Strategic vision, vertical integration are key ingredients to shop’s competitiveness
July 16, 2012
Ross Liberty, founder of Factory Pipe, has been making exhaust systems for two-stroke engines since he was a teenager. He recently brought his decades of manufacturing experience and his substantial product knowledge to bear on an exhaust pipe that had been produced at Factory Pipe and subsequently sourced from a competitor in China. Liberty developed a new design, cutting the weight and cost substantially, thereby getting the contract back from the Chinese company.
Aside from a short stint working for a paycheck, Ross Liberty has done one thing for his entire adult life and much of his adolescence: make aftermarket exhaust systems for two-stroke motorsports engines. His career and vocation started decades ago when, as a proud owner of an extremely inexpensive Hodaka motorcycle, 13-year-old Liberty wanted a better exhaust pipe to see if he could coax a few more horsepower out of the cycle’s 100-cc engine. He had spent the funds he had earned from cutting lawns, and his parents weren’t about to fork over any money for a new exhaust pipe, but the lack of financing wasn’t an obstacle. Liberty’s father had already encouraged entrepreneurship, so Ross decided to make his own exhaust pipe. Decades later he’s still at it, and he has refined the process so much that he recently brought some exhaust system work back from China and captured some work that was possibly headed to Mexico.
In his first attempt to make an exhaust component, Liberty did what you’d expect any budding entrepreneur to do: He copied one. He got his hands on an exhaust pipe, wrapped paper around it to make a template, then unrolled the paper and traced the template’s outline onto some sheet metal he had purchased. Using the biggest pair of household scissors he could find, which didn’t please his mother much, he cut the pattern out of the sheet metal. He then made a wooden cone on a lathe in his shop class and wrapped the sheet metal around the cone. He welded the seam, and there it was—his first exhaust pipe. Before long he was making them for friends, and his father took him to swap meets so he could sell them in a larger marketplace.
When he was a little older he took a job making aftermarket exhaust pipes and learned a few more manufacturing techniques and processes. After a move to Northern California, to the small town of Ukiah, Liberty pondered earning some money and decided that he wasn’t finished with exhaust systems. He upgraded his home operation from cutting and forming to stamping.
“Aftermarket manufacturers would roll these cone segments and assemble them, as opposed to stamping two halves,” Liberty said. That was the inexpensive, low-volume way to do it. The big manufacturers stamped the parts.
“The OEMs would make two stamped halves because they had the volume to justify tooling,” Liberty said. “I was determined to stamp them. At the time there were probably 40 aftermarket companies in Southern California making exhaust systems. You don’t want to be one of those guys; you want to supply those guys,” he said.
He hadn’t yet finished high school, he lacked any knowledge about deep drawing, and had little in the way of equipment, so he set out to learn by doing. After using a torch and a grinder to fashion a die from a piece of plate, Liberty made a crude stamping system by cobbling together his own press. He scrounged the parts, and for power he used the power steering system of his 1963 Chevrolet Impala®.
“I’d pull the car into the garage, disconnect the power steering, and use the power steering pump for power,” Liberty said. “The steering wheel connects to a valve, so I’d hook this thing up; start the car; and turn the wheel left to open the press, put the part in, then turn the wheel to the right to close the press.”
Eventually Liberty realized that he could make his tooling a different way. First, he made an exhaust pipe by cutting the necessary parts from sheet metal, forming them to make several cone-shaped sections, and welding all the seams. He then filled this exhaust pipe with molten aluminum; after it cooled, he sliced the solidified aluminum into two pieces with a band saw. The result was two dies, each with the contours of the original part.
“It’s really accurate, and for some aftermarket applications we still use this method today,” he said. For a time after he opened his shop, Factory Pipe®, he used this process and it provided a big advantage over many other shops.
“We could make the tooling in a week and it would cost $4,000. Similar tooling from a tool and die shop would cost $100,000 and a lot more time,” he said. Liberty acknowledges that Factory Pipe’s tooling isn’t quite as precise as a set of dies from a tooling house, but his company’s tooling is affordable for the low- to medium-volume niche, where a production run might be as low as 50 units.
“It was a good gig for a long time, but eventually other people discovered how we did it, and they adopted it,” he said. “This is the way almost everybody does it now.” This doesn’t bother Liberty. He’s aware that techniques and technologies spread (see Markets Divide sidebar).
While his early efforts in his parents’ garage seem primitive, it taught Liberty about vertical integration. He designed the tool; made the tool and the press; stamped and assembled the parts; marketed the product, made deliveries, and did the accounting. Liberty runs Factory Pipe along the same lines today.
Liberty’s shop in Ukiah actually has a few things in common with his original workplace, his parents’ garage. In addition to two artifacts in Liberty’s office—his first handmade die and a section of garage wall with an exhaust pipe sketch—the production floor has a small stamping press Liberty designed and built. Beyond this, Factory Pipe bears little resemblance to the parents’ garage.
Processes and Equipment. Although Factory Pipe operates with the same basic strategy he devised decades ago, Liberty has done nearly everything possible to remove the manual processes from fabricating exhaust pipes. The dies are designed and machined in-house using any of three machining centers or a lathe; the blanks are cut on one of three Amada 5-axis sheet lasers; the parts are stamped on any of a variety of presses to form right and left shell halves; and the halves are welded by one of five 7-axis Miller Automation/Panasonic robotic welders.
Although many processes resist automation, such as grinding and polishing the complex shapes of exhaust components, Liberty strives to put people in positions where they contribute their knowledge and problem-solving abilities, not their labor.
“Welders shouldn’t weld—they should load parts,” Liberty said. In his view, a welder’s knowledge is best used to set up an automated process, troubleshoot the process when something goes wrong, and repair the occasional bad weld. Although Factory Pipe produces some legacy parts using manual welding, Liberty prefers to design exhaust systems from scratch. He uses his experience to optimize exhaust system efficiency and manufacturability, using as much automation as possible.
Running Efficiently. As a teenager Liberty ran a one-man show; after making the dies and building his own press, he did the stamping, welding, grinding, and so on. This lack of specialization is anything but efficient. On the other hand, too much specialization is also inefficient. Liberty saw one of his clients relying on an assembly-line proc-ess that had too many people, each adding too little value in each step. In contrast, Factory Pipe uses a cell system with one operator handling several jobs; it uses the fewest possible fixtures and the fewest possible motions.
“You pick it up once and do as many processes as possible,” he said.
According to Liberty, one of his OEM customers had an assembly line that used a staff of eight to produce 200 parts per day. When the OEM put the part out for bids, Factory Pipe managed to get the contract because its system relies on two people who produce 220 of the same part per day, a ratio of approximately 4-to-1.
Fast Turnarounds on New Designs. Like Liberty’s original shop, Factory Pipe is vertically integrated. A team of three designers (including Liberty); the ability to machine the dies; and all the equipment needed to stamp, weld, and powder-coat in-house means that Factory Pipe has a substantial control over costs and timelines. According to Liberty, the dies are such a long-lead-time component when outsourced, up to 20 weeks, that they often determine the timeline for rolling out a new snowmobile or all-terrain vehicle.
In Liberty’s view, reducing the timeline is critical to having products that are relevant, especially in the motorsports industry. And in the fabricating industry, relevant product is key to profitability. Liberty said that Factory Pipe occasionally receives drawings for a new part on a Sunday. Liberty does some work on the drawings and gets approval the same day, and the customer has an initial batch of parts in hand the following Friday.
The fast turnarounds are a byproduct of Liberty’s infectious enthusiasm for manufacturing, which in turn is a byproduct of his involvement in the development, design, and production of relevant products that he’s passionate about.
“It’s much more interesting to work at something you care about than a bunch of ‘me-too’ products,” he said.
Factory Pipe has had to confront the same competitive pressures that other U.S. manufacturers have had to deal with. In 2008 it lost a substantial portion of its business to a manufacturer in China. Liberty was confident that Factory Pipe had the right combination of factors to get the work back:
In the end, Liberty’s gamble paid off. Using his own resources to develop a prototype replacement muffler, he came up with a unit that weighed much less than the original did. And while it might seem unbelievable, the new design actually costs less to produce in California than the old design did in China.
If the competitor has a lower labor rate, the key to competitiveness is using less labor.
When Ross Liberty discusses his thoughts about competitiveness in manufacturing—whether he’s talking about serving his clients, competing against foreign suppliers, or any other aspect—it seems like he dumps all the pieces of a jigsaw puzzle onto the table, but eventually all the pieces fit together and a single, unified image comes into focus.
“This says something about the very nature of markets—all markets,” Liberty said. “They always divide. Always.”
After the basic need is met, the market becomes niches. Liberty cites Bombardier. In the 1960s the company often sold more than 100,000 units per year of a single snowmobile model and made few changes from year to year. “Now market forces are such that snowmobile manufacturers make improvements to more than a dozen models at a furious pace to stay competitive. Those who don’t update their products often do so at their own peril.”
Where four-stroke engines have intake and exhaust valves that are opened and closed by pushrods driven by a camshaft, two-stroke engines have intake and exhaust ports in the cylinder wall that open or close based on the cylinder’s motion and position. With fewer moving parts and a few other differences, two-stroke engines are simpler and have a higher power-to-weight ratio than four-stroke engines. This makes two-stroke engines advantageous in weight-critical applications such as motorsports.
The downside is that a two-stroke engine has a narrow power band (the RPM range of maximum efficiency). This is related to the fundamental difference between the two engine types.
The four processes in a four-cycle engine—intake, compression, power (combustion), and exhaust—happen in four distinctly separate stages, or cycles, providing thorough separation between the intake and exhaust functions. Because a two-cycle engine has all the same processes happening in only two cycles, the intake and exhaust processes overlap and therefore are much more complicated. Evacuating the exhaust gases from the cylinder efficiently aids in drawing more of the air/fuel mixture into the cylinder during the intake cycle, enhancing the system’s performance in both fuel efficiency and power.
The trapping function of a properly designed two-cycle exhaust system is key. Two-cycle exhaust systems need both a scavenging (evacuation) low-pressure phase and a plugging high-pressure phase. The optimal exhaust pipe shape allows the exhaust gases to diverge, then forces them to converge, at the proper times, hence the need for the proper lengths, diameters, and tapers. This is where product knowledge comes into play.
Tweaking the design—optimizing the lengths, diameters, and tapers of the exhaust system—is known as tuning.
Decades of tuning experience at Factory Pipe made all the difference in designing a system that runs as efficiently as possible and helped the company bring a project back from China.