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Monday, Jul 15, 2024

Manufacturer Finds Answers to Industry Woes

The story has been a familiar one in the manufacturing industry of the San Fernando Valley specifically and Southern California in general. A small or mid-size manufacturing company succeeds and grows during the boom times. But then come worldwide economic changes and the company’s work is undercut by other countries where labor is cheap and plentiful and doing business costs less. Some companies facing those circumstances fold up, laying off workers, selling off equipment. Others move out of state or out of the country. And still others do what they need to survive. Geno DeVandry counts himself as a survivor. He feels the answer to how long DeKing Screw Products, Inc. in Chatsworth continues to make its precision threaded parts depends on a combination of factors: new equipment, leaner manufacturing methods, and scaling back on the volume of parts. A job shop the size of DeKing no longer competes with the job shop around the corner or across town but with those in a time zone half a world away where the cost of labor and material is cheaper. Factor in skyrocketing health care premiums, rising salaries, and the cost of meeting compliance for product standards and it all adds up to challenges if not outright roadblocks to running a profitable company. DeVandry says there has been a drop in the screw machining industry in Southern California and he expects the industry to continue to be rocked by closures and moves out of the country. “Those of us who will be around will have to make some really big changes to stay in business,” DeVandry said. So how does DeVandry survive? It’s done through investment in new equipment and using more efficient manufacturing methods. He also has cut costs in other ways, such as eliminating health care for the family members of his 28 employees. The adjustments made at DeKing have helped the bottom line. After a slow period several years back, business has picked up to the point of 10 percent growth in sales over the past two years, DeVandry said. DeKing moved to Chatsworth in 2002 after nearly 30 years in Burbank and another move has been on DeVandry’s mind although he’s not sure where he would go. “The reason I don’t move is I have employees who have been with me for 30 years,” DeVandry said. “It’s not easy for them to pick up and move.” The company is also making the transition to turning out smaller quantities of product, something that is easier for it to do than larger, overseas firms because of the high productivity and time needed to make threaded products. The future of small manufacturers may be in smaller lot sizes. “The soup to nails days are gone,” said David Goodreau, the executive director of the San Fernando Valley chapter of the National Tooling and Manufacturing Association. “You need to specialize.” The flipside to turning out less product for a client is that a manufacturer, especially one with the years of DeVandry, may not be compensated for what he puts in, said Brad Ward, president and CEO of the Small Manufacturers Association of California. “In taking on smaller lots it’s tougher and tougher to get paid for all of its intellectual property, all of its process knowledge,” Ward said. The manufacturing sector in the Valley, however, is not a monolithic working environment where all companies find themselves in the same boat facing the same challenges. Suppliers to the aviation industry, for instance, are not necessarily under the same competitive pressures as the screw machine job shops. DeVandry himself sees that at the Roberts Tool Co., Inc., a hydraulic components maker located across Prairie Street from his shop. “The Chinese aren’t running that kind of work yet,” DeVandry said. The advantage for an aviation supplier is that the government doesn’t allow that type of work to be sent overseas because the major aircraft manufacturers of both commercial and military jets keep close tabs on their supply chains. Screw machine manufacturers, on the other hand, face an open market. “The low bidder is the winner,” Goodreau said. DeKing weathered transition periods before in the years since it was founded by Gene DeVandry in 1964. Geno, his son, took over day to day operations in 1972. (DeVandry’s eldest son Aaron works for DeKing although he’s encouraging his son not to stay for the long term.) The company primarily provided parts for suppliers with military contracts but after the Cold War ended that work dried up and DeKing diversified its client base by mixing in automotive, medical and plumbing customers. When making the switch, DeKing was fortunate to find commercial customers needing threaded products and having supplied defense contractors showed the company did quality work. But then that screw machining work went overseas to South Korea, Malaysia, Indonesia and especially China. Equipment from shuttered U.S. companies ended up in those countries operated by employees paid the fraction of an American wage. Where DeVandry used to do $50,000 or $100,000 in sales on one part he is now undercut by the same product coming from China. The price of raw materials DeVandry purchases to churn out product in the Valley often equals the entire cost of a foreign-made product. Meeting that competition led DeVandry to analyze the manufacturing process to see what can be done to make it less labor intensive, more efficient and faster. He’s also researching switching to different equipment, which while it may not be as fast as what his employees use now is easier to set up for a job, De Vandry said. With big production volume gone, survival for the screw machine shop comes down to the speed of producing and delivering product, Ward said. Goodreau said the key to survival can be summed up in one word investment. Manufacturers need to invest in new equipment and technology to be more efficient; invest in their employees so they are effective and productive; invest in local schools and build relationships with instructors to identify promising students who want to pursue a manufacturing career; and invest in speaking with politicians to let them know when they are helping or hurting the manufacturing industry. “World class companies can compete no matter if they are in downtown L.A. or in Texas or wherever,” Goodreau said.

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