Ahead of the Curve
As the 1980s drew to a close, Tad Korndoerfer knew that if his Long Island, New York-based company was to survive, it was going to have to undergo a paradigm shift in the way it did business. No longer, he felt, could Action Machined Products be content to compete in the commodity-type business on which it had grown up. Price pressures from the consuming industries were eating the margins of Action Machined Products. Plus, while low cost foreign competition was just starting to become a factor in the precision machined products industry, it was obvious which way things were headed. Action Machined Products, which up until then produced the lion’s share of its parts on aging Brown&Sharpe machinery, needed to evolve to the next level.
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As the 1980s drew to a close, Tad Korndoerfer knew that if his Long Island, New York-based company was to survive, it was going to have to undergo a paradigm shift in the way it did business. No longer, he felt, could Action Machined Products be content to compete in the commodity-type business on which it had grown up. Price pressures from the consuming industries were eating the margins of Action Machined Products. Plus, while low cost foreign competition was just starting to become a factor in the precision machined products industry, it was obvious which way things were headed. Action Machined Products, which up until then produced the lion’s share of its parts on aging Brown & Sharpe machinery, needed to evolve to the next level.
So Mr. Korndoerfer, who once worked for Brown & Sharpe, decided to completely overhaul all the operations within the 8,700-square-foot shop his father founded in 1967, replacing the obsolete equipment with new state-of-the-art CNC machines. Noting that such a prospect can seem daunting and difficult to achieve, Mr. Korndoerfer admits, “How we managed it was to phase it in over a period of time, because logistically it simply isn’t realistic to attempt such a drastic change all at once. These moves have to be steady but gradual transitions.”
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Not only did Action Machined Products transition out of the old machines, but it also transitioned out of its entire business philosophy, even phasing out its traditional customer base. For all practical purposes, the company changed 20 years of business practices and culture on the fly. As Mr. Korndoerfer explains, “We evaluate our customers every year and determine which of these companies are not right for us. We didn’t offend anybody, but we began to pull away and move toward other customers.”
The company had traditionally used 12L14 carbon bar, 2011 aluminum and brass to produce bike parts, appliances, typewriters and copy machines in the so-called “commercial lines.” Many of these markets have shrunk dramatically or disappeared altogether with the advent of the computer chip. “Consequently,” Mr. Korndoerfer says, “that kind of helped us to look at things and say, what other parts are going to be phased out?”
Finding Niche Markets
As the company phased in the technologically superior CNC machines, gaining the ability to produce closer tolerance parts, it moved to stake its claim in niche markets with higher value and lower volume. One of the primary industries Action Machined Products pursued was the aerospace field. That was the logical move with two major aerospace companies, Fairchild and Northrop Grumman, doing business on Long Island.
“We wanted to entertain some of that business although we didn’t want to be in totally,” Mr. Korndoerfer observes, noting the risky nature of being entirely dependent on a market with a history of major spikes and drops. Hence, Action also branched out into other fields, the semiconductor and highly challenging medical field to name two.
When told that Pete Rosenkrands, president of the Precision Machined Products Association, said that companies need to move away from the commodity-type products that face critical pricing pressures from customers and stiff overseas competition, Mr. Korndoerfer agreed wholeheartedly. “Pete’s absolutely right! We’re not the size of Rosenkrands’ company [A.B. Heller], but we’re successful with this configuration of customers. We’re like a delicatessen or a boutique. I know that sounds crazy, but we’ll take on any order, even small ones—it doesn’t matter.”
Mr. Korndoerfer, who is vice president of PMPA, believes it is an invaluable resource at Action’s disposal. “The PMPA is a collection of companies dedicated to progress in their field,” Mr. Korndoerfer says. He goes on to add, “Not only does PMPA offer access to invaluable educational seminars on everything from new processes to hiring practices, it also has an amazing innovative information pooling system. You can draw on other companies’ experiences in the field. This saves immensely on trial and error, such as working with a new material or trying to implement new techniques.” Indeed, Mr. Korndoerfer sees an obvious advantage to his membership in the PMPA as Action continues its never-ending evolution.
The move toward the higher value markets also provided an incentive in the area of employee retention. Knowing the competitive nature of the machining industry, it was imperative to be able to attract highly trained, multi-faceted, critical thinking people to handle the needs of competing in the exacting markets Action was expanding into. Mr. Korndoerfer observes, “If I could have personnel capable of using the more complex technology, it would allow me to minimize the number of people I need, so I could invest more in the quality of my people.” It was also an asset to have, as Mr. Korndoerfer explains, “. . . people who were freer thinkers, people who could challenge me, and people who could bounce back ideas to me.”
A Better Educated, More Involved Workforce
During the intervening years, Action has seen its workforce grow more educated and more involved in the production process. As the company changed, so did its hiring requirements, as the company searched for employees who would be willing and able to meet the challenges Action Machined Products was now facing.
The move that started 15 years ago is still an ongoing evolutionary process. The company continues to invest in new machinery and training in order to keep its employees and the equipment at their disposal on the cutting edge. Initially, the company had upgraded to three-axis CNC machines; then, as it mastered the technology, it added four-axis machines. “When we got good with those,” Mr. Korndoerfer remarks, “We added a five-axis Swiss machine.”
Action Machined Products has been a CNC shop for the past decade and recently added six- and nine-axis Swiss style machines to its arsenal. Not only has the new technology allowed the company to branch into fields that require the use of more exotic and difficult-to-work-with metals—such as Inconels, Monels and other super alloys—it has also helped to keep labor costs down. The use of the multi-axis machines has allowed Action Machined Products to condense what used to be multiple step operations down to one machine. This eliminated steps and personnel and increased efficiency. “The number of people we need to have at that level is smaller than it used to be,” Mr. Korndoerfer says. Another plus is that he gets to sit back and “play coach.” “We couldn’t do that with the old machines,” he says, grinning.
Meanwhile, the company has seen its sales increase during the transition. “We’ve been able to significantly increase our sales and production with the same number of people, or fewer. Not only have we invested in the machinery, but we’ve invested in the personnel who can maximize the benefits from these capital improvements,” Mr. Korndoerfer explains.
As a result of the dramatic shift in technology and the advent of the more multi-dimensional work force, Mr. Korndoerfer observes that Action has been able to “raise the bar” on the production floor, allowing it to tackle projects from a sales perspective that many other companies in the field could not.
Action Machined Products feels that its commitment to constant improvement, both in personnel and machinery, coupled with its partnership with the PMPA, are all necessary to maintain a thriving business in this changing industry. “You’ve got to be one step ahead,” Mr. Korndoerfer remarks. “And that can’t happen unless you’re committed to progress on all fronts.”