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August • September 2005 • Vol. XXIII No. 6 • An Arnold Publication |
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Aftermarket Aforethought |
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Story and photos by C. H. Bush, editor |
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For a machining job shop to get an FAA repair station certificate is similar to a hungry kid getting a key to a candy store. The kid looks around, eyes wide, drooling over the variety of yummies available, sometimes not knowing where to start gobbling first. In the same way, the job shop, with FAA certificate in hand, literally can become deluged by requests for quotes. “Our problem is definitely similar to that kid’s,” says Adam Nelson, general manager of Garden Grove, CA’s Nelson Engineering, Inc., a company that received its repair station certificate about 6 months ago. “It’s easy to be overwhelmed by all the business that can come your way just in a single day. For instance, we literally can get 50-60 RFQs per day. But we’re smarter than that hypothetical kid. We know we can’t be all things to all people, so we’ve learned to focus our efforts on the things we can do best, things we’re already geared up to do.” With 40 employees occupying an 18,000 sq ft facility and producing $5 million plus in annual sales, Nelson Engineering is a highly successful machining and manufacturing job shop serving tier 2 subcontractors in the military and aerospace markets. They also have customers in the automotive aftermarket and medical industries. Founded in 1986 by Nelson’s father, Don, the company historically has specialized in providing vertical and horizontal milling, turning, gear grinding and hobbing and some screw machine services. Their customers include people like Parker Hannifin and Kaiser Electro Precision. “We’ve been doing job shop work for a long time,” Nelson says. “We were also doing some assembly work, things like gear boxes, but we couldn’t quite figure out why we weren’t getting more of it or where the business was coming from. And then we hired Anthony Rodriguez, who is our director of business development, and he said, ‘Look, you want more of this kind of business, you have to be doing repair station work.’ So we started looking into it more, and about a year and a half ago the pieces of the puzzle began coming together. Once we made the decision to go for repair station certification, it took us a solid year of effort of going back and forth with the FAA to do it. We’re in contact with the FAA weekly or at a minimum twice or three times a month. Plus they come into our facility every month or two to make sure we’re doing things right. Compared to the FAA certification, ISO is a piece of cake.” Aftermarket Aforethought Probably the biggest benefit of gaining the FAA certification is that it opened a large new market for Nelson Engineering “The whole purpose of getting the certificate is to expand our sales by opening up the military and commercial aerospace repair aftermarkets,” Nelson says. “Getting a certificate is a very stringent process, and it’s expensive, so we put a lot of thought into doing it before we jumped in. In the end, though, it allows you to receive components off an aircraft and perform overhaul and repairs, a huge source of potential sales. We’re already seeing the benefits in increased sales and profits.” According to Nelson, the certificate doesn’t allow his company to make spare parts. Those he has to buy. “The way it works is, if you need an OEM component to make a repair, even if you could make the component, you can’t do it. You have to buy that part from an approved manufacturer. You might say we’re mechanics licensed to repair things like actuators, integrated drive generators, pneumatic components, hydraulic components, that sort of thing. Even so, the certificate has opened up vast new profitable sales possibilities for us.” But like anything else, there costs associated with getting the repair work in house. Nelson: “For one thing, you have to have the approved repair manuals for anything you want to repair. And, if you think of all the different aircraft still flying out there, you’re talking about millions of parts. Getting a library of the manuals for the parts we want to do was our biggest challenge. You either have to go out and buy the manuals or find people willing to let you borrow them just to look at for quoting purposes. We solved the problem by getting on a subscription service for certain types of airline components. It would cost a fortune to try to own all the manuals. Our goal is to slowly grow the list of parts we repair and accumulate the manuals as we go. That’s the only practical way to do it.” Another advantage the certificate offers is to eliminate the need for an outside inspector. “That’s because when you have a certificate, you are the inspector,” Nelson explains. “When we’re done with a repair, all we have to do is hang our ‘8130’ tag on it and ship it back to the airline. No inspection. It goes straight onto the aircraft.” To achieve that certificate, repair employees must be certified by the FAA. Job Shop Cost Cutting Although excited about and pleased with their new FAA certification, Nelson Engineering has not neglected the bread-and-butter job-shop side of its business. “Concurrent with our efforts to gain the FAA certificate, we also implemented a major cost-cutting program,” Nelson says. “In a way you can say we had a two-pronged program. One to gain new sales and one to increase profits by cutting costs. So far we’ve been successful with both programs.” One of the early steps taken was to implement the Parker Hannifin 5S program. 5S basically means to Sort, Straighten, Shine, Standardize and Sustain the program. “We got rid of everything not needed for current work, eliminated the clutter,” Nelson says. “We rearranged things to make them easily visible to eliminate wasting time hunting for stuff. We cleaned up the shop and set that as part of the everyday routine. Finally we’ve been working to standardize all our internal processes so that everyone does things the same way all the time. The 5S is a good, common sense approach to managing your shop.” New Tool Room Another major step the company took was to add a full-time toolroom and employee. “We bought a Zoller tool presetter and tool management software package,” Nelson says. “What we found was that if a setup took four hours, two hours of that was wasted sending the guy to look for perishable tools and toolholders and then building the setup and putting it in the machine. Now we do all that ahead of time during the programming phase of a project. Our programmers identify the perishable tools we need ahead of time and the toolroom has everything ready when we need it. That's been a tremendous cost cutting program.” Nelson, who got a degree in industrial engineering and manufacturing engineering in college, talks about doing things in parallel. “We’re really trying to cut down on non-value-added time,” he says. “Where things used to be done in sequence and often just sat around waiting, now if operations can be done simultaneously, we do them. That’s another big cost saver. To make these efforts become even more efficient, we’re trying to become a completely paperless shop. We’re writing our own custom software, which we hope to have fully implemented by December at the latest. Once that’s online, every machine will have its own computer tied in. There won’t be any more paper, except blueprints to contend with, and those will have a barcode label on them.” Grinding Down Outsourcing Costs As part of its cost-cutting program, Nelson Engineering also closely analysed the work they were outsourcing. “We have some great vendors, but profit and turnaround time are important for us, so we decided to analyze what we were doing. We just asked, ‘How much does it cost to buy it out? And how much would it cost to do it ourselves? If the answer came out right, we would bring the work inside.” One of the outsourcing areas Nelson analyzed was grinding. “We were spending a couple of hundred thousand a year on grinding,” he says, “so that was a definite candidate. In the end we purchased a Studer S31 universal grinder, which allows us to do six different types of grinding with one machine. With that machine we can do OD and ID cylindrical and thread grinding and we can do OD and ID form grinding of weird shaped parts like cams. The machine wasn’t cheap, but the potential for us is great and the payoff time is reasonable.” Nelson says he looked at two other major grinders, but the Studer offered all six grinding variations as standard. “The other machines were excellent, too,” he says, “but the Studer had a larger installed base locally, I believe, and that helped us make the decision. Another thing was the service. Studer is one of the best company's I've ever dealt with when it comes to support. For the first six months after we got the machine, Nick Schuetz, the Studer sales manager and Dennis Breckner from Dmark Corporation, their distributor, were in here two or three times a month, making sure we were okay. The truth is we needed their help, but not because of the machine. The machine is a piece of cake to learn and use. Our problem was that being a good grinder takes a lot of experience to learn how not to burn and crack materials.” One of the mistakes Nelson Engineering made in the beginning was not quite understanding the difference between grinding and normal machining. “The biggest difference between machining and grinding is that in machining, most of the heat build up is dissipated in your chips,” Nelson explains. “When you’re grinding, most of the heat is transferred to the part. So you burn parts if you don’t do it right. The trouble is that you don’t know you’ve ruined an expensive part until you send it in for testing. A part can look beautiful on the outside, but is just no good under testing.” Having learned that a grinder is not just “another” cutting machine, Nelson says they buckled down and did things right. “We finally took one of our best machinists and put him on the Studer to learn grinding,” he says. “Once he realized the kinds of things to watch out for, he’s done a great job for us. We’ve ground thousands of parts successfully and the machine has been breaking even for us, even while we’ve learned the art of grinding.” Ultimate Goal As part of its cost cutting program, Nelson also bought a Reischauer CNC gear grinder., a Phauter gear hobber, a Star SV32J2 CNC screw machine, and a new Brown & Sharpe PMMC coordinate measuring machine.
“Actually, Nelson Engineering grew
during the last recession,” Nelson says. “In fact, we bought a lot of our new
equipment by taking advantage of some of the deals that were out there during
that time.” “Our goal is to add more value to our customers products,” he says. “We want to do more complete projects including assembly. We’re not there yet, but we’re working on it. We’ll make it.”
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