Can US Precision Machine Manufacturing Survive? – Part 9

Packaging Products and Services PMPI companies may have to offer sets of combined (packaged) services in order to gain a competitive advantage. The package could include design engineering, precision machining, and prototyping, fabrication, vertical services (such as anodizing, material selection, etc), fixturing, assembly, and repair/modification services in various mixes. Becoming an element in the customer’s supply chain can also be effective. Choosing the right mix of services to package could be difficult, if the PMPI Company continues to operate in a ‘job-shopping’ mode. Each Read More >

Can US Precision Machine Manufacturing Survive? – Part 8

Specialization (Another name for Focus) It sounds paradoxical, but the longer the list of a company’s claimed services, the broader the level of expertise claimed appears to potential customers. Company’s do probably believe that they can do it all, but clients won’t believe it, and the company won’t be considered among the best. To a potential customer, the company looks like it’s flailing, just hoping to hit something. Customers want the best, and the most for their money, their gut tells them that they will more likely get that from a specialist, than from a generalist. To the potential Read More >

Can US Precision Machine Manufacturing Survive? – Part 7

Marketing Value Value as it turns out is a figure of merit that is owned by the customer. It has different metrics and means different things to different people. This means that a PMPI company desirous of  adding or creating value for a customer must really understand the customer. Understanding the customer doesn’t mean prospecting harder for sales opportunities, or having more RFQs come in over the fax. Understanding your customer means knowing their problems, their objectives, and how your product or service helps reach them. All viable customers have four essential Read More >

Can US Precision Machine Manufacturing Survive? – Part 6

The Competition  -  With respect to the previous, it is clear that the competition for business in PMPI markets has become fierce, with price removed as a strategic differentiation. Companies that have survived and are emerging from “The Great Recession” should not be thinking in terms of ‘business as usual’ they should be thinking like startup companies. They in essence have to retread their company and start it on a new business and performance trajectory. We have just made a pretty strong case that the PMP Industry is probably maturing; and that most of its products and services are Read More >

Can US Precision Machine Manufacturing Survive? – Part 5

Market Wrap-up There is one thing missing from Porter’s strategies and that is a “staying alive strategy”; whereby companies compete harder for sales (even though margins are low) just to make payroll, and keep the doors open. They must also run a lean and mean ship internally, to keep OH low and maximize cash-flow. Companies should consider the effectiveness of employee roles and capabilities in their operations, since employees account for about 50% of cash outflow. A customers view of PMPI Companies is diffused by the numbing sameness among offerings, and commoditized features, and Read More >

Can US Precision Machine Manufacturing Survive? – Part 4

The effect of commoditization of products and services in the industry makes them somewhat subject to the “law of one price” the price dictated by the market. ‘The law of one price’ is an economic hypothesis saying that the price of commodities are the same in different markets. Given the effects that the internet has in bridging geographical differences, and the low cost of transportation, it is probably more correct than not to consider that this pricing law is in effect in the precision machined products industry markets. The following graph shows sales of precision machined products Read More >

Can US Precision Machine Manufacturing Survive? – Part 3

Given this (previously described) situation, what are the strategies and courses of action a precision machining manufacturing company can take, to survive and prosper? Let’s take a look at the first factor “a maturing industry.” What are the signs indicating that that an industry is maturing? Usually when an industry matures the total available market (TAM) for the industry grows at only (or less than) the rate of growth of the economy. This effect has been accelerated in the US by a significant amount of off-shoring. Off-shoring has brought with it serious price competition which has Read More >

Can US Precision Machine Manufacturing Survive? – Part 2

The US precision machining industry has changed structurally; at the same time it has become somewhat mature. A big part of the structural change has been brought about by globalization. Most high volume jobs are now outsourced to offshore suppliers in China, Korea, Mexico, or numerous others. Other structural changes have been forced by the cost and limited availability of capital. The companies that have survived the Great Recession have had to deal with a whole new business paradigm. Many precision machining companies have adopted ‘Lean’ process techniques to improve the efficiency and Read More >

Can US Precision Machine Manufacturing Survive?

Post the Great Recession, many US precision machining and manufacturing companies are asking themselves if it makes sense to continue operating in the US, as before. In flat-to-declining markets there are only two options, either grow or die. There are no other strategic options. Companies must capture market share in order to survive. Despite the recession, globalization has forced these companies (given their current business models) to act “locally.” The critical perspective is that most all of these companies, are operating “as before,” trying to maintain or grow their businesses in Read More >

Funding Your Startup: Bootstrapping Part 3

That Special Case Businesses developing services or applications for the Internet, that are using Bootstrap self-funding techniques, can grow in both phase 1) and phase 2) simultaneously. Internet service/application/software companies can actually grow in all phases at the same time! There may not be a ‘GAP’ for businesses developing Internet Services or Applications! They develop their App' or Service while operating in the target medium using its technology. These companies would fall into the ‘Type 2’ category (above), similar to a spinout; they are in effect extending the Read More >