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From the Desk of Jack Healy

Small Manufacturers: Key Drivers of Innovation

By Jack Healy, Director, MassMEP

While the public's view of domestic manufacturing becomes defined by the media's treatment of Detroit's automotive sector, the real story of US manufacturing continues to be untold.  The reality is that domestic manufacturing in Massachusetts has evolved. What we are seeing is growth in the small manufacturing sector (companies of less than 500 employees) and its ability to overcome the huge global challenges that are transforming all manufacturing. As reported by the US Bureau of Census, and nowhere else, the 6,935 small manufacturing enterprises (SME's) are, for the first time in our economic history,  employing more personnel than the larger firms of over 500 employees.

Listed below is a summary of the sector changes within the manufacturing community for the period immediately following the related economic down turn associated with 9/11/01.

U.S. Census Bureau Manufacturing Sector Statistics

Number of Mfg. Establishments
2006
2002
Diff.
Companies over 500 employees
624
738
-15%
Companies under 500 employees
7,935
7,948
--
 
 
 
 
Total Number of Employees
 
 
 
Companies over 500 employees
127,364
167,433
-24%
Companies under 500 employees
147,816
162,917
-9%

As noted in Northeastern's recent report, "Staying Power: The Future of Manufacturing in Massachusetts," it "was remarkable, given the situation facing manufacturing across the United States, that the state still sustains a manufacturing base that employs nearly 300,000 people."  

To this we would add that the remarkable staying power of the SME community, despite market disruption and economic pressure, is the result of the constant reinvention of the SME's. They realize, more than most, that the alternative is to simply go out of business.  This  phenomenon been true for generations and there are very few SME's that are still dealing with the same customers or the same products with which they originally started.

We see this dynamic SME community of over 7,000 plants as one of the state's most valuable economic assets. Their constant efforts to reinvent themselves result in continued innovation and growth.  Some typical examples of this are:

Wirefab, Inc
Wirefab is a leading manufacturer of custom wire, tube, and sheet metal fabrications servicing the commercial food industries, retail businesses, as well as science, military, medical, and high tech industries.  Based in Worcester, Mass, Wirefab operates in an 80,000 square foot manufacturing and distribution facility and was founded in 1955 by Asbed B. Zarkarian. Zarkarian's simple philosophy is that business built on quality will thrive.   The organization continues to do just that. Fifty (50) years later and now an employee owned company, they have broadened their product offerings from wire to steel and other metal applications. In addition to being a leading supplier of wire products to multiple industries, Wirefab also offers custom welding services to customers who may be seeking the most cost effective alternative for their product assembly, regardless of the type of metal used.

Over the years, thanks to their founder's  philosophy, Wirefab has invested millions of dollars in equipment, enabling them to contribute their part to the dramatic increase in the state's overall manufacturing productivity. This continued capital investment, coupled with their internal expertise in robotics  has allowed Wirefab to cut labor costs by 50% and to provide just in time service to their clients. It has also opened new markets. Capital investment and technical expertise, coupled with outstanding customer service, have allowed Wirefab to continue to compete in today's  business environment.  The challenges of today are best summed up by Wirefab's President, Jim Samsul , who stated, "You only get one shot with clients. You need to do it right and on time. There is no patience remaining in industry."

Cryogenic Institute of New England, Inc.
Started in 2002 by Robin Rhodes, President and Owner, Cryogenic Institute of New England is based in Worcester, Mass. The company offers cryogenic deburring and deflashing, as well as cryogenic tempering of steel and other metals.  When the company started, it was focused on cryogenic treatment, deep freezing (opposite of heat treating), of various metals, cutting tools, dies, and golf club heads to increase longevity and reduce replacement costs. Various aspects of cryogenics have been around for hundreds of years.  Swiss and German watchmakers used a process called seasoning, where they would take their steel and place it outside over the winter season in order to make their metal more stable and easier to work with.

Because the cryogenic process is not really well understood or utilized, Rhodes saw a demand for other types of applications and started offering deflashing and deburring freeze processes, along with thermal cycling for stress relief.  The institute is now working with treating the mirrors that will replace the Hubell telescope and other military applications. In addition, the Institute now offers environmentally friendly dry ice blasting cleaning, done at the customers site to clean machinery, without leaving any residue behind. These changes to their core competencies have repositioned the Institute to expand to the point where their original business of freezing metal accounts for only 25% of sales.

Valkyrie  Co.
Valkyrie is a leather goods manufacturer founded in 1969. At one point, they employed more than 600 people, before low cost overseas manufacturing firms came to dominate the sector. Today, James Devaney and his sons, Bill and Rob, owners of a 118,000 sq. ft. facility, continue to produce high end handbags, wallets, and other accessories under the name Abas with a reduced staff of 70 people. Last year they decided to enter into an agreement to manufacture top of the line Nocona baseball gloves, under the company name of "Good Glove USA. With this addition, the Devaney's are also pursuing the creation of a "Cut and Sew Incubator" on their property. In addition to Abas and Good Glove USA, the incubator will grow to include businesses of all sizes that can make use of the benefits of maintaining a manufacturing facility that provides specialty products, short runs, rapid delivery, as well as proximity to domestically located product development.  The incubator offers all of these.

Given the constant stream of bad news about the stupid and self-destructive behavior of business people in all sorts of industries, the MEP is quite pleased to be working with innovative people like Samsul , Rhodes, and Devaney. They are working every day and in every way to reinvent their organizations to  stay competitive. We are lucky to have a community of people like this so close to home.

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