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Silicon Valley Firm Provides Window into US Manufacturing   Mark Langlois, Senior Editor

 
 



A part produced on a CNC turning machine. Advanced Machining Techniques’ CNC turning machines are equipped with double spindles and live tools, allowing parts to be made in one operation without the need for secondary processes.
Photo courtesy of Advanced Machining Techniques, Morgan Hill, California.

Building strong customer relationships is a priority for Advanced Machining Techniques, a company that combines pallet changers with efficient multi-axis machining to get the most out of its machines.

The manufacturing world turns on relationships and quality, according to Frank Dutra, founder and owner of Advanced Machining Techniques (www.amtcal.com), an ISO 9001:2008 certified machining company that’s also registered to the AS9100 Rev C aerospace standard. Dutra, who founded Advanced Machining Techniques in 1986, bases his belief on decades of experience in providing precision metal parts to the defense, medical, aerospace, electronics and automotive industries.

“It can take you years to build a relationship and an afternoon to lose it,” Dutra said in a phone interview with D2P. “They [customers] all rely on metrics—for on-time delivery, quality, production,” he said. "If your metrics start slipping, the warning notices start coming and you’ll notice a drop off in orders. They’ll start putting it someplace else.”

Any company, including those with long histories of excellent quality, can have a bad day, go through a down cycle, or experience a change in critical personnel. But when a supplier is at risk of losing a customer over issues of quality or price, the depth of its relationship with its customer is crucial. Who you know—and how many—is critical to mitigating that risk. “You want to know who all the people are at the table,” Dutra said. “They’re sitting around a conference table and they’re saying ‘this supplier [isn’t cutting it]—look at their metrics.’ There’s no one there to defend you, except for one guy, but if his review is coming up, he might just go along with it.”

Better to know everyone at the table and have multiple advocates who can vouch for the company’s quality and integrity. While keeping a close eye on quality, shop owners should meet and get to know as many of their customers as possible, Dutra said. The same could be said of an OEM’s engineers and purchasers. They, too, should meet and get to know as many of their suppliers as possible because the benefits of such relationships go both ways—to the OEM, or product manufacturer, as well as the supplier. Opportunities for these authentic, two-way, face-to-face relationships are plentiful in the U.S., where product makers don’t have to look very far to find high-quality machine shops and providers of various parts manufacturing services.

Face-to-Face Relationships Are Key
One of the casualties of offshoring, Dutra said, is the reduced reliance on face-to-face meetings and long-term relationships. And all too often, people rely too heavily on computers. “There is so much internet activity going on. I think an underlying factor in business that a lot of people—especially this newer generation of millennials—don’t understand is that personal relationships get it done.”

Dutra said it’s easy to see the importance of relationships in aerospace and defense work because if someone leaves one prime contractor, for example, they’re likely to end up at another. Workers tend to stick to their industries and similar-sized firms.

“What you see is the orders keep coming. They’re using the same vendors because the relationships are so well developed. People bring their vendors with them,” Dutra said. “If you leave that company, I’m the first you call. The relationships are strong.”

Cost Trumps Price
Advanced Machining Techniques, located in Morgan Hill, California, employs about 40 people, including workers with decades of experience in precision machining. The company offers machining services that include CNC vertical and horizontal milling, CNC turning, and CNC screw machining. In addition, the firm provides sheet metal fabrication—including certified welding—and mechanical and cleanroom assembly.


A welded part fabricated by Advanced Machining Techniques. The company’s welders are certified to AWSD1.1 and AWSD1.2.
Photo courtesy of Advanced Machining Techniques, Morgan Hill, California.

One of the biggest challenges that Advanced Machining Techniques and other U.S. manufacturing suppliers continually face is to make precision, high-quality manufacturing—including CNC machining and sheet metal fabrication—available at a total cost that allows the company to compete globally. The company accomplishes this in a variety of ways, such as through the use of pallet changers, unmanned machining cells, and lean manufacturing principles.

Pallet changers, used on the company’s vertical and horizontal milling machines and multi-spindle turning machines with six-axis capabilities, allow the machines to continue making parts while the loading and unloading of parts is taking place. The non-value-added time that would result from stopping the machine to load and unload is thus eliminated.
 

A small, fine-tooth gear is an integral part of a component manufactured by Advanced Machining Techniques.
Photo courtesy of Advanced Machining Techniques, Morgan Hill, California.

“We give people our best service, regardless of how much work they give us,” Dutra said. “Customers do not want to pay for you to load a blank piece of material into a machine. There’s no value in that.”

To make manufacturing work, Dutra said that each machine has to contribute all that it can to the company. He recently bought a $200,000 Citizen A20 Screw Machine that’s well suited for making simple or complex round parts.

“It’s paying off,” Dutra said. “The finishes are just incredible; the cycle times are incredible. You can make several things happen at the same time. You can be drilling a hole on one side of the part while you’re machining a flat on the other side. You can have more than one tool engaged in the part at a time. You really can’t do that on any other type of machine.”

Dutra said his job is to educate his customers on costs. He once had a customer approach him about a part he was buying for $5. Dutra estimated he would charge about $30 to manufacture the same part. What his customer didn’t realize, and only learned over time and through experience, was that the $5 part arrived with an 84 percent failure rate. That problem didn’t appear on the purchase order anywhere. The bottom line cost for the customer, it turns out, isn’t always on the purchase order price.

“The current mantra is, ‘cheap, cheap, cheap,” Dutra said. Some companies look solely at the PO price and are not focused on the true cost, he explained.

In Dutra’s example, the customer received failure reports over time and finally traced the failures to its $5 part. Eventually, the $5 part was replaced by a $30 domestic part that had a failure rate near zero.

“We do whatever it takes to meet the customer’s need,” Dutra said. Pricing pressures have been unrelenting, forcing everybody in the supply chain to do their part to produce parts cheaper and be more efficient and creative. “If any shop owner is honest with you, they’ll tell you they haven’t ever had pricing competition like they do today.”

Dutra said that the offshore option might look good up front on the PO, but what you hear later is, “the offshore source is either a complete failure or a complete success. They’re either very happy or they’re very unhappy.”

His observation isn’t new. In Dr. L.J. Hart-Smith’s 2001 analysis of outsourcing for Boeing, Hart-Smith wrote, “A major source of unplanned costs associated with out-sourcing has been subassemblies that cannot be fitted together. … As a minimum, this has entailed considerable out of position work, a lot of rework, delays for replacement parts, and recriminations as the source of any error is uncovered.” Hart-Smith was working as a Boeing aerospace engineer when he wrote “Out-Sourced Profits – The Cornerstone of Successful Subcontracting,” a paper he presented at Boeing’s Third Annual Technical Excellence (TATE) Symposium in 2001 in St. Louis.

Manufacturing firms that are surviving in the United States today have squeezed out all of the excess costs of manufacturing, Dutra said. They’ve lowered their own labor costs, equipment costs, and shipping costs, and they’ve maintained quality. Often, a single person works two, and sometimes three, machines at the same time.

“U.S. manufacturing has been under immense pressure to compete with countries that don’t provide health insurance or even lunch breaks for their employees,” he continued. “With this pressure has come much creativity from employees and managers, owners, and machine tool manufacturers, tooling manufacturers, and work-holding manufacturers to optimize every second in producing a part. With many years of this pressure, the U.S. manufacturer has probably hit the bottom of the curve as to the least expensive parts that can be produced here in the United States. Today’s pricing reflects years of price optimizing through creativity from the manufacturing industry.”

In one case, Dutra said, off-shore parts for motorcycles were being assembled in northern California, near Morgan Hill. The motorcycle firm was buying a frame for a headlight mount designed to attach to the handlebars at two screw holes. Dutra’s cost to make the part was $10, so the motorcycle firm went with an offshore provider who charged $5. Truckloads of the headlight frame arrived with one of the screw holes out of place.

“They couldn’t mount it. It had to be re-worked. We turned one of the holes into a slot. We did it for weeks and months, just reworking the stuff. When I talked to the buyer about the total cost, he didn’t want to hear about it. He thought he did great because they bought them cheap,” Dutra recalls. Dutra asked about the shipping costs. The buyer said, “It doesn’t matter. That comes from a different bucket.”

That left Dutra shaking his head. He asked the man, “So if I charged you $5 for the part and another $5 for shipping, would that work? He thought I was nuts, and I thought he was nuts.”

Getting the Most Out of a Machine
Dutra said that the uptick of manufacturing parts and products in America hinges on several ideas, including the fact labor in China is inexpensive. He said he isn’t really surprised by the whole “re-shoring” trend in manufacturing.

“We were the expensive ones who had to come down [in price], and we did that,” Dutra said. “If you look at manufacturing in China, they’ll put four or five guys on a CNC machine: one to open the door, one to take the material out, one to fixture it, one to close the door.”

Dutra shakes his head at that. To him, it means they’re not getting the most out of the machine. Each time a person touches the part, a chance for error or mistakes arises. “There’s no reason for them to invest in the high-end equipment. They haven’t embraced automation because labor is so cheap. We automate because our labor is so expensive.

Getting the most out of a machine might mean having a machine work three sides of a part before moving the part. “The quality is inherently better because you’re not moving your axes, none of your datum points are changing,” he explained. “Everything is in relation to each other. You just have a higher quality part.

“Where you really notice the quality is on an assembly line where the customer is putting their units together,” Dutra continued. “There are no hammers, there are no files, and there are no pieces of sandpaper. The part is true to itself. You see that. Everything just fits better. Everything lines up better. There are downstream efficiencies.”

Efficiencies arise from making better use of each machine tool. “I have a multi-tasking lathe that has two spindles and two turrets. They can both run at the same time. If you can do 50 percent of the machining on spindle 1 and transfer that part to spindle 2 at the 50 percent mark, turret 2 can finish it off while you start another part. Your cutting time might still be 10 minutes, but you’re getting a part every 5 minutes,” Dutra said.

Fewer touches translate into more accurate parts, he added. A part touched by a person and re-set in a machine six times may measure the same and meet the customer’s specifications. However, that same part will be a better part when touched only twice by a person, but machined six times on the machine. It, too, meets specifications. “The less you handle a part, the better it’s going to be,” he said. After all, it’s going to be easier to put together.





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