Oregon job shop reinvents itself during the recession
February 13, 2012
Between 2007 and 2011 sales at Eugene, Ore.-based Mohawk Metal Co. grew 700 percent. During normal times such growth would be seen as uncontrollable, but the past few years haven’t been normal times.
In early 2007 Mohawk Metal Co. had an ironworker, a few welding power sources, and six employees. At this writing the job shop employs 56 who work on a bank of press brakes, laser cutting systems with automated load and unload tables; and in a full-service fabrication department that offers welding and on-site installation. In 2007 shop revenue came mostly from one customer, a maker of retail displays. Now the Eugene, Ore., fabricator serves customers from a dozen industries.
Between 2007 and 2011 sales grew 700 percent. During normal times such growth would be seen as uncontrollable, but the past few years haven’t been normal times. The success story, in fact, is a testament to how a recession can change a market.
Tony Bloom, Mohawk’s co-owner, knows that without good timing, the fabricator probably still would resemble the six-person shop in 2007, a company that hadn’t changed dramatically since David Sheflin launched it in 1987. For years Bloom worked at a large area job shop that recently had been purchased by a large metal service center. After watching the company change over a year and a half, Bloom decided it was time to move on. He wanted to either launch his own job shop from scratch or find a business partner—and in 2007 Mohawk’s Sheflin was looking for one.
Bloom joined Mohawk as co-owner, developed a business plan, and presented it to local banks to get loans for the initial expansion. “We caught the timing just right,” Bloom said. “The business plan I presented to the bank was titled ‘The Perfect Storm.’ And I had no idea how perfect it was, because it was right before the financial crisis. So we were able to get capitalized. We wouldn’t have been able to any year since then.”
Bloom had fostered good relationships with dozens of company representatives over the years, and he planned to use those to diversify Mohawk’s customer mix. To bring them onboard, he would pitch them the advantages of quick response. A shop that responds quickly and reliably can deliver a succession of small orders over a period of time. This means the customer doesn’t need to keep a large inventory buffer of parts but instead order only what is needed, when it is needed. Such an arrangement reduces inventory and improves cash flow—music to customers’ ears during an unprecedented recession.
Saying this is one thing, but actually making it happen is another. On this front, Bloom hired experienced individuals, many of whom came from his previous employer. He also told potential employees that the shop wouldn’t be run conventionally, but instead in a just-in-time fashion.
The cultural change wasn’t difficult, he said, and in an odd way the recession actually helped push the transition. Conventional manufacturing techniques obviously weren’t working; area fabricators were closing their doors. “People took the idea of change much better than they would have if I tried to do something like this in 2004,” Bloom said.
Working in a job shop, managers haven’t implemented traditional lean manufacturing but instead have cherry-picked useful elements. Setups aren’t avoided like the plague. It’s not about how many parts a machine churns out during a shift, but instead how many completed jobs ship quickly.
The company is divided into the processing department, which Mohawk defines as laser cutting and bending; and the fabrication department, where workers weld, assemble, and—for certain structural fabrication work—install fabricated assemblies on-site. (The shop’s structural fabrication work focuses on commercial plants and similar buildings, not the large steel structures a beam-line shop would tackle.)
Workers are cross-trained extensively so that they can move where needed. Such cross-training has allowed Mohawk to cut lead-times dramatically. A laser-cut and bent part usually is turned around within four days, depending on the job.
The shop works with diverse customer demands. One simple cut and bent part may be turned around in a few days, while a complex fabricated assembly requiring on-site installation could take weeks of planning. Making it all work, Bloom said, is (at least in part) the flexibility of the shop’s labor force. The approach has allowed the company to expand dramatically during the toughest of economic times—and, according to Bloom, still maintain margins.
One such expansion involved the construction market. Mohawk had been fabricating various pieces for Hamilton Construction’s EZ Bridge, a temporary bridge used during road projects. By 2009 the Springfield, Ore., construction firm started to focus more on large-bridge projects, and the smaller EZ Bridge product line was becoming a burden. When Mohawk offered to buy the product line, Hamilton eagerly accepted.
Mohawk’s expansion plans continue, and playing into it always is the question, What else do customers need? That’s why sometime this year Bloom hopes to acquire a high-precision fabrication operation. “This would be at another level of precision that we don’t do, so that will give us one more offering that we then offer to our current customer base.”
Flexibility, he added, is at the heart of the company’s success in adapting to customer needs. For instance, many job shops avoid installation, and for good reason. Timing a structural erection job requires coordinating with numerous parties, and the schedule can change continually. Mixing such work with traditional metal fabrication isn’t easy, but Bloom tackled it all the same. He hired a fabrication manager who, with years of installation experience, can quote and schedule those challenging structural fabrication jobs.
As Bloom explained, “Customers were saying, ‘If we didn’t have to hire a different installer for this, it would really be convenient.’ Well, ‘convenient’ usually ends up turning into margins.”