Learning to adapt
Fabricator adapts to changing manufacturing environment
Production Cutting Services opened for business in 1985 as a service
Manufacturing isn't the same today as it was two and a half decades ago. CNC for machine tools, desktop computers, electronic data interchange (EDI), laser cutting machines, robots, lean manufacturing, and other technologies and processes have caused more changes in the past 25 years than perhaps any similar time period since the discovery of iron. Fabricators who have been able to adapt have survived, and many have thrived in this environment.
One such fabricator is Bill Duy. In 1985 Duy and two partners opened Production Cutting Services Inc. (PCS), East Moline, Ill., a service center that initially provided tube and cut-to-length sawing services. From that foundation, the company adapted and grew as it learned about drilling, machining, bending, laser cutting, and other processes that today make PCS a full-service fabrication shop. A look at the company's history offers a perspective on morphing a service center into a fab shop, little by little, while manufacturing changed in ways both big and small.
Good Times, Bad Times on the Mississippi
If the word risk-taker is a substitute for entrepreneur, Duy is an entrepreneur. Before founding his own company in 1985, the bulk of his work experience involved a job at a steel service center in the Quad Cities area (Bettendorf and Davenport in Iowa and Moline and Rock Island in Illinois). This area's most well-known entrepreneur was John Deere, who moved to Moline in 1848. Just as Detroit would later become the U.S. automobile capital, the Quad Cities became the U.S. agriculture equipment capital. In the area's heyday, Deere, J.I. Case, and International Harvester had manufacturing facilities in the region. Duy was an account manager, and his job involved the big picture. He supervised purchasing material, developing cutting processes, quoting jobs, and ensuring deliveries were made in a timely manner. At that time manufacturing practices were characterized by long production runs, big inventories of raw materials and work-in-process (WIP), and little outsourcing.
"The entire riverbank along Moline and East Moline was lined with factories and storage facilities," Duy said. "Many companies would order a month's or even a quarter's worth of material at a time to fill the facilities to the hilt to be sure they wouldn't run out of steel," he said, describing a lean guru's nightmare.
However, change was afoot.
"I saw Deere and Case changing direction in how they viewed return on assets," Duy said. "I think they started to realize that those assets—the inventories and the buildings used to store those inventories—didn't provide any return, so they started tearing down warehouses and began to do more outsourcing,especially saw cutting and other processes that are high-wage, low-value-added activities."
This rethinking might have been related to prevailing business conditions. The industry was in a steep decline.
"This industry was in recession then," Duy said. "It started in 1982 and finished around 1985. Farmers just weren't buying equipment." Although the rest of the economy was doing well in 1985, farming was in bad shape.
"Ag marches to its own beat," Duy explained. "In fact, 2009 is a good example. Right now the rest of the country is in a recession, and we justfinished our fourth record year in a row."
Farmers' fortunes rise and fall with commodity prices. The prices for wheat, corn, and soybeans fell throughout the early 1980s and hit bottom in the middle of the decade. Many farmers faced foreclosure, and the rest were just barely getting by. So were many people in the Quad Cities, who were largely dependent, either directly or indirectly, on the agriculture industry.
"The downturn devastated this whole area. Case closed one of its plants, and the Quad Cities lost about a quarter of its population," Duy said.
Duy recalled that, despite the downturn, inventories continued to rise among many ag equipment manufacturers in the area.
"Along with their storage of raw materials, many OEMs continued to build combines, tractors, and planting equipment, so they had inventories to work off."
Commodity prices recovered quickly. Within two or three years, the price of wheat increased 70 percent; soybean prices increased about 85 percent; and corn doubled in price. Farmers were harvesting cash by the bushel, and many were in the mood to purchase new equipment. Eventually the inventories were depleted and orders started rolling in. The OEMs kicked it up a notch and passed some of the new work along to their suppliers.
A Source for Outsourcing
Where some saw the rise of outsourcing, Duy heard opportunity knocking. He got together with two partners and developed a plan. From Duy's description, they had more guts than expertise. One of the partners provided the bulk of the financial backing; another hadsubstantial sawing knowledge; and Duy had connections among many of the ag equipment manufacturers.
"The idea was this: Let's create a company that provides component parts to meet a company's production schedule, whether it's on a daily, weekly, or monthly basis," Duy said. Initially the company provided steel and a single service: sawing to length.
"After about three years, Deere started farming out saw-cut tubes with holes in them, so we had to learn about the accuracy and tolerances for drilling holes," Duy said. It was the first of many manufacturing lessons the PCS staff would learn.
"None of us knew anything about geometric dimensioning and tolerancing. I went to visit a design engineer at Deere Plow & Planter Works, and it became evident after a few minutes that I wasn't familiar with GD&T jargon or concepts," Duy recalled with a chuckle. "He said, 'You need to learn about GD&T if you want to get the contract to make this part,' and he recommended a book that I should read."
The learning process didn't end when the PCS staff mastered GD&T. In fact, it was just the beginning. They learned the drawbacks of three holemaking processes before settling on the fourth.
"Eventually we found that drill presses were too labor-intensive for drilling, so we switched to vertical machining centers," Duy said. They later determined that vibration caused problems with accuracy.
"Then we switched to plasma to do as much of our holemaking as possible," Duy said. "The downside was that our plasma cutting process wasn't very automated.
"We later added laser cutting," he said. "Even though we had quite a bit of manufacturing experience under our belt, buying our first laser was a risk. We weren't sure if we could learn the process and develop it to the point that it would be viable. I think I tossed and turned over that investment more than I did with subsequent and more expensive lasers."
The company purchased a six-axis machine that could cut a variety of shapes. "It was a SpaceGear-U44 from Mazak," Duy said. "The bed of the machine is 4 by 4 feet, so it can accommodate many parts—2-D, 3-D, tube. It's a versatile machine. It does a fine job of cutting to length and making holes.
"We have found that the biggest advantage with a laser is that it's often a done-in-one process," Duy said, referring to the number of processing steps. "You pick up a part, put it on the laser, and you don't pick it up again until it's done." A lean guru's dream come true.
Because the company specializes in tube, it later purchased two tube-specific lasers from the same supplier. The machines handle parts up to 315 inches long. The smaller of the two handles workpieces up to 6 in. round or square; the larger machine handles tube up to 115/8 in. round or square.
This isn't to say that it abandoned machining, plasma cutting, and other processes. Far from it. The experience it gained taught PCS the capabilities and limitations of the various processes. Along the way it evolved into a full-service fabrication shop equipped with drill presses, lathes, horizontal and vertical machining centers, band saws, 2-D and 3-D lasers, and hydraulic presses. It also has vibratory deburring machines. The company even offers pickling services that it outsources to a separate business, QC Metal Pickling Co., which is located in the same building.
Duy feels that this variety of machines and processes separates it from itscompetitors.
"When you talk to a customer and you say 'tube laser' their eyes light up and they think, 'Oh, this company is high-tech,'" Duy said. "Among some of my competitors, the attitude seems to be, 'Yes, we offer laser cutting and yes, we'll take your money.' We don't work that way. The laser isn't the answer in all cases. We use lasers on less than 80 percent of the parts we manufacture. Laser cutting is a versatile process, but it's costly. On about 30 percent of the parts we produce, machining is faster and cheaper, making it the lowest-cost process."
Two Machines in One. The company also learned the value of combination machines. "We produce some very large tubular components, especially for Deere's Seeding Division," Duy said, referring to the section that used to be the Plow & Planter Works.
"Some of these parts require two processes, saw cutting and drilling. Saw cutting is the faster of the two processes, so we used to saw-cut a couple of truckloads and then we'd have piles of tubes just sitting and waiting for time on the machining centers. To eliminate the bottleneck we purchased an integrated machine. It has a drilling system and a saw. You load a big part onto the input table, push the button, and the drilling machine makes the hole pattern and the saw makes the cuts. The operator's main job is to catch finished parts. He bands them up and sends the bundles to the shipping area."
The combination machine eliminated that bottleneck, but the PCS staff later realized that the machine had a bottleneck of its own.
"The machine required reclamping before drilling every hole," Duy explained. "We decided to build our own integrated machine. We purchased a drilling machine and a band saw and hired a third party, an engineering firm, to help with the integration. The new machine clamps a 24-inch area and the spindles can drill three holes simultaneously over that 24-inch length. It's probably 30 to 40 percent faster than the original machine."
No WIP. Just as the OEMs learned in the 1980s, PCS learned how much value WIP provides: none. Although PCS used to deal with some WIP, the two integrated machines and careful attention to work flow elsewhere have nearly eliminated it from the company's business.
"About 50 to 60 percent of our work is repeat business, shipping the same part day after day, five days a week," Duy said. "Over the years we developed an order tracking system tied to our order release schedule. We don't carry any raw material inventory here at all. We have mills roll a month's worth or so of material for us and we'll release it to production right from their inventory. We'll receive anywhere from two to five truckloads of material a day. Our inventory turns are probably around 20 to 24 times a year.
The Biggest Lesson
Duy's original vision for the company was to serve OEMs in and around the Quad Cities. That's another way of saying that he intended to be a supplier to agricultural equipment manufacturers. That was a good plan for establishing the company, but for many years Duy has been refocusing PCS.
The company still does plenty of sawing and drilling, the first two processes it specialized in, but the machining, plasma cutting, and laser cutting capabilities have opened up other possibilities.
"We make some components for an office furniture supplier over in Iowa, and we have done some automotive work too," Duy said.
This branching out to other industries is aided by an all-important lesson, one that trumps all of the manufacturing lessons PCS picked up along the way. The company offers more than manufacturing services: It provides manufacturing and process knowledge, making available to customers the lessons it learned along the way. Duy thinks this body of knowledge sets PCS apart from the pack.
But even at that Duy and the PCS staff aren't done growing, learning, and adapting. Just as Duy guided the company throughout the years and broadened its capabilities from large, cumbersome, heavy-wall components to handle a bigger variety of shapes and sizes and wall thicknesses, he is considering another change.
"About the only process we don't do is waterjet cutting," he said. "We might look into that in the future." This would be a strategic investment. In addition to complementing its other processes, a waterjet would allow the company to expand beyond metals, adding more materials to its repertoire and serving additional customers in other industries.
The Tube & Pipe Journal
The Tube & Pipe Journal became the first magazine dedicated to serving the metal tube and pipe industry in 1990. Today, it remains the only North American publication devoted to this industry and it has become the most trusted source of information for tube and pipe professionals.