Journal of the Minnesota Precision Manufacturing Association

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in a Down Economy by Melissa DeBilzan A look at five companies making significant investments in capital equipment. In the face of weak sales, budget cuts and layoffs, a lot of companies have viewed investments in capital equipment as risky business. But some have viewed them as long-term opportunities, taking advantage of all-time low pricing to set their companies up for post-recession growth. Here is a look at five manufacturers that have made significant investments in capital equipment over the last year … and whether or not they are seeing a return. Yeager Machine Inc. yeagermachine.com Last year Yeager Machine, Inc., an 11-person job shop in Norwood Young America, Minn., purchased about $400,000 in capital equipment. It was a move so bold that it made headlines in the business section of the Star Tribune. But now, that move seems to be paying off. Like most companies, Yeager Machine took a hit in 2009. Sales were sliding fast and revenue dropped nearly 25 percent. Yet the company decided to move forward with plans to open a new facility and purchase three large pieces of equipment. It was “the perfect storm,” according to Yeager Machine President Mike Yeager. “Pricing was at an all-time low,” he said. “I still had access to credit. And I was confident that the recession wasn’t going to last for another year.” Months after installing the new equipment, which consisted of a new coordinate measuring machine and two horizontal machining centers, orders started to pick up. In fact, orders picked up so fast that Yeager was forced to invest another $250,000 in equipment this year. With the addition of two major turning centers and a 5-axis mill, Yeager Machine has doubled its turning capacity and cut turnaround times in half for short-runs and prototypes. But the company isn’t finished yet. Yeager said he is planning to buy another machining center before the end of the year. “Right now, we have to be able to keep up with our customers’ needs or they’ll probably find an alternative,” Yeager said. “Their lead times are very short. We’ve got to be able to respond when they want us to.” Challenge Machine challengemachine.com When Jim Betland started Challenge Machine out of his garage in 1999, he had just one piece of equipment. Since then, he has purchased 13 more and expanded his company’s capabilities to include micromachining prototypes and short-runs for the medical, aviation and defense industries. “We are fast approaching maximum capacity,” said Betland, who moved the company out of his garage and into a permanent facility in Columbia Heights, Minn., in 2000 and now manages 14 employees. “We were up 286 percent during the first quarter of this year compared to last year, and I expect strong growth for the remainder of the year.” Last year Betland purchased a 3-axis horizontal micro-milling machine. This year he is looking to purchase a Haas vertical mill and a Citizen Swiss. A Haas vertical mill would increase capacity by 15 to 20 percent, he said. The Swiss machine 32 | PRECISION MANUFACTURING July | August 2010
Feature | Investing in a down economy is a new venture, but would expand the company’s capabilities and allow it to do a wider variety of prototypes and short-run work. It’s something customers have been asking for. New technology has elevated Challenge Machine to a whole new level, Betland said. For that reason, the company makes a point to send representatives to IMTS and related shows each year. “There aren’t a lot of machines out there for what we’re doing as far as micromachining,” he said. “We’re always looking for new ideas and new equipment in this area.” Proto Labs protolabs.com Proto Labs is a contract manufacturer that specializes in quick turnarounds of low-volume parts. “I think it’s safe to say we’re the fastest in the world at what we do,” said President and CEO Brad Cleveland. “And it’s because of the technology we use.” Proto Labs has invested millions of dollars in software and milling technology to automate all of the manual processes that are necessary before a part can be milled, such as analyzing the geometry of its customers’ parts and programming the tool paths of its machines. As a result, the company can ship finished CNC machined parts or injection molded parts the next day. However, the company is more dependent on software and computing technology than milling technology, Cleveland explained, because the software drives the automation. “We exist because of technology advancements that didn’t exist 12 years ago,” he said. “We are completely dependent on proprietary software that we’ve developed and the Internet in general.” Indeed, technology has fostered rapid turnaround times as well as rapid growth. Since it was founded in 1998, Proto Labs has grown from zero employees to more than 300 employees worldwide. Headquartered in Maple Grove, Minn. the company recently added full scale operations in Europe and Japan. Precision Tool Technologies precisiontooltech.com Precision Tool Technologies, which makes prescription eyewear components, purchased over $2 million in capital equipment over the last year, including precision grinders, laser welders and a laser engraver. It also opened a second facility in Brainerd, Minn. “Five years from now, 80 percent of what we’ll be doing we’re not doing today,” said Jim Goerges, president. “What that expansion equipment allows us to do is work around the clock. It is automatable and can run unattended.” Despite a steep drop in sales and budget cuts, Precision Tool Technologies purchased the equipment anyway, having learned a few lessons from the downturn in 2001. “When we were doing equipment expansion in 2001, we sped right through that deal,” Goerges said. “This downturn is a little deeper and steeper. But we’re still long-term focused. We’re not going to jump off the track because of a short-term blip.” Haberman Machine habermanmachine.com Prior to August of 2009, Haberman Machine had been running 24 hours a day, 7 days a week. Maxed out in capacity, the company decided to purchase additional equipment and open a second facility in Stillwater, just 5 miles away from its Oakdale, Minn., facility. Then the company began to experience a ripple effect from the recession. “We had a tough fourth quarter last year and first quarter this year,” said Kimberly Arrigoni, Haberman’s controller. “The slowdown was painful on top of our expansion. Our second quarter has been much better and signs are there that we are getting through it.” In November, Haberman Machine opened a 10,000-square-foot facility and is running currently both facilities 6 days a week, 24 hours a day. Its goal is to produce parts “better, faster and cheaper” in order to compete in today’s marketplace. “We were fortunate to be able to take advantage of the sales opportunity on our building and equipment,” said Scott Ness, Haberman’s sales engineer. “For once, we were at the right place and time to be able to capitalize on what the market was offering.” The equipment Haberman Machine purchased was a Zeiss coordinate measuring machine, two Fanuc RoboDrills, and eight Kitamura horizontals, two of which are 5-axis. The company also purchased a central mix and makeup system to continuously recycle its coolant, just one of the many elements that makes its building a green manufacturing facility. In fact, Haberman is the only manufacturer in Minnesota with this type of a fully automated system. “Everything is set up to run 24 hours a day for lights out manufacturing,” Ness said. “We positioned our organization to be able to support our current customer base and be ready to expand with new customers once the economy recovers fully.” PM Melissa DeBilzan is a contributing writer for Intrinxec Management, Inc. She can be reached at melissa@mpma.com. July | August 2010 PRECISION MANUFACTURING | 33
Page 1 and 2: J u l y / A u g u s t 2 0 1 0 M A N
Page 3 and 4: IMTS 2O1O Minnesota Precision Manuf
Page 5 and 6: TABLE | OF CONTENTS July | August 2
Page 7 and 8: The FEDERATED Insurance Companies H
Page 9 and 10: PM: What do you expect from IMTS 20
Page 11 and 12: JOIN MPMA AT IMTS 2010 Hegman Machi
Page 13 and 14: cover | IMTS 2010 Ellison Technolog
Page 16 and 17: Now is the time to take your shot!
Page 18 and 19: shop | profile Razor Edge Systems,
Page 20 and 21: MADE | IN MINNESOTA Transforming th
Page 22 and 23: 3 Locations to serve You: Burnsvill
Page 24 and 25: Makino ADVANTiGE Visit us at IMTS,
Page 26 and 27: Industry Profile Yeager Machine Th
Page 28 and 29: Industry Profile Yeager Machine Pr
Page 30 and 31: Manufacturing | Mat ters Manufactur
Page 34 and 35: Manufacturing | Marvels Getting a C
Page 36 and 37: Industry Profile | Command Tooling
Page 38 and 39: 38 | PRECISION MANUFACTURING July |
Page 40 and 41: What’s Happening at Mpma? MPMA Ma
Page 42 and 43: MANUFACTURERS’ | MARKETPLACE Mach
Page 44 and 45: MANUFACTURERS’ | MARKETPLACE Comp
Page 46 and 47: MEMBER | DIRECTORY 4.625” x 7.375
Page 48 and 49: MEMBER | DIRECTORY Minnesota State
Page 50 and 51: 17,000 sq. feet. booth # S-8100 Vis
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