The Price School – USC Center for Economic Development regularly meets with manufacturing business owners, managers and service providers on behalf of AMP SoCal to learn how the collaboration can support the region’s companies – building a stronger, better Southern California. AMP SoCal Industry Profiles offer a glance at different businesses and the range of concerns, solutions and best practices that local manufacturers encounter every day.
Operations Manager, Sheralee Connors has been employed with Savage Machining, Inc. for 17 years. She began her tenure with Savage Machining as a part-time office manager/accounting clerk and has grown with the company ever since. At one point Sheralee was working at her regular job, plus part-time at Savage Machining, then working at another machining company in the evening, all while going to school part-time. Her hard work and dedication paid off, Sheralee now oversees all the business operations within Savage Machining. But she’s still balancing multiple roles, Sheralee is also a mother who manages a growing business alongside a growing family with three children.
Q: Could you please provide us with some background on Savage Machining?
SC: Savage Machining offers value-added services, processing services and custom machining products. We also occasionally do prototype work. 65% of our customers come from aerospace, 20% from defense, and the rest are a mix of aviation, commercial, or automotive work. I think one of the reasons we stand out as a company is that we deliver exceptional quality services, and strive to get our customers their products on time.
Q: Can you give us an idea of how has Savage Machining has fared since the recession?
SC: We were seriously impacted by the sequester. In 2012 we experienced nearly a 75% reduction in business, from over one million dollars to $255,000. We had a 42% downturn in sales from just one of our customers. This was a very difficult time and we are still in the business of recovery; we have been trying to do everything that we can to keep our business moving forward in spite of those cutbacks. We have been able to gain a few employees since then, increasing from 16 to 20.
Q: What other trends have you noticed in the supply chain for the A&D industry?
SC: We have been involved with a “just-in-time” system, where we are required to make a certain volume of products at a particular price. In this system customers choose a staggered delivery throughout the year, but we are seeing a growing trend toward customers wanting a quick two-week turnaround. We custom manufacture products to customers’ specifications, so this fast of a turnaround may not always be possible. This trend has its pros and cons: there is a longer guaranteed revenue stream, but also many upfront costs including materials and labor, which can be difficult for small business like us. Major obstacle is being able to front those costs and help keep that supply chain going.
Q: In terms of the impact of this quick turnaround, what has the process been like when working with your vendors?
SC: It’s very taxing. I have certain vendors who are understanding and able to accommodate when we aren’t paid up front. I also have other vendors who are not willing to work with me, which has put a strain on several long-term relationships that we have with other suppliers; some of them want to be a part of that opportunity while some people do not. We want the work, but the catch with quick turnarounds is whether or not we can afford the monetary cost and the cost of relationships.
Q: How do you see the outlook going forward for aerospace?
SC: Our company and owner feel that the new President is going to open up many opportunities for growth in the A&D sector, which is positive because it will allow growth for smaller companies. I do not think it will change overnight, but rather I think we will see a slow and steady growth.
Q: How has Savage Machining evolved in terms of the number of employees, the types of positions you hire for, and investments in new technology or equipment at your facility?
SC: We recently hired a few new employees because we have seen an increase in orders from several of our primary customers. Most of the positions that have opened are for either an operator, a lead machinist, or a programmer, and if we grow further these will be the positions we are looking for. In terms of investments, we haven’t had the opportunity to invest in new technology because we are still too busy recovering; we would like to invest in newer equipment that is more efficient with more diversified capabilities, but we cannot afford to do that now. As we grow and see an increase in orders we will be able to close that gap and streamline our processes and give our customers products at a cheaper price. In the future we would be interested in investing in a screw machine or machines with more multi-axis work, and possibly 3D printing for additive manufacturing.
Q: What do you see as some of the major obstacles or challenges to grow manufacturing in our region?
SC: From our standpoint, I think two major challenges are foreign competition and outsourcing work to other countries are challenges, as well as the increased pressure to lower costs. Customers expect business to be innovative and to find ways to produce products more efficiently and more cost-effectively. From the small business perspective, regulations and requirements from OEMs are an obstacle, so resources for how to handle them would be helpful.
Q: Do you have any relationships with an OEM, like a mentor – protégé relationships? Are you involved in any mentorship programs?
SC: We have relationships with the people at the OEMs we have contact with, but not in the mentor capacity. I think it would be beneficial to have some sort of ongoing relationships with OEMs to help walk us through that process in a cost effective way, because consultants are expensive for small businesses. When information is being disseminated to a large group of vendors it’s great to sit down in a room with 150-500 other vendors, but OEMs should also have breakout sessions with small groups to discuss concerns and available resources for small businesses.
Q: What kinds of services has the SBDC been providing you with?
SC: They have been helpful in providing us with assistance on the financial side by helping me forecast our projected sales. They are also helping us with our business plan so that we can get additional funding to assist with upfront costs. Next, we will work on how to better plan future investments and cash flow analysis. We want to be prepared in the event that something like sequestration happens again, and we want to be prepared to make investments in new technology and additive manufacturing.
Q: Do you think finding skilled machinists in the region has been a challenge?
SC: It’s very difficult to find people with the correct expertise. In Ventura County I partner with the manufacturers’ guild, which is trying to establish a program to educate and certify individuals to become machinists or programmers. One of the guild’s goals is to train people who are already in the workforce but may need a little more training to get to that next level. There is a coalition here in Ventura County that incorporates input from business owners and educators to figure out how to address the skill needs in the workplace, and how to get that information down to the students.
Q: Are there any community colleges in your area that are training the workforce?
SC: Pierce College has a great program; I have actually hired four people from the program and have been very pleased with the employees, which is very promising. The Goodwill works with Pierce College to put on a job fair to connect students with possible employers.
Q: What do you see as the major opportunities in the short term and long term?
SC: I think a lot of the OEMs plan in advance, so there is a lot opportunity to participate in long-term agreements or contracts. The SBDCs are a great way to help you find those opportunities with the government and other OEMs. In addition, there is a lot going on in the space industry and personal space travel, so I think there is opportunity there if you can find it. One of our primary customers does drones, so we have participated in several different projects that have been launched. I think there is going to be a lot of opportunity as technology expands and changes, so I definitely think that supply chain is a major growth segment.
Q: Is there anything you think AMP SoCal can do to support firms and the industry as a whole?
SC: I think AMP SoCal is doing a great job. I think just making people aware of AMP SoCal its resources, and letting people know how to get involved will benefit the A&D industry.