The old approach isn't of interest to the new kid on the block, Seconn Fabrication—The FABRICATOR's 2008 Industry Award winner
February 12, 2008
Rob Marelli left a family-owned metal fabricating company four years ago with the intention of doing things his way. Joined by a loyal group of managers and employees, he's found success at Seconn Fabrication. In the short time the company has been open, it has earned revenues of $9 million. And the company has done this by doing things other metal fabricating competitors aren't.
After five years of working for a family-owned metal fabricating business in eastern Connecticut, Rob Marelli wanted to do things his way. He approached the president with an offer to buy the company from him, but he was soon gone with a handshake and a letter of recommendation.
He eyed 5,000 square feet of rental space down the road and began thinking about starting his own fabricating business. Soon five top employees—the production manager, the laser cutting machine operator, the estimator, the lead fabricator, and the equipment programmer—from Marelli's old company wanted to join his new mission. Seconn Fabrication opened for business in July 2003.
Some of the nearby old-guard fabricators weren't too impressed. Before Marelli committed to establishing his own shop, he inquired about purchasing a small shop in southeastern Connecticut. The owner replied, "Who the f*** does Rob Marelli think he is?"
"Looking back, it was scary," Marelli recalled. "You would have loved to walk into a building and have all of your equipment and tools there and all of your employees trained. But I really think that we had a clean slate where we could set up our operations and culture the way we wanted to in the beginning. It made a significant difference."
Today Seconn Fabrication and its 66 employees operate out of a 35,000-sq.-ft. facility in Waterford. The company had a record year in 2007, topping $9.5 million, and has broken ground on a 24,000-sq.-ft. expansion this year to double its manufacturing space. The expansion will accommodate an additional powder coating line, an automated laser cutting cell, and a prototyping department.
Meanwhile, the shop owner who wondered just who Rob Marelli was came by in late 2007 to apologize for his gruff remark almost five years earlier and offer his congratulations on Seconn's success.
The FABRICATOR staff and industry experts felt the same way in naming Seconn Fabrication as the recipient of its first Industry Award. (For specifics on contest criteria, please see "Determining the Award Winner.") In only five years the company has managed to achieve success for which many other, older companies still strive. Through employee commitment, investment in technology and people, and focus on meeting customer needs, Seconn Fabrication has laid a foundation for future success.
Press brake operators can program a bending job at the machine, but they also can do the job from the front office by using Amada's BendCAM software.
With 5,000 sq. ft., Seconn Fabrication got down to business in the summer of 2003. The company bought a used TRUMPF 2530 laser from a competitor. A welding supply shop offered the team credit and gave them a gas metal arc welding (GMAW) power source and related equipment. A steel distributor Marelli knew opened up a line of credit for the new company. Quotes were sent out on a Microsoft Excel spreadsheet. Everyone worked for less than they had in recent years. (In fact, 35 of the first 40 employees came to Seconn for less money than they were previously making, according to Marelli.)
With the used equipment, good credit terms, and competitive labor costs, Seconn Fabrication was competitive from the start on a price-per-job basis. The commitment to turning the jobs around as quickly as possible without sacrificing quality kept the customers coming back.
"No excuses. Time clocks meant nothing," Marelli said. "There was a lot of ownership and fire in their bellies."
"We had a visit from a company in Long Island, and they asked if we had a conference room that we could sit in. As quickly as I could I said, 'No. There are no walls in this place. We are all part of the same team. We can speak freely here,'" Marelli said. "I didn't have room for a conference room, so here we are at a table in the middle of the shop."
Seconn didn't get that job, but they got others. After six months, the company had accomplished $750,000 in sales, the second-year goal established in the original business plan. By the end of 2004, the company had reached $3.5 million in sales.
To complement its powder coating line with a three-stage pretreatment system and manual spray booth, Seconn Fabrication purchased a booth for finishing small batches of larger fabrications.
Soon employee salaries and wages met industry norms and surpassed them with bonuses. Medical coverage and other benefits were extended. The new kid on the block looked like it wasn't going anywhere for a while.
"My goal was to field the best team," Marelli said. "I don't want to manage it or micromanage it. I want to put the guys in that can make intelligent manufacturing decisions on-the-fly."
Marelli, the company's president as well as owner, said he once saw a PricewaterhouseCoopers study that said a well-incentivized manufacturing company could generate $13,000 to $14,000 in monthly sales per employee. By 2005 the company was producing more than $19,000 in monthly sales per employee.
"The guys just went at it," he said. "There was so much pride and ownership in here with the employees."
Seconn Fabrication moved to its current location in 2006. Even with the relocation and market expansion, the company has been able to maintain the momentum it had in those early years. Here are some of the ways it has done so.
Seconn Fabrication employs 22 welders to keep up with all of its jobs.
"Anybody can buy price," Marelli said. "My objective is that I want to do business with a group of people and help them learn that there is a difference between price and cost."
To earn the loyalty that's needed for people to look past just the price, Seconn Fabrication is trying to overwhelm the customer with service. Estimators look to return quotes in 24 hours, and average turnaround time for jobs is nine days. The company bills itself as a one-stop shop for fabricating, machining, and powder coating services and promotes its live customer service available every weekday from 6 a.m. to 6 p.m.
More customer service offerings are on the horizon. The company is looking at establishing a prototyping cell to offer quicker response and take the smaller jobs that slow up throughput of larger-volume jobs on the shop floor. Marelli wants to commence monthly meetings with Seconn Fabrication's engineering team and customers to reconfigure fabrications that could be made more efficiently. There is talk of initiating vendor-managed inventory programs in which Seconn will maintain inventory at customer sites and not charge them for the fabricated parts until they are pulled from the shelves.
"Rob's plan in the future is to allow customers that we want to connect into the [material resource planning] system and see where their parts are—and maybe even change the date," said Richard Sweet, Seconn Fabrication's production manager.
"The system will report where the part is, how much time is left [before delivery], and even provide a Gantt chart, if needed," said Paul Brax, a member of Seconn's production team.
With knowledge of the dearth of welding experience in the local labor pool, Seconn Fabrication invested in a robotic welding cell to prepare for growth in its business.
The customer relationship management module that will allow a customer to have visibility into Seconn Fabrication's operations isn't live yet, but it is a logical extension of the company's information technology base. The management team relies heavily on the shop management software package from Exact JobBOSS to keep track of the 86,000 fabricated pieces that go through the shop monthly.
In addition to offering quoting, quality control, and shipping control, the software provides the details to track two very important statistics: production efficiency and on-time delivery. Seconn Fabrication relies on a "working standard"—determined by multiplying productivity (billable hours versus payroll hours) by efficiency (time it took to complete the job after being compared to the time that was quoted)—to see where they stand in terms of getting product out the door to customers. The goal is to have a working standard above 80 percent, and as of late 2007, the company was at 82 percent. That efficiency has translated into an on-time delivery rate of 95 percent.
When it comes to scheduling jobs, Sweet and Brax said they aim to fill about 80 percent to 85 percent of shop floor capacity for the first two weeks of the month and then, like other job shops, watch production capacity reach higher levels as everyone pulls together to complete the rush of jobs that comes at month's end. By watching the working standards of different fabricating cells, production management knows that when levels reach 100 percent or above, they might want to throw extra labor into that area to help or farm out the work to a subcontractor.
To help production management absorb all this information, all the team members in the front office have two computer screens before them, where they can track multiple metrics without having to switch back and forth.
"It's all about speed," Brax said. "How do you get the speed? Find the right people and have the commitment, IT, and tools."
Seconn Fabrication's shop floor is arranged so that projects flow from raw material to the next natural step in the fabricating process until it's ready for final inspection, packaging, and shipping. In addition, notice the material shelving at the bottom right that is placed at an angle for easy access by lift trucks.
Applying lean concepts has helped the company to maintain the quick turnaround on jobs. In most instances, the ideas are more common sense than revolutionary.
For example, the job orders that the shop management software creates go into color-coded router packages. If someone on the shop floor sees a red package, he or she recognizes it as a project that's fairly complex. An orange package is one that is less complex, and black represents a fairly straightforward job.
Blue packages, however, stand out as the most sensitive. Only team leaders or supervisors oversee the work done on these jobs. They usually are very time-sensitive or related to a new customer.
The routing packages also contain a form that can be used by the shop floor to share comments with estimators. If production personnel see a big discrepancy with quoted work time for a job or want to make other notes, they jot it down on the form, and the notes are taken back to the estimator. The estimator can take the suggestion under advisement and make changes to the quoting template if necessary.
That feedback contributes to solid job quotes. Sweet estimated the company wins about 60 percent of the 500 to 600 new business quotes sent out each month.
The lean approach also influences shop floor layout:
"I really think that we had a clean slate where we could set up our operations and culture the way we wanted to in the beginning. It made a significant difference."
--Rob Marelli, Seconn Fabrication
Seconn Fabrication not only looks for flexibility in its shop floor organization, but also in its employees. A chart indicates which production personnel are cross-trained in a particular skill or process. For instance, one laser operator can drive the truck or act as a backup for the press brake.
The front office staff is no exception to this cross-training rule. Some of the software programmers can weld and tend the laser cutting machines, and some of the estimators can operate press brakes.
"It's a monthly occurrence that we pull people from the office," Brax said.
To keep the entrepreneurial spirit alive as the company grows larger, each new hire is assigned a mentor. Additionally, a 30-, 60-, and 90-day evaluation takes place with the new hire to ensure that expectations are being met on both the employee's and employer's ends.
During the year the organization conducts "organizational climate surveys" to learn what employees think about their job duties and what changes make sense. The formal discussions are supplemented with more informal affairs, such as picnics, pizza parties, and a recent trip to a New York Yankees and Boston Red Sox game at Fenway Park.
The efforts apparently are paying off—Seconn Fabrication has an employee turnover rate of less than 3 percent. A full-time human resources person joined Seconn Fabrication in early 2008 and was expected to expand upon these programs.
"There's an energy here. It's contagious," Brax said.
"I've been involved in metal fabrication for 20 years, and I've never seen anything like it," said Jerry Elliott, Seconn Fabrication's sales manager.
How do you maintain that culture with the growth? Marelli said he realizes that is the biggest hurdle his company will have to overcome as it continues to grow.
"It's hard to let go," he admitted, "but it's my responsibility to all of my workers to train, educate, mentor, and build that team."
Marelli has a clear-cut vision for Seconn Fabrication. He wants it to be the best shop in New England and reach $20 million in sales in the next five years.
He has a more personal goal as well. That goal is to establish a solid future for the employees who have worked hard to put Seconn Fabrication in the position to achieve so much in a relatively short time frame. He said he would like to see each Seconn Fabrication employee be put in a position where he or she could earn enough money to be the sole breadwinner for a family.
"I have to make my decisions for these men and women that believe in me. I need to keep this group together. That's my focus," Marelli said.
The same ol' same ol' was never in the plans for Seconn Fabrication. As a result, new and exciting opportunities lie ahead for this 5-year-old company with a lifetime of experience.