A young fabricator follows his dream, learns about business along the way
May 1, 2012
Rob Howell, a 38-year-old fabricating veteran in Phoenix, Ariz., opened his fab shop more than a year ago and has experienced a lifetime's worth of lessons in the months since. The biggest lesson: Just because you own a business doesn't mean you know how to run a business.
On a social media website recently, a young fabricator asked group members what sort of advice they might have for someone wanting to open a metal fabricating business. Everyone had good advice, ranging from getting customers lined up to putting together a solid team, but a simple one-word answer stood out: “Don’t!”
Half said in jest and half said as a plea to be cautious about what was about to be undertaken, the advice probably rings true for many metal fabricators. They love solving customers’ problems, but the business end of metal fabricating has grown incredibly difficult over the years. Customers don’t knock on the door anymore; a metal fabricator has to knock on prospects’ doors.
Of course, that attitude doesn’t apply to everyone—certainly not Rob Howell.
Toward the end of 2010, Howell was looking for his next challenge in life. He recently had left his job as general manager of a large, Phoenix-area metal fabricating operation and thought he might spend the next few months helping an acquaintance set up a fabricating operation for his machine shop. That opportunity didn’t materialize, and he unexpectedly had some time on his hands. Updating his SolidWorks® skills was the initial thought that popped into his mind, but as he thought about it more, a much larger idea took root. Maybe it was time to start his own metal fabricating shop?
Jump ahead about 18 months, and Howell Precision Sheet Metal (HPSM), Phoenix, Ariz., is open for business. Thirteen employees work two shifts, producing parts for customers in a 10,000-square-foot shop. Howell said his company made $1.1 million in the first 11 months of operation.
How did he accomplish it when the odds were stacked against him and most metal fabricators likely would have advised against it? The simple answer is dogged determination and hard work, plus a little more. Howell is proud of his team’s effort—(“I wouldn’t be successful without the guys,” he said.)—and isn’t shy about sharing how they made it happen.
Howell spent a fair number of his formative years working in his grandfather’s metal fabricating shop in Northern California. That’s where he learned the ropes and got that metallic taste for the business.
“My grandfather started his own business when he was 40, and I wanted to have my own business before I was 40 to honor him,” the 38-year-old Howell said. “I never really thought it was possible.”
His time with his grandfather prepared him for a career as a metal fabricator. His time with his previous employer prepared him to deal with customers and learn that on-time delivery of a quality product at a good price is the name of the game (see Figure 1). Customers took note of his commitment to their jobs, which would play a huge part in helping to get HPSM up and running.
A good reputation will get you only so far in life. To convince anyone to assist a new company financially, a company owner needs to prepare a blueprint for future success.Howell had the good fortune of being able to work with an entrepreneurial consultant and family friend, Charles Grantham, a former college instructor and founder of the Community Design Institute think tank.
“Traditionally, when people start with a business plan, they start with the numbers and try to work backwards, but what I did with Rob is focus on what you are going to do, how you are going to be different from your competition, and what you are going to do to get and keep the customers. Once we got those questions answered, then we started to play with the numbers and the financing,” Grantham said.
For two days Howell sat in Grantham’s basement designed for brainstorming, complete with white boards all around. They started by identifying potential customers and the metal fabricating jobs that might be available. From there they discussed how HPSM would be different.
“I dubbed myself a new business with new technology and new ideas. I had a clear, new canvas,” Howell said. “The guys that have been around a long time are set in their ways.”
The two also chatted about immediate and long-term goals. HPSM surpassed the first-year revenue goal of $750,000 and looks to be on its way to hit the second-year goal of $1.8 million. Ultimately, Howell said he would like to have a 50-person shop in the $7 million to $10 million range.
For this new start-up, the support wouldn’t come from the bank. Because Howell wanted the latest in metal fabricating technology, he needed to go directly to the representatives of the machine tool builders.
He knew that used equipment was not the way he wanted to go, especially for the laser cutting machines.
“They are really, really finicky machines,” he said.
He started making calls and got turned down almost every time. He said one representative even laughed at him when he described his situation.
He finally connected with Glen Zachman of North South Machinery, Brea, Calif., and the two started working on a plan. Howell prepared his business plan and letters of recommendation from 15 potential customers of his new business.
Zachman set up two interviews with Mitsubishi/MC Machinery Systems, and company Vice President Bill Isaac and two credit analysts later met with Howell and some of his potential customers. In February 2011, Howell and his wife Leslie flew to Chicago and wrapped up the financial arrangement there.
“He just has tenacity. He won’t give up, which is really good because there will be bumps in the road,” Grantham said.
By March 2011, a 4-kW Mitsubishi LVPPLUS 45-CFR laser cutting machine and a 10-foot long, 130-ton Mitsubishi Diamond Smart press brake were installed.
The laser cutting machine has a 5- by 10-ft. bed and MC DIAMOND SOFT® 2-D CAD software (see Figure 2). It routinely cuts steel and stainless steel up to 0.25 in. and aluminum up to 0.375 in., but can cut thicker material if necessary (see Figure 3).
“Most shops [around here] don’t have a laser for the most part. So I can go to a precision sheet metal shop that has punching and forming, and I can market myself as a profiling shop. They always need laser-cut parts and short runs,” Howell said.
“Or I can team up with waterjets [and cut parts for them] because their process on thinner materials is slower. So they can give [those jobs] to me, and I can do it for less and with a faster delivery. They make more money and keep their customer happy without even touching the job,” he added.
Right now the laser has a shuttle table, which shifts a new sheet of material onto the laser cutting machine the moment after the laser completes cutting on the previous blank. In the future, Howell said HPSM plans to enhance the laser cutting machine by adding an automated, 20-shelf storage tower, which will allow lights-out production runs when employees are gone for the night.
The CNC hydraulic press brake was necessary to deliver high-tolerance bends expected from a fabricator that was already employing laser cutting technology. The press brake (see Figure 4) is able to deliver that with the help of automated bend angle calculations and backgauge positioning.
HPSM also wanted to be set up for CNC tube bending, so it purchased an Eaton Leonard VB 300 tube bender (see Figure 5) that can accommodate material up to 20 ft. long. The equipment has proven pivotal in landing jobs such as high-end, aftermarket car exhaust fabrications (see Figure 6) and military seating frames.
Howell said he wanted the latest technology, even with welding power sources. He elected to go with pulsed gas metal arc welding technology because a welder is able to lay down more metal into the weld, not waste it with spatter, and have tight control over the heat input.
Having worked for his previous employer for more than 10 years, Howell knew the importance of setting up his shop for proper flow. Today when you walk into his shop, the laser cutting machine is the first piece of equipment you see. All jobs start with a part being cut from a blank.
From there the part flows to a press brake only a few feet away or moves directly to one of three welding bays in the rear of the shop. A deburring station and an assembly area complete the work-in-process flow as goods exit the same door through which the raw material was delivered.
With an eye toward the future, Howell has roughed in areas near the assembly department where welding bays can be set up quickly to create workcells in case manufacturing jobs warrant that setup. All that would be needed are welding curtains and tables because the gas and electric hookups are already present. Micro Air industrial air cleaners are found throughout the shop to extract cutting and welding fumes.
The workspace also contains an inspection department and a shop floor office area where Howell can design parts and keep an eye on fabricating activities.
HPSM also happens to be located in an industrial complex that has two key manufacturing partners literally a door away. A company that performs waterjet cutting and a precision machine shop are neighbors in the complex near Deer Valley Airport in Phoenix that have proven to be capable partners in providing manufacturing services that HPSM doesn’t offer.
Howell and one other person were the only employees in the start-up company. They pulled 32-hour shifts and caught a nap whenever they could on a cot hidden by a temporary wall in the shop.
When revenues reached a certain level, he added people when he could.
“They have all worked for me at some time over the past 11 years,” Howell said. “So I put together the dream team. All of the guys have been managers in departments, and we are going to build the foundation from here.”
Take the night shift, for example. Howell said he doesn’t expect to get late-night calls or have any problems when the morning shift shows up the next day. The second shift is as trustworthy as the first-shift team they replace in the afternoon.
From a skills perspective, he’s also assembled a strong team. He has three welders on the payroll and all are certified for military work.
At his old job, Howell said he witnessed firsthand the “nightmare” associated with trying to implement ISO processes in a large company. People were set in their ways, and change was difficult.
That’s why HPSM achieved ISO 9001 registration this spring. Everybody is onboard with the current work processes, and all new workers are expected to be as well.
Additionally, the work done to achieve the ISO certification will come in handy as the shop pursues AS 9100 certification. Such a quality registration will prove beneficial in attracting potential aerospace and defense work.
Sometimes it’s easy to get wrapped up in the work and forget that a shop always needs new work. Word-of-mouth advertising used to be able to keep a shop going, but that’s not the case today.
In the early days of the business, Howell had daily motivational meetings with his account receivables report. He was only as good as his cash standing. If he didn’t have the funds coming in, he couldn’t pay for the material necessary to produce parts. He wasn’t going to rely on credit cards, and he didn’t have access to a credit line.
So when his shop finally got to the point where it could function without his constant presence, he focused on sales. And come to find out, he was pretty good at it.
“My specialty has kind of become sales—selling the customer on the fact that we are going to do it better and with new technology,” Howell said. “We are going to do it faster than anyone else, and we are going to service the customer better than anyone else.”
He’s also held an open house, which provided a nice opportunity to thank those customers that supported him early on and show off to potential customers. One of the latter liked what he saw, according to Howell, because a new contract came over only days after the customer attended the company festivities.
Someone recommended that Howell should hire a business adviser after the business had been up and running several weeks. Howell initially scoffed at the idea because he was running a business already—what else was there to know?
After one meeting, however, that thinking changed. If HPSM wanted to be the opposite of an old-school fabricator, it had to keep an open mind about all aspects of the business.
So each Saturday Howell and his wife meet with the business adviser for two or three hours to talk about accounts receivables, quoting efforts, and human resources issues. Howell has even taken the adviser along on a customer visit to explain more clearly HPSM’s current financial standing and long-term viability.
“I try to stay open-minded,” Howell said. “I’m the new guy on the block. I listen to what everyone has to say. I don’t necessarily do it, but I listen and analyze the information I take in.”
Howell admitted that HPSM finally reached the point in early spring “where it just flows.” The first customer contact is made, the estimate is produced, the job is won, the order is sent to the floor, and the part is fabricated for on-time delivery. He doesn’t have to be there to ensure everything is done correctly. He’s not spending nights on the company cot anymore.
He’s not kicking back and enjoying the fruits of his hard work either. HPSM added a new lathe recently because a job had grown so large that outsourcing it no longer made sense, and Howell is working diligently to bring more jobs to the shop floor—particularly jobs that showcase all of HPSM’s manufacturing capabilities (see Figure 7).
When asked to look back on the first year of business and share what he’s learned, Howell didn’t hesitate: “If your heart is in it and you love what you do, then go for it. Give it a try.”
That passion is always the fire that stokes the engine of entrepreneurialism.