Ask almost anyone in the world about California’s Silicon Valley, and they’ll know that it is the home of the computer chip and lots of high-tech companies, including Apple Computer, Hewlett-Packard, Lockheed Aerospace Company and countless others. Even if they haven’t read about the valley, they’ll remember it from the James Bond movie A View to a Kill, in which the bad guys tried to achieve a monopoly on microchips by creating an earthquake to destroy the entire valley.

What they probably won’t know is that the concentration of high-tech companies in the area was the brainchild of Stanford University’s Professor Frederick Terman who, as professor of engineering, encouraged many of the now-famous valley startup companies. In 1951 Stanford, in need of money, began leasing some of it’s 8000 acres of land to attract high-tech companies who would benefit from the nearby university and vice versa, thus forming the original Stanford Industrial Park.

But it wasn’t until 1971 that journalist Don Hoefler, at the suggestion of Ralph Vaerst, then president of Ion Equipment, used the term Silicon Valley in a couple of articles in a tabloid newspaper, Electronic News. The term instantly caught on, and the area from the San Francisco Bay on the east, the Santa Cruz Mountains on the west, and the Coast Range to the southeast has been the Silicon Valley ever since.

Small Job Shop Amongst Giants

So, as it happens, in 1968, when a young machinist named Art Armstrong started up a job shop in a corner of his boss’s plant the name Silicon Valley had not yet been born.

“Before starting my own company, I supervised a crew of machinists for a company in the valley,” he recalls. “Then, one day, I got a called ElectroSound. They were having trouble cutting .005” thick mylar tape at forty-five degrees for eight-track tapes. They called my previous employer and asked him if he could produce the parts for them. He told them no, but that he knew someone who could. The parts had a lot of surface grinding on them, and not too many people knew how to grind. I visited ElectroSound, and I'll never forget the look on the guy’s face when he saw how young I was. He had eight tool and die makers struggling to get out ten of the assemblies a week. I was only 26 years old at the time, and I said, ‘No problem.’ They were reluctant to give me the order because of my age. So I said, ‘Okay, give me the order for ten pieces and I'll prove to you I can make them.’ The last thing he told me was, ‘Hey, they have to run 2,500 cycles without failing.’ So I said ‘Okay, no problem.’

Armstrong used an old Boyer Schultz grinder and rented some space in one corner of his boss’s building.

“I made the first ten parts,” he says, “and they put three of them on a test bed. After 3,500 cycles they were still running. In the end they were getting over 5,000 cycles out of them, which really hurt me in the long run, because the only reason they needed so many assemblies in the first place was to replace the ones that failed.”

Conservative Business Philosophy

Prior to starting his business, Armstrong went to college at night for 5 years.

“I studied business management and industrial engineering,” he says. “In the beginning, of course, the business management didn’t play much of a role. When you first start up, your problems are mostly technical, but as you grow, business management becomes much more important. Once you have good employees to handle the technical end, your business know-how comes to the front. I was luckier than other shop because in addition to my technical shop training, I had a good formal education.”

Although Armstrong says he has a very conservative philosophy when it comes to expansion, within five years of start-up he had 50 employees.
Armstrong: “I believe in steady growth, not jumping in and going too fast just because the demand is high at the moment. You is only so much cash flow coming in, and I don’t believe in taking big chances to buy equipment. I borrowed to buy equipment, of course, but I always made sure I had adequate working capital only hand. That’s the key. No matter how much sunshine there is now, eventually it will rain. If you’re not prepared for it, it’s your own fault.”

Armstrong’s philisophy has worked well for him. His company now employs 150 people working in 46,000 sq ft of floor space in four buildings located in Sunnyvale and Auburn, California. Three of the buildings are owned by Armstrong. His company services now include turnkey manufacturing, electro-mechanical assembly, lapping and grinding, precision machining, inventory control and laser interferometer surface analysis, among others.

“We’re divided about 60-40 between job shop and subcontract manufacturing,” he says. “We have customers in aerospace, medical, electronics and a lot of other major industries. Most of our jobs are short run, 20 to 50 parts, with some going as high as 1000 parts. That means we have to have a lot of jobs going through our facility.”

Armstrong’s People Philosophy

Armstrong knows that you can’t build a large, successful organization without hiring and training the right kinds of people. To achieve this he has developed a somewhat unique approach to hiring.

“I learned as a supervisor early on that some people have it, and some people don't,” he says. “If you want somebody to do something that you’re doing yourself, you have to spend time training them. But you also have to start with the right kind of person in the first place.”

Armstrong has his own yardstick by which he judges who is right, and who isn’t.

“I look for someone who really wants to excel at whatever they’re doing,” he explains. “That means they need passion. They may never be the best, but they have to want to be. My first clue is a potential employee’s energy level. I look for physical energy and mental energy. They have to have both.”

Armstrong says he classifies people into three categories: emitters, middle-of-the-roaders, and drainers.

“Drainers are the whiners and complainers and the people who keep you from moving forward,” he explains. “So when you’re hiring people, just load your staff with high energy people. When I’m interviewing, I prefer someone who squirms in his chair over someone who sits passively like a sponge. I have 150 good people working at Armstrong, who are full of energy and work hard at solving customer problems. Customers who want cheap prices, shouldn’t come here. I hire good people and I pay them well. The work we do is world class.”

Armstrong’s Equipment Philosophy

Armstrong’s equipment philosophy is similar to his approach to hiring people.

“Last year China bought half of all the machine tools sold in the world,” he says. “So, if we want to stay alive, to survive, we have to give our people the best equipment we can afford. We have five departments, including milling, turning, grinding and lapping, inspection and clean room. We operate close to a hundred machines. We have CNC 26 vertical mills, two horizontals, one with 24 pallets. We have 14 turning centers, five Chevalier surface grinders, three Lapmasters, and a large number of support equipment. We buy Haas, Matsuura and Hitachi Seiki. We run this equipment sometimes 24 hours a day, 7 days a week, depending on the work load. Armstrong Technology its own maintenance crew to keep the machines running. It’s a pretty big operation, and you have to have good people to keep it running smoothly.”

What About Grinding?

Although his knowledge of grinding got him his first project, Armstrong says that grinding has slipped to a relatively minor position in terms of sales and importance.

“The reason is that the milling and turning centers have improved so much that the need for grinding has diminished considerably,” he explains. “Our mills and lathes are producing finishes we used to have to grind to achieve. As a result, most of the grinding we do nowadays is on parts that have special features on them, and on parts that have to be heat treated. Grinding is probably only ten percent of our sales now, but, even so, we maintain three Lapmasters and five Chevalier surface grinders.”

When he could afford any machine he wanted, why did Armstrong decide on Chevalier for his surface grinding needs?

“I bought my first Chevalier about fifteen years ago,” he says. “Prior to that I had always used German-made grinders, but then I felt their quality had fallen off, so I decided to look around for something else. Over the years a lot of our employees have gone into business for themselves, including one of my best grinding supervisors. He bought a Chevalier and gave me rave reviews. He knew high-end grinding, and he knew what my issues were. He told me the Chevalier was a good machine and I respected his opinion. We now have five Chevaliers, including a couple of FSG-1224’s and a Smart H818. The machines hold very tight tolerances, and they’re easy to use, which is important. We want equipment that does 90% of the work, with the machinist doing the rest. I bought most of the Chevaliers from Performance Machine Tool, a local distributor. Performance Tool has an in-house service department, which is important. If we ever have a problem, they’re on it right away.”

What’s Next for Armstrong?

Armstrong starts his day at 6:00 every morning and ends it at 6:00 at night. He divides his week between his Sunnyvale and Auburn plants. He commutes in his own 300-hp, 6-passenger Saratoga airplane. For entertainment, he plays golf every chance he gets.

“You want to know about the future?” he says. “Well, I’ll just continue doing what I’m doing. I’m working with my son, my daughter and son in law, and people I’ve known for thirty years. It can’t get any better than that.”

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