2010: Valuable and stressful: People & Companies

December 2010 Manager's Desk column for Cutting Tool Engineering reflects on lessons learned from 2010.

December 15, 2010By Keith Jennings

It’s hard to believe December is already upon us, but the Cutting Tool Engineering calendar on my wall reminds me of that every day whether I like it or not. Reflecting on the previous year, it’s clear it was a volatile one from a business standpoint. But, for me, the significance of 2010 represents a year since my dad retired, leaving all management responsibilities to me. That resulted in an interesting combination of stress and learning.

Most importantly, I’ve realized just how much responsibility it takes to own and manage a relatively large shop with more than 40 employees, lots of machines, all housed in a large building. On top of everything else, managing such an operation with fewer employees is challenging. Some left and some were terminated, but replacing them isn’t a quick fix. As a result, we’ve all had to juggle various responsibilities to ensure our service and quality is still high. After all, we need the business.

My brother describes the lingering difficulties from Dad’s reign as “legacy issues.” While dealing with these issues can be frustrating, I try to keep in mind it takes patience. Reengineering a business can take several years and lots of costly trial and error. Reinventing the wheel doesn’t necessarily make sense either, and the comments and advice from many CTE readers have helped prevent much reinventing. Hearing what others are dealing with and how their situations were handled has been encouraging. Getting that feedback makes it clear our shop can effectively compete and be around for many years. Some have written off the value of domestic parts production, but that’s unwise. U.S. shops are still the best choice, even in a global economy.

Another interesting concept that’s been validated for me in 2010 is the good ol’ 80/20 rule. It seems to be consistent no matter how much we spend on marketing, meaning about 80 percent of business comes from about 20 percent of the customers. As those top customers get busier, we follow. If they slow down, we also follow.

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Our readers have machining on the brain! CTE readers are involved in purchasing every product used in machining. Including, 92% cutting tools 74% metalcutting machine tools 71% toolholding 69% coolants, lubricants, related products 68% workholding

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This doesn’t mean we forego mining for new business, but it shows that a shop needs to carefully select what new business opportunities to target, especially because many quote requests can tie up estimators for hours or days. Investing a lot of time and energy into an RFQ only to be told “that’s too high” makes you wish you hadn’t been burdened by that project after all. In most cases, had I known price was going to be the driving factor, I probably would’ve politely declined.

Screening RFQs and the companies requesting them is important. If the potential customers are not financially sound and prepared to pay within terms, they’re not worth your time. Few of us have time to quote special projects at commodity prices, much less wait 60 days to be paid.

As 2010 wraps up, it’s become clear that working through these issues makes one better and wiser. Much has been accomplished, but there’s still much to do. Whatever may arise will certainly be discussed in this column. I’m looking forward to an even better year in 2011 and hope you’re there to ride it out with me. Happy holidays and stay in touch!