Contract Manufacturer Launches into the Global Marketplace with Extensive Restructuring
This technical information has been contributed by
EF Precision Group
Close-tolerance slip rings manufactured by The EF Precision Group, Willow Grove, Pa., for the aerospace industry
Image courtesy of EF Precision
A Philadelphia area manufacturer maximizes its value-added offerings with large portions of innovation and capital investment.
After losing a major client to an overseas supplier several years ago, EF Precision Group of Willow Grove, Pa., began restructuring its machining company to meet the needs of a rapidly expanding global marketplace. The company added new machinery, new manufacturing and assembly processes, and an engineering department, and began retraining its workforce. The company's core competency is now what it calls material management, which includes precision CNC machining, complex assembly, and engineering support. The manufacturer of high-end component parts for the defense, aerospace, and medical products industries recently added ISO-9001 certification to its business resume, and is on track to achieve AS9100 aerospace certification.
Another major aspect of the company's reinvention of itself has been the addition of enterprise resource planning (ERP) software that helps the manufacturer control materials and scheduling. The contract manufacturer's innovative restructuring strategies have paid off handsomely during the past five years. EF Precision Group has grown more than 50% since 2005, posting a reported $18 million in revenue in 2008. Its commitment to superior customer service and its remarkable business turnaround caught the eye of the Greater Philadelphia Chamber of Commerce, which honored EF Precision in February by presenting the company with its Small Business Excellence Award in Manufacturing.
Design-2-Part Magazine caught up with EF Precision Vice President of Business Development Bud Tyler recently to talk about the company's resurgence. Following is an edited transcript of the interview.
D2P: EF Precision lost 75% of its business when its largest client took its work overseas. The company says that it survived by reinventing itself and being innovative: setting up a new management team, investing in CNC equipment, retraining its workforce, and changing its approach to manufacturing. Now, most of the company's work is machining and assembly. Can you tell us more about this?
BT: It's almost a 50/50 split for machining and assembly. The company really thrives when it's doing the turnkey assemblies with engineering involved. The machine shop has been with us forever: We started the machine shop in 1977, and the assembly and engineering phase in 1993. The assembly and engineering areas gave us an opportunity to find other types of work. We also handle castings for our customers. We'll deal with the foundry directly, carry the upfront charges, machine the parts, handle the inventory, and then deliver them to our customer. So the castings are also a value-added service for our customers.
D2P: Can you tell us how you changed your approach to manufacturing?
BT: Back in the days when we were primarily a machine shop, we ended up doing piece parts. When we combined the efforts of assembly and engineering, we became a turnkey operation for our customers. We were able to continue to provide the customer with on-time deliveries, and have them onto their shop floor--if it was a subassembly or a major assembly--for final integration, thus completing all of the aspects of the job.
D2P: Can you tell us about the engineering department that was set up?
BT: We have mechanical, electrical, manufacturing, and design engineers on staff--about five people. We handle machine building design for our medical, pharmaceutical, and semiconductor clients. We will design a whole, complete piece of machinery for them, including software, electronics, mechanical parts, and enclosures.
We will also help the customer through UL (Underwriters Laboratory), CSA, FDA, and GMT requirements, and even OSHA requirements. We have the ability to design circuit boards, but we don't make them, and our electronics engineer can design the software and the other electronics in the machine. We have a couple of companies that we have strategic alliances with that handle the sheet metal parts for us, and we handle all of the machined parts.
This was one more piece to the puzzle to create a tight loop for our customers, so they only have one-stop shopping. Our advantage is they are adding three suppliers with the addition of one company. We're giving them machining, engineering, and assembly under one roof.
D2P: It sounds like you make complete medical devices. Can you give an example of a medical device that you manufacture?
BT: We make devices for back surgery, a device for peritoneal dialysis, eye surgery equipment, and for bone surgery. We are currently working on integrating a production line for a pharmaceutical company. It will get validated in our facility and then we'll install the equipment at the pharmaceutical company's facility. The installation is something new for us over the past two years. I would say that our core competency is now material management--it includes the machine shop, the assembly side of our business, and our engineering offerings.
D2P: A news release mentioned that the company invested in some CNC equipment. Was that machining equipment?
BT: We've added about 12 pieces of machining equipment in the last 24 months. The machining side of the business is very capital-intensive, but if you don't keep up with the latest machinery, you're going to get left behind. We've been using CNC machinery since 1977, when it was NC, which were the old 8-hole punched tapes. Then we gradually moved in CNC machinery.
D2P: The company also stated that you retrained your workforce. Can you tell us about that?
BT: This is always a continuous process. We went through ISO 9001 training, and we now have our certification. In this month (March), we should become AS9100 certified for aerospace work. So we are constantly in the training mode with our employees to make sure that they understand the quality phases of our work.
We do aerospace right now, but we're going to start hitting it a lot harder. I think that it's a good time to get into it because the economy is pretty strong in this area. And having the AS9100 certification will allow us to get involved with some of the larger companies.
D2P: Can you provide some examples of the aerospace parts that you've already been involved with?
BT: We've done parts for the heads-up display for F-16 fighter jets, which are two castings and the slip ring that goes between the two castings. These are very detailed parts. Our client then adds the electronics to the castings. We're also currently making the de-icing system for tail rotors on the Apache helicopter.
D2P: What methodologies did the company use to reinvent itself for global markets?
BT: We embraced continuous improvement, adopted Kaizen methodologies, and hired new salesmen to open up new territories and industries. We concentrated our sales to our strengths: medical, defense, and semiconductor. Continuous improvements are common sense in the manufacturing world; everything seems to change pretty readily these days. Instead of just having an RMP2 system, we now have an ERP (enterprise resource planning) system. We've gone away from doing builds in lot fashion; they are now done in a flow line. It's a matter of keeping pace with the newer technologies, staying up with lean manufacturing. It's improving your production processes, and how these functions work within the company.
The Japanese Kaizen approach allows you to take an assembly and break it down to create a flow line during assembly. It is streamlining the workflow in any given production area. What you want to do is create a queue, and you want the queue measured out in time. Say, for example, the first operation takes one hour, and the second one takes an hour and a half. You might decide to spread them into three operations that each take 50 minutes.
So instead of one guy waiting for one hour, and the next waiting for an hour and a half to be finished, by the time it gets to the third guy, the process is being delayed. By doing it in a flow line approach, you try to take out all of the delays. Kaizen can also be used with the machining area, where you are finding ways to reduce set-up time by setting up things faster, and thereby taking some of the delays out of the process. For example, it could be using a dual pallet system instead of a single pallet.
D2P: How did the measures that you initiated bring about a new period of growth?
New customers were added, current customers hit on some new programs, and, because of our quality efforts in the past, we've won new business for the future. The approach that we've always used is that the best customer is your current customer, and if you can develop more business from them all the better, and you should always strive to do that. We've been successful in doing that, and we've been fortunate that programs that they've been working on have been extended. Programs that were expected to last two or three years are lasting, 10, 12, and 15 years.
So by being a good supplier--understanding the customer's needs, being on top of the service, and delivering a high-quality product--we continue to develop a longer-term relationship with them that involves more products. Obviously, looking for new customers is the hardest part to do. It's a balance between trying to handle existing business at the same time that we're looking for new customers.
D2P: Please describe your facilities, staffing, and the type of work you perform.
BT: We have a 65,000-square-foot, well-maintained facility with 80 employees performing CNC machining, turnkey electromechanical assemblies, and engineering services. Eighteen months ago, we bought two, five-axis machines. Now we're working with five-axis machinery, and we understand how that can save time for setups and how much more efficient they can be, versus some of the older equipment we've been working with. We're trying to buy equipment that can actually lead us into the future. We do use pallets for our machines, and we also use cellular manufacturing in bits and pieces.
D2P: Can you elaborate more on your electromechanical assembly work?
BT: From an assembly standpoint, we build quite a gamut of products. As I mentioned before, we're now working on a pharmaceutical line that is about 110 feet long. It starts out with loading a bottle into the machine, and then comes out as a full bottle at the end. We also make machines that our customers ask us to redesign. We redesigned a dialysis machine that was the size of a table, and made it into a handheld product.
We make Cannondale bicycle cranks. This is one of the world's lightest cranks for high-end bicycles. We collaborated with them not only with our tooling and through the design process, but also through the manufacturing processes. We are a turnkey manufacturer for electromechanical devices: We make a dental imaging machine, and we're currently making a machine that produces a chemical that kills bacteria on vegetables and prolongs their shelf life in the store.
D2P: What is unique about your company?
BT: Our people and their great attitude make the company what it is. Everything that is built has their name on it. It is the pride they take in performing their jobs consistently, and it is the less than 1% employee turnover rate that has existed with the company since its inception in 1977.
You can go out and verbalize a lot of things and sell a lot of things, but you can't sell the pride in ownership that people take when they're building products, machining the products, engineering the products, or inspecting the products. Our slogan is "attitude is everything." It speaks volumes as to how our people approach their jobs. And it's one of the reasons that we've had less than 1% turnover in 30-plus years in business.
D2P: What tolerances can you hold on your parts?
BT: We are known as a close-tolerance, high-precision company, regularly holding tolerances of 0.0005-inch, and working with complex parts versus wide-open tolerance parts. The close-tolerance difficult parts are our niche.
As a company, we've always grown by wanting to handle the toughest parts--the most difficult, complex parts with the closest tolerances. We wanted to separate ourselves from the other machine shops around us. We're not the company to come to if you want a square part with a round hole in it, and the tolerances are ± a tenth. But if you're looking to have that same square part machined on all four sides, for the hole to be bored, and the tolerances to be ± 0.005-inch, then we're the right shop. We've learned to separate ourselves by providing the high-end, complex parts.
D2P: Can you talk about some success stories, where you've solved problems or produced a customer's parts more cost effectively?
BT: We made a football scrubber for the NFL. This is on the simple side, but the reason it was a success was because they go through about 70 or 80 balls during the Super Bowl game. At first, they were making the machine by hand. So the company came to us to ask us if we could design and manufacture a machine for them. We designed a machine that would scrub the balls in preparation for the game. About six or seven years ago, we sold three machines to them. Our machines could do all of the balls in one hour, whereas the handmade machines were taking all day to complete the project.
Another project was for a pharmaceutical company that does a lot of testing for companies that use chemicals. One thing they do is process assays, which are panels of chemicals that go through a testing process. The company had an older system that was not doing the processing very well, and it had downtime of about 6%. The system that we built for them had downtime of less than 3% the entire year. We built and designed a machine--the mechanical and the electronic parts--that is a nine-axis system.
We built the machine with the hope of making their running time better than with past systems. Our system has been running 24/7 for the past three years. They expected that the mean time between failures would be 30 to 35 days out of two months. We far exceeded that, and we've been able to help that customer grow their business exponentially because of the machine that we designed and built for them. We helped them gain quite a large volume of business with our machine, and saved them a significant amount of money. Per part cost went down about 30% to 40%, and their profit margin went up about 210%.
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