January 2008 Edition

JOB SHOP DOMINANCE

Confidence and Savvy Lead to Success

A shop manager saw a niche and started his own CNC business without any customers, but used the Internet as a springboard to prosperity

Frustrated in his efforts to find quality precision machining suppliers who could deliver on a timely basis, Steve Salazar decided he could do better than the other suppliers that were out there.

"I was running a shop," Salazar said, "and having a lot of trouble getting precision work done in a timely manner."

After research and preparation, he took the plunge and started Expedited CNC Machining, Tipp City, OH. During the research period, he discovered MFG.com, Atlanta, GA, and it became an important factor in the company's early success.

Salazar spent several years researching the business, and figured what it would take to make it a success. Then he secured the equipment and space, hired machinists, and opened the company's doors – with zero customers.

As soon as he opened, he went to MFG.com and started quoting on jobs he found available through the online manufacturing community. In the first year-and-a-half, about 80 percent of the company's business was traced to MFG.com.

Expedited CNC specializes in precision machining, with new Haas equipment and six machinists turning out everything from single prototypes to lot sizes in the thousands. Major markets served include aerospace, medical, and fixturing.

The company works with a variety of materials including plastic, aluminum, and super alloys.

Global Competitiveness

"We have the technology to compete worldwide," Salazar said. "We do hard-turning and hand-milling. We turn carbide – and not a lot of companies can do that."

Expedited focuses on quality, price, and on-time delivery to keep customers happy and coming back.

"This is the combination of qualities that I found so hard to find as a buyer," Salazar said. "So this is our competitive edge."

The shop runs on a 24-hour schedule from five to six days per week.

"We're exploring how we can increase capacity with our current resources," Salazar said, "by improving efficiency and throughput."

He said he is confident that there is plenty of business out there to consume any additional capability they can generate.

"Our customers want us to do more and more work for them."

Lately however, Salazar has had to reluctantly say "no" to some customers who want more because Expedited just doesn't have the capacity.

"We'll be purchasing more equipment soon," Salazar said, "but we just can't handle any more work now and still do a good job."

As capacity expands, Salazar said he is confident he can fill it from existing customers. If not, he can find more work through MFG.com.

Claiming a hit rate of about 30 to 40 percent, Salazar said he searches through the postings on MFG.com and selects jobs on which to quote.

"I want to make sure that it's something that we can do well," he said.

He then prepares the quote and competes for the business.

Relationships

Nearly all of Expedited's work right now is repeat business, much of it from customers found on MFG.com. "We have established strong relationships with our customers," Salazar said.

"Our customers want us to do more and more work for them."

One Canadian customer has steadily increased its purchases from Expedited as the exchange rate makes it more economical to buy parts in the United States. The two companies have met to discuss a possible partnership to open a new facility here in the states.

"It makes sense for the Canadian firm to not only source parts here but to complete the manufacturing for products it sells here, rather than ship the parts to Canada then ship the finished products back. Doing it all here eliminates the import and export issues," Salazar said.

Other opportunities continue to appear for the machining company.

"We are doing some consulting," Salazar said, "helping local companies that have equipment but don't know how to get the most out of it. That's a profitable business for us and is also good for our relationships with local companies that we might want to work with more closely in the future."

Several customers have asked Expedited to take the next step and complete the assembly of some items.

"It's good for our guys to be able to see the end product," Salazar said.

And, it's additional business that contributes to Expedited's service to customers and its profitability.

Keys to Success

A key to its current – and future – success is keeping costs in line. One facet of that effort comes through as Expedited is beginning to do some outsourcing.

"We have to make suppliers compete for the business, just as we compete," Salazar said. "We have to control all our costs to stay ahead."

At this point, all of the outsourcing work – there isn't much of it yet – is going to local shops that supported Expedited in its start-up and growth over the last two years, and Salazar wants to support them in return. As that portion of the business grows, however, Expedited will likely turn to MFG.com again, but this time as a buyer rather than as a seller.

Nearly all of Expedited's business now comes from the United States and Canada, but that may change.

"We have to control all our costs to stay ahead."

"Dealing with the freight costs and the import/export process is difficult," Salazar said, "but we're looking into doing business in other parts of the world. The business is out there. We get calls from all over."

When increased capacity sends Expedited back into the market looking for more business, some of it could come from outside of North America, and MFG.com will play a significant role in any overseas marketing that Expedited may do in the future.

"We can see jobs out for bid at MFG.com that we could do," he said, "but we're just not ready to tackle the import and export part yet."

With business opportunities on so many fronts and expansion plans in place, the future looks very bright for Expedited CNC Machining.

Finding an underserved niche and filling it may be the secret to success. It seems that Expedited has done just that. MFG.com

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