Sometimes the difference between winning and losing is the ability to recognize and heed good advice, even when it is painful and deflates your ego.

“They say truth hurts, and I can testify to that from first-hand experience,” says Brian O’Rell, president and CEO of Simi Valley, CA’s Vanderhorst Brothers, Inc., a highly successful job shop that specializes in precision milling, turning and EDM machining. “In October 2000 when my wife Juno and I first took control of Vanderhorst Brothers under a buy-out arrangement, I guess we were pretty pumped up about business.”

“But that feeling didn’t last very long,” adds Juno, who handles finances and runs the company’s front office. “Right after we took over we went to a JPL conference, hoping to meet people and bring home some business. To put it mildly, that conference was both an eye opener and a big let down for us.”

“Juno was telling a very sharp young guy from Colorado about our business,” explains O’Rell, “At one point the guy says, ‘I have to get to a meeting at NASA, but if you don't mind, I'll tell you a little bit about what I heard when you told me about your business. It might be a bit brutal, so you may not want to hear it. It’s up to you.’”

Juno: “We were a shocked by what he said, but to his credit, Brian said, ‘Look, we came here to learn something, so if you have something to tell us, please do.’”

O’Rell: “In a nutshell, what he said was, ‘Just because you can take an IGES file, stick it in a Fadal and make the parts, doesn’t mean anything. Anybody in their garage with a computer and a Fadal can do the same thing. Find a niche for your business, then you won’t see your work going to the Pacific Rim. The way you are now, you’re always going to be out scratching for jobs.’”

The next pin to pop their egos came when they walked outside to an area where the conference was being held.

“There were people out there from Kodak, JPL, Northrop Grumman, big companies, so we aproached a guy from Kodak, Buffalo,” says Juno. “We were already doing work for Kodak in San Diego, so we thought we had a good chance at another division.”

“It was almost like they had it in for us,” O’Rell says. “The first question the guy asked me was, ‘What do you have special that's different from what I can get in my area?’ ‘We have horizontal mills, and we do quality work,’ I told him proudly. He shrugged and said, ‘I can get horizontal mills anywhere. What do you have that’s different, special, that would make me want to work with you?’”

“That left us speechless,” says Juno. “We really didn’t have anything else to say after that.”

“We came back wondering what we could do to make things different,” adds O’Rell. “Both those guys had popped our bubbles, and we didn’t like it, but we knew they were right. The problem was figuring out how to differentiate ourselves from other people.”

Baby Steps

In 2000 about 45% of Vanderhorst Brothers’ sales came from making parts for nearby Fadal, so the O’Rells knew they needed to diversify their business, which was one of the reasons for attending the JPL conference.

“The problem then, as always really, was scraping up enough money to diversify our capabilities,” Juno says. “It’s one thing to want to be better. It’s another thing to be able to pay for getting better.”

“For a long time I had wanted to get into wire EDM,” says O’Rell. “so we decided to buy a Mitsubishi. We didn’t know much about EDM work, but we felt the need to do something. The EDM would help us differentiate ourselves a little by giving us the ability to do more complex work.”

“We started getting some business for that,” Juno says, “and since then we’ve bought two more EDM machines.”

“We have a Mitsubishi FA10 and a Mitsubishi FA20S wire, and a Makino Edge2 Sinker,” O’Rell says. “Between the three, we can do very complex parts. Those machines set us apart from the normal corner job shop running vertical mills, but it still wasn’t where we wanted to be. Those were just our baby steps.”

Medium-Size Steps

Four years ago the O’Rells decided they had to make another move to differentiate Vanderhorst Brothers.

“We bought two big machines,” O’Rell says, “a Mori Seiki NV5000 stand-alone vertical mill and a stand-alone dual-pallet Mori Seiki NH5000. I really wanted two horizontals and a linear pallet pool, but we just couldn’t pull it off financially. Even so, those machines really boosted our productivity and made us a lot more competitive. Now we had good guys in the shop running good tools.”

“Still, even with those machines, we had to make too many setups and reset too many tools” adds O’Rell. “We kept hearing about people who were running lights out, which is what we wanted to do, but we didn't see any way we could do that with our kinds of customers and our part runs on our machines. What we needed was a way to do short runs on demand and still run unattended. We needed big horizontals with lots of pallets to feed in the work.”

Big horizontal mills fed by big pallet pools represent a big investment for any shop, no matter what the size.

“Two years ago, Juno and I and our son, Bob, and Josh Church, a young man who runs our EDM department and handles our programming, all got our heads together and agreed that we had to change our business model,” says O’Rell. “Our model used to be be to go after every little job that was out there, whether it was ten pieces or fifty. We decided then that our goal had to be to achieve the maximum amount of flexibility in the types and numbers of parts we run and do so with minimum manual input. We wanted long-term agreements with our customers in order to assure a suitable amount of work and cash flow. That, in turn, meant we had to switch to big, pallet-fed horizontal systems that could run lights out.”

Giant Steps

A year ago the O’Rells hitched up their courage and took a giant step toward differentiating themselves from other job shops.

“A friend of ours said we bet the farm, and he’s right. We bought two 4-axis Toyoda FH450 horizontals with 494 tools each and served by 42 pallets,” O’Rell says. “We wanted to completely eliminate stops for changing out tools. We wanted to get repeat jobs that we could put on the pallets and leave them. Remember the goal is long-term agreements and to be able to make short runs with zero setup time and maximum lights out running.”

At about the same time, O’Rell took a trip north to silicon valley with Selway’s Jeff Sterling and Bill Selway to watch three big, pallet-fed Matsuura MAM-72, 5-axis machines running 24/7 lights out.

“We had heard about lights out running,” O’Rell says, “but this shop was amazing. We saw guys working 8 hours a day, yet producing parts 24/7. We went to see two other shops doing similar things, and I knew that’s where we had to be, too.”

“When we returned, we all kind of looked at each other,” says Juno. “We were totally sold. The Matsuura’s were really incredible.”

“We didn’t spend a lot of time analyzing which company we wanted to go with,” O’Rell adds. “We didn't expect to spend another three-quarters of a million dollars on a machine, because, frankly that was a giant step for us on top of the Toyodas. Still once we saw the MAMs in operation, we knew we had to have one. Selway’s really excellent support was another deciding factor.”

A Winner for Customers

Vanderhorst had a customer that needed a lot of parts done fast, but the company was having trouble delivering on time.

“We were doing their work on our standalone machines,” O’Rell says. “Continuously having to make new setups, and we just weren’t quite making our deliveries on tim. We were on the verge of losing the customer.”

But then the horizontals were delivered and O’Rell’s customer came for a visit.

“We showed him the machine, still in its wrappings,” O’Rells says, “and he said, ‘Now you can compete with the Phillipines.’ Prior to that they didn’t think we could. We still have that customer.”

Learning Curve

Learning to program the new horizontals was relatively easy, especially the Matsuura, which is not as complex a system as the Toyodas, according to O’Rell.

“First, we had to learn to program the 5-axis Matsuura, and then we had to learn to schedule the pallets and all the tombstones,” he says. “But we were lucky there, too. Our son, Bob, had joined us in 2001 when he was 19, and a young man named Josh Church joined us in 2002. Both of them have grown significantly since coming on board, and they’re both excellent programmers, so they got the assignment to learn the horizontals, and they’ve done a wonderful job. Right now we’re running the Matsuura sometimes seven or eight days at a time, two shifts a day unattended, with only a twenty minute stop once in the morning and once at night. Now we’re ready for long-term agreements.”

Are We Different Yet?

How would that guy at JPL respond to Brian and Juno O’Rell today, if he saw their current capabilities?

“I like to think he would say we're on the right path,” Juno says. “We’ve come a long way since that conference.”

“Now our new goal is to work our machines 24/7, but have our employees work only 40 hours, and still pay them as if they were here 50 hours” O’Rell says. Now that we have the Toyodas and the Matsuura, I really believe that’s possible. That’ll sure make us different.”

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