Riding The Wave
There is never an easy time to run a machine shop. Customers either want it all now, or nothing until next year. Good employees are hard or impossible to find. And making that next big machine purchase? Future demand visibility has never been cloudier.
Yet, Compass Precision was created five years ago to acquire shops and organically grow the business. And its management actually seems to enjoy their jobs. To learn how the company is doing in these choppy economic times, just prior to one of the craziest Presidential elections ever, we spoke with CEO Gary Holcomb. This is what we learned.
How is Compass doing this year?
Happy to say we are exceeding revenue versus expectations and prior year. Same with bottom line. We have purchased four new CNC machines in the past four months. We got two new lathes for Tri-Tec and two new high-end 5-axis mills for Advanced Machining, the second of which will be cutting chips by the end of September. Also, we have new, high energy general managers at Gray Manufacturing and Quality Products. It has been a good year.
Tell us more about your success with increasing sales
We believe the US manufacturing sector is still in recession. Has been for at least 18 months. From our perspective, most machine shop businesses aren’t growing. Fortunately, we are. This is due in part to our deliberate focus on serving markets that are generally expanding under most economic conditions. We really cater to customers in space, aerospace & defense, medical, telecommunications, power generation, and industrial automation.
What do you look for In new customers?
Our credo is “we make the tough stuff”. If a prospective customer needs an easy part, chances are that he will pick another vendor. But when we discover demanding customers whose parts are exceptionally challenging, we get excited and really pursue it. Our capabilities are best suited for complicated geometries, tight tolerances, difficult-to-cut materials, and exacting surface finishes. Furthermore, these opportunities are most commonly found in the markets I already described.
Are there any markets that are particularly interesting to you right now?
Yes. They are space and semiconductors. For very different reasons. The space business is expanding very quickly right now, led by a variety of companies that did not exist 10-15 years ago. Their components are absolutely mission critical – part failure in space is totally unacceptable. We are riding the wave in space, and expect to for some time. The semiconductor industry is another market requiring highly-precision, complicated parts. But it is notoriously cyclical. In addition, it has been down for more than a year. But every peak and valley is higher than before, because semiconductors are being used in an increasingly number of ways. When this business comes back, which we think will occur next year, we will have another wave to ride.
You mentioned having a couple of new general managers – tell us more
At Gray Manufacturing, we promoted Even Grose to General Manager in July. He had been Gray’s Operations Manager. Evan totally earned this promotion. I think his elevation to the top spot at Gray is a pretty good indication of our desire to promote from within whenever possible. We also have a new VP & General Manager at Quality Products. Dustin Jones joined us Monday. He brings with him a wealth of CNC machining technical and business knowledge. Look for an official announcement about this hiring soon.
Finally, any other news worth sharing?
When we started Compass five years ago, we thought customers would react well to a machining vendor having multiple, well-run shops scattered around the country. All our facilities have advanced equipment and an experienced staff of 10-30 employees led by managers with deep knowledge of CNC machining. We make decisions quickly, yet are capable of moving heaven and earth using whatever resources are needed from various Compass locations to totally satisfy customer needs. I didn’t mention it before, but I think this strategy also contributes to our success in growing sales while other shops are languishing.
For additional information about Compass, please feel free to contact VP of Sales Jim Miller at [email protected].