold parts with Mitee-Bite Pitbull clamps and ID expansion collets. It allowed me to flick an air valve and take 30 parts out instead of having to loosen a vise and take out one or two parts at a time. Fifteen seconds later, I could put in another 30 parts, close the air valve and start another run.

“There were fewer tool changes since it wasn’t changing tools on just one part. I could also walk away for 15 times longer than with a vice. I made it affordable. I’m a one-man shop. I know what it’s like to consider buying new equipment.”

Pierson used his invention in-house and profited through his increased efficiency, but the law of unintended consequence appeared again.

“My rough versions of the workholder were for in-house use. They didn’t look pretty,” Pierson said. “A couple of neighbors in the job shop business here in the industrial park stopped by, saw me using it, and asked me what it was. I showed them. Their eyes got big and I saw they ‘got it.’ They asked that if I made any more, that I should make a couple extra and they’d buy them.”

The “Eureka” Moment

“That’s when the light bulb went off over my head,” Pierson said, “and I decided to market the workholders.”

He improved the units’ engineering, adding more features, and made them more robust. He prototyped and tested them to improve and make them more accurate, then started selling them.

First he listed them on eBay and sold enough to interest a distributor. Pierson then designed some brochures and took them to westec with the distributor who showcased the system. It caught on. In fact, creating and selling the workholding system is now 70 percent of Pierson Industries’ business.

“I didn’t intend to sell workholding systems, but it paid off. I’ve come full circle. I have a product that allows me to run more efficiently, so I can manufacture more efficiently, and sell at a price with which the big players in the workholding industry can’t compete.

“I wanted to hold true to my original dream of creating and selling a product, and now I have.”

Revenue from the pallets in the past year are about 70 percent of his shop’s total revenue. Pierson, with a part-time employee, dedicates one month to machining the components, and spends the rest of the year marketing.

“Sad to say, the machines are sitting quiet, but cash is coming in,” he said. “I’m okay with that. We hit all of our goals for marketing.”

A starter version of the kit sells for $2,500. That includes a base, two pallets, and a connection kit. Pierson promises that it can be used within 30 minutes of opening the box.

“We’ve run case studies with our customers,” he said. “In real dollars, a shop will increase efficiency by about 40 percent in its workholding. For my shop, our rate was about $60 per hour, so I was saving $25 per hour. It saved in labor and every cycle time was faster. For me it translated into the equivalent of a new and faster machine.”

It took some time for Pierson to realize the success his invention brought his Simi Valley, CA, company.

“Most of my sales come from the website,” he said. “That surprised me since I consider it passive marketing. Sales have been about even between web and local sales.

“For What?”

“I remember the first time someone called and said he wanted to place an order. I said, ‘For what?’ He caught me off-guard. He wanted the starter package, then I caught on. I’ve sold to the East Coast, Chicago, the southwest, and pretty much in every time zone.”

Pierson said he finds it easier to do follow-up sales to local customers. His business neighbor is his biggest customer.

“He comes by and sees the new products and buys the prototypes,” he said. “My first three customers were here in Simi Valley, otherwise, sales are pretty balanced around the country.”

The sale of the workholding system has come at some cost to Pierson’s job shop customers.

“This is a big growth segment for my company,” he said. “There was a point where I realized I couldn’t afford to keep some of the customers I had and continue to do the manufacturing.”

He kept some of his first and most loyal customers, such as the microwave product designer.

“The biggest obstacle now is wondering where we’ll be spending our marketing dollars. That’s something new to me,” he said. “I’m five years into this company, but learning things once again, this time, marketing. I’ve considered taking night classes in marketing, but there’s a lot of good minds out there that have written a lot of good books; so it’s a matter of studying those the way I did machining.”

He’s also looking beyond the U.S. for markets for his Pierson Palleting System.

“I’ve got our machining and manufacturing dialed-in and streamlined. I’d like to expand our product internationally. That’s the dream. That’s a pretty big task. I tend to shy away from shipping internationally. There’s also the question about foreign patents. We have room for marketing improvements, but the other aspects of company are solid.”

Not for Everyone, but for Enough

Pierson said the Palleting System targets a niche market.

“I geared it for efficiency in a shop like my own, a one- or two-man. It’s 6"×12" because it matched the 12" travel of my Haas mini-mill. It’s designed for a shop which doesn’t want to invest $20,000 or more in a complete pallet shuttle system.”

Many of Pierson’s customers are desperate for increasing their efficiency.

“How fast can you ship it?” is a common question for Pierson. Often, customers are at their wit’s end when looking for a product like the Palleting System.

“A customer called in December and wanted to know how quickly I could get a system to him,” Pierson said. “I could hear the desperation in his voice. He’d been working on an order for a couple of thousand small parts. He had three vises across the table and was holding two pieces at a time. He was only getting six parts per cycle. He wanted to know what my system could do for him and how soon I could get it to him. ‘I’m dying here!’ he said.”

Luckily for the customer, Pierson Industries does custom engineering, so he designed a system that held 32 parts per pallet.

“I sent him a drawing,” Pierson said. “He said it was perfect and ordered it and asked that I send it as fast as possible. He got it two or three days later and was happy with it. He went from desperately tired from running the job to a more acceptable pace. I was really happy I could help the guy.”

Freedom Riding

Pierson’s goal has been to have the freedom to be his own boss.

“I wanted to do something with my life that allowed me the flexibility to set my own hours,” he said. “Owning my own company may be the answer, but I’ve put in a lot more time getting the business started and making it successful than I’d anticipated.”

He said that he expects more flexibility in his personal time as the business matures.

“I don’t expect it to be carefree,” he said. “Being my own boss means I’m responsible for everything. I’m to blame if I miss deadlines. But, I find it rewarding to please a customer. That’s a benefit I really appreciate.”

Pierson Industries’ current revenue is about $100,000 per year.

“From the example of others who have gone into similar businesses — a friend invented the Twister speed lathe, a desktop lathe for polishing and light deburring,” Pierson said, “my goal is to have an annual revenue of about $500,000 after five years or so.

“This is a niche product and works well within it,” he said. Pierson Industries

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