ment] investment when we did,” Chirchirillo said.
“You had major automakers going bankrupt, so the
likelihood of companies investing in an expensive
tool to ramp up production was slim to none. ;at’s
where the decision to complement the existing
high-volume business with the quick-turnaround
fabrication really led to additional business for us.”
Escaping the Commodity Trap
Still, was this enough to emerge from the “
commodity trap,” to rise above the RFQ-bid-win-or-lose cycle? As Chirchirillo saw it, not really. True, his
engineers could work with customers on projects
as partners, providing design and manufacturability assistance, but the company was limited by the
technology it had on the floor. Customers worked
with Chirch Global for sheet metal parts that were
still viewed as commodity items, a small piece of a
much bigger, more important puzzle. To truly escape the commodity trap, Chirchirillo had to do
something else.
During his years in Asia, he noticed how local
businesses operated. Like in the U.S., small, family-owned companies dominate manufacturing, but
they go to market in a di;erent way. In the U.S.,
a metal fabricator may subcontract to a powder
coater, machine shop, or metal galvanizer. In Asia,
the connection between small firms can be closer,
sometimes much closer. Noncompeting companies, each o;ering complementary manufacturing
services, form local networks or clusters. When
sales engineers visit customers or prospects, or exhibit at tradeshows, they represent not just their
employer, but also every company in the network.
;is arrangement allows many small companies to
go to market as one large organization.
Author Shelley Rigger noticed something simi-
lar in neighboring Taiwan. In her 2011 book Why
Taiwan Matters, she explained the Asian “manu-
facturing cluster” this way: “Clustering small firms
for joint manufacturing promoted cooperation
among relatives, schoolmates, and friends. It also
promoted flexibility and minimized marketing
costs. SMEs [small and medium-size enterprises]
learned to retool quickly to meet the demand for
new products. Often, a whole cluster could get by
with sending one representative to tradeshows
to collect orders from foreign buyers. By keeping
their business within close-knit networks … entre-
preneurs were able to minimize risk while sharing
know-how and capital.”
Consider a typical situation among various con-
tract manufacturers and job shops. A fabricator
might have to wait a week to get parts back from
a subcontractor like a powder coater. Plating can
add more time. So can machining. All that time can
add significantly to a fabricator’s lead-time. And, of
course, a late subcontractor can cause everybody
else in the supply chain to be late as well.
Such variability always has been an issue in contract fabrication. According to this year’s Financial
Ratios & Operational Benchmarking Survey from
the Fabricators & Manufacturers Association International, the average metal fabricator’s on-time
delivery rate is about 85 percent.
But with close collaboration among network
companies, contract manufacturing may become
more reliable because production schedules are
coordinated. If a powder coater runs a certain color
on Tuesday and ;ursday, the sheet metal fabricator can adjust its own schedule to suit. Conversely,
the powder coater may adjust its schedule to suit a
changing product mix at the metal fabricator, machine shop, or other network companies.
Perhaps even more significant, the design assistance spans not just one niche in metal manufacturing. Sales engineers may work for one company,
but if a customer has a question about a specific
process, that information can be forwarded to anyone within the network of companies who has that
expertise. Design becomes a collaborative e;ort involving machinists, metal fabricators, powder coat-ers, and more. ;is moves the focus away from the
process and toward the project at hand—which, of
course, is what the customer really cares about.
Would this business model work in the U.S.?
Chirchirillo thought so, and started networking.
Selling the Concept
Chirchirillo knew he needed to convey this concept to a certain kind of company. He needed to
work with owners that shared his goals of having
long-term, sustainable, focused growth of a small,
privately held family business. “We targeted companies that could bring to the table other services
that weren’t our core competencies,” he said.
He wanted to leverage the advantages of a small
business, including direct communication and
lack of a burdensome bureaucracy. ;e disadvantages—few resources, limited range of manufacturing equipment, and so on—could be minimized
through collaboration.
“;e idea sparked my interest immediately,” said
Tom Hacker, president of C&L Supreme, a machine
shop in Des Plaines, Ill. Hacker had met Chirch-
irillo at a regional manufacturers’ meeting. “We
don’t have a proprietary product, and we were in
the continuing RFQ-and-bid cycle. ;e service was
treated like a commodity, and it was price-driven.
From a business standpoint, it just made sense. I
liked Tony, and I found we shared a number of busi-
ness values. ;ere was really no trepidation.”
By the time the network formally launched last
year, it had 14 companies that altogether have a
process list that reads like the index of Machinery’s
Handbook: machining, die casting, stamping, laser
cutting, punching, welding, plating, induction heat
treating, metal finishing, powder coating, roll form-
ing, manual and robotic welding, plastic injection
molding, cabling and electromechanical assembly,
tube and pipe fabrication, as well as engineering
services.
Each network company has its own niche. Some
are obvious: C&L Supreme does precision CNC
machining; Gatto Industrial Platers focuses on zinc
plating and metal finishing; Induction Heat Treating Corp. focuses on (you guessed it) heat treating.
But for others, the complementary aspects are a
Customers may view sheet
metal fabrication as a
commodity, a small piece of
a much bigger, more
important puzzle. Chirchirillo
wanted to change this.
Woodworking
Machining
Closures
Welding
Tel: 440-497-8271
info@clamp-rite.com
www.clamp-rite.com
Distributors Wanted
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