Staying Strong In Changing Times

During a recent trip to the Los Angeles area, we had the opportunity to visit Alger Manufacturing, LLC, and Jim Hemingway, company president and current president of the Precision Machined Products Association (PMPA). Being heavily involved in the association has given him the opportunity to see a large number of shops and get a broad perspective on the industry as a whole.

Alger is celebrating its 50th year in business, focusing on screw machine parts 1/16-inch to 2 1/4-inch diameter on a lineup of single- and multi-spindle automatics, including 50 Davenports, 39 New Britains and 22 Brown & Sharpes. We asked Mr. Hemingway to provide his views on the success of his own company through the years, as well as what he feels other companies can be doing to remain competitive as they face the challenges of doing business today.

Production Machining: Considering that your company works almost exclusively with what most would consider “older technology,” with traditional gear and cam equipment, how do you keep the business strong?

Jim Hemingway: We have a specific type of customer who we target. If you’re going to go out and sell, you’d better know who you’re selling to and what you’re trying to sell. We seek out the high-volume work. There’s some great CNC single-spindle equipment out there, but they’re not going to be making a 5-cent part like we do. We’re just serving that one segment of customers. For the parts that we specialize in, you can’t buy a piece of equipment that can do it more economically.

Our strategy is that we are what we are. We’re significant in size compared to a lot of shops that are using similar equipment. We can position ourselves by maintaining inventory, working with larger OEMs on just-in-time programs. We feel as though the high-volume, low-cost need is here to stay. Sure, some of it will go away, some will be designed out and some of it does go offshore. But we feel that Alger will be a survivor in this shrinking industry. We have our niche in what we do.

PM: How has low-cost overseas competition affected your business, and what short-term results do you foresee in the industry in general?

JH: Given the type of work we do, we are certainly the type of company with a target on our back for China. With our size, our customer base and what we have to offer our customers, we feel as though there will always be a need for a domestic screw machine source. We’ve positioned ourselves strategically to remain that type of source for many of the OEMs. We can’t stop everything from going offshore, but it won’t all go offshore.

There has even been growing talk recently of the overseas threat dwindling. But you won’t get that same viewpoint from the shop that lost a good chunk of business yesterday. As president of the association now, and first vice president all of last year, I’ve had the chance to visit about 75 different shops throughout the country. One of the things I’ve learned in traveling through all these different companies is that the offshore threat has a lot to do with either subassemblies or completed products.

A good example is a major faucet manufacturer that used to do 80 percent of its own machining. It is now out of the machining business. The company still buys component products, but its volumes are way down and it has faucets—complete lines of faucets—that it buys complete from China. All those component parts—whether it is a screw machine part, a gasket, a filter or a plastic part—are all gone. I think that could be a bigger threat than like component to like component.

It will take a major event for things to slow down over there. American OEMs are still looking over there for low-cost providers. Hopefully, it will turn around. It was a slow process to get the pendulum to swing that way, and when it reverses, it’ll be a slow, gradual process to bring it back.

PM: What is the biggest challenge facing shop owners right now?

JH: Finding quality personnel is the number one issue for everyone I’ve talked to in shops throughout the country. And the issue is compounded on older-technology equipment. The CNC equipment fits the interests of the newer-generation machinists much better. So you offer a young person a blue collar job, and he can use his innate computer knowledge and transfer it to the knowledge he’ll need to run CNC equipment. The gear and cam type of technology is an apprenticeship-type program. It takes years to learn it.

To account for this, we have our own in-house training program throughout. We used to have one man for every two machines on the New Britains. We now have four-man teams on seven machines. So we’ve given up a machine for each four operators combined. But we have a team leader, two skilled machinists right below him and a trainee right below them. We have about six trainees in our New Britain department right now.

PM: How has Alger benefited from the PMPA?

JH: I’m definitely taking away more from the PMPA than I can offer. I’m gaining a wealth of personal knowledge—knowledge that will help Alger Manufacturing. I bring back ideas, and we implement the ones that make sense for us—process improvements and things like that.

It’s amazing how open fellow members are to allow me in their shops. It’s the openness of the members and the networking opportunities. It’s more of a personal and selfish benefit that I and Alger will realize out of the time volunteering to be an officer of the association—much more so than what the association will be able to glean from me.

The concept of the association is to provide the opportunity to share and exchange ideas about what we’re all faced with. If we can learn from each other, we’ll all be better off. There will continue to be casualties in our industry. Smaller shops are at even greater risk for several reasons—lack of capital, less desire to change, dependence on one or two large customers, lack of a succession plan. But the majority of shops—those willing to make the necessary adjustments—will survive. And the survivors are better now than ever before.