Intense competition from manufacturers in China nearly drove J&R Machine Inc. out of business, but company ownership and management realized in the nick of time that somewhat drastic changes needed to be made in order to save the company.
Founded in 1992, J&R got its start by manufacturing simple items such as bushings and pins. Two years later, the company moved into a new facility in Shawano and business began to grow. Then came the Sept. 11, 2001, terrorist attacks and the United States and the corresponding downturn in the economy. J&R felt the effects in full force. After several years of growth, revenue began to decline, putting the company in a precarious position and fighting to survive.
“After 9/11, business took a downward turn,” J&R president Timothy Tumanic said. “We suffered some substantial losses. It about closed the company. We were days away from closing the doors.”
A thorough examination of the company revealed that it was producing commodity items that competing manufacturers in China and elsewhere could produce at a much cheaper cost. J&R needed to go in a different direction in order to survive.
That’s when J&R turned to The Wisconsin Manufacturing Extension Partnership in an effort to “China-proof” its business.
“The biggest thing, as an owner or a manager, is when your company is in trouble you have to look at yourself in the mirror, take a good inventory of yourself, check your ego at the door and admit that you need help in certain areas,” Tumanic said.
J&R looked to the WMEP for assistance in making productivity changes on the shop floor. In particular, a more consistent manufacturing process was needed.
Among the many changes, WMEP looked at ways to make equipment utilization more effective, said Mark Hatzenbeller, a regional account manager with the organization.
“The utilization wasn’t as effective as it could have been,” Hatzenbeller said.
The implementation of lean manufacturing principles enabled J&R to consolidate equipment, clearing room for newer technology.
J&R also sought to have a more consistent manufacturing process.
“We started taking a look at some of our processes and we started picking them apart,” said Parker Tumanic, vice president of engineering at the company. “It’s about streamlining the process.”
Changes implemented by J&R have created additional capacity and allowed for a reduction in direct labor costs from 18 percent to 10 percent, according to the company.
Over time, J&R has shifted to producing more complex parts and away from commodity-type items. It also offers more value-added services and assembly operations in order to be less vulnerable to competitors in China and other countries that tend to offer low-cost manufacturing services.
The message sent by Timothy Tumanic to his staff has been that J&R has been transformed into a service company that “just happens to be a machine shop.” Gone are the days of merely producing commodity products.
The changes implemented by J&R have allowed the company to return to a growth mode. Its annual revenue has climbed to $10 million. The company has a youthful workforce of about 30 employees, most of them at or under the age of 27.
“Whether your business is on the brink or you’re looking to improve margins or to improve employee performance, I highly recommend WMEP,” Timothy Tumanic said.
J&R Machine China-proofed its business by
- Becoming a service company that just happens to be a machine shop
- Grew from a business “on the edge” to a $10M company with 30 employees
- Reduced direct labor costs from 18 percent to 10 percent