Four central Illinois manufacturers are building a network of trusted partners to take their businesses to the next level.
“Don’t put all your eggs in one basket,” goes the old cliché. But for decades, the manufacturing sector in central Illinois did just that, with its resources—and future outlook—joined at the hip to Caterpillar yellow and John Deere green. This dependence left many suppliers vulnerable to potential shifts in that dynamic.
The recession of the 1980s helped to expose that risk, and over the last 20 years, manufacturers—and the regional economy at large—have taken steps to diversify. Diversification tends to diminish risk—a simple concept that applies as much to success in business as it does to one’s investment portfolio. Many companies have learned this lesson the hard way. Others have been able to harness their agility, adapt to changing realities and thrive. Teaming is one route by which small manufacturers are diversifying to weather uncertain economic times and build their businesses.
Adding Value and Opening Markets
Todd Berry is president and owner of Precision Laser Manufacturing (PLM), a high-technology company that specializes in laser processing services, including cutting, welding, engraving and tube cutting. Founded 20 years ago, the East Peoria-based PLM works in a broad range of industries, from traditional agricultural and heavy equipment manufacturing to the electronics, medical equipment and automotive industries. His company’s introduction to teaming came with the 2006 formation of a strategic alliance with The Material Works, Ltd. (TMW), a steel processor near St. Louis.
“Their technology allows them to clean and level the steel and then cut it to length,” explained Berry. “Our proposition was that we are the next step—we would provide the value-added laser cutting operation. So if their customer wants an actual part cut out, we would do that for them.” Over lunch, the two companies signed a simple lease agreement under which PLM opened a satellite location, setting up its laser equipment within TMW’s existing 200,000+ square-foot facility.
The partnership has worked very well for both companies. TMW can now offer an additional menu of value-added processing services to its clients, while the arrangement opens up new markets for PLM and diversifies the company geographically. When the local economy took a nosedive, this diversification helped PLM weather the storm. Later, a third company brought in a turret punch press and brake press—“And now we have a small fabrication cell,” said Berry. The three companies now team to supply a major manufacturer of recreational park equipment.
A United Front
While teaming isn’t a novel idea, it takes the traditional outsourcing/subcontracting arrangement to another level. “It’s really moving up to that next notch of trust,” said Berry, and it provides a way for a linked group of smaller entities to compete with larger companies. “It allows us to broaden the solutions that we can bring to our customers.”
Meanwhile, the Economic Development Council’s Specialized Manufacturing Strategy Group had begun to explore the teaming concept, and Berry was invited to share his experiences with the group. At the Peoria NEXT Innovation Center, he met Scott Aberle, president of Premier Fabrication, a steel fabrication company based in Congerville. This connection would soon bear fruit in the form of another teaming arrangement.
“We were ready to launch with a new customer,” said Berry. “On Friday afternoon, at the eleventh hour, they asked for components requiring additional fabrication processes on top of just laser cutting. I knew the folks at Premier had the capabilities, and we didn’t want to say no to our customer.”
Everything fell into place very quickly. Berry called Aberle, and by Monday, the two companies had hammered out an agreement. Unlike traditional outsourcing, this was “a more shared relationship with the customer, versus a multi-tiered supply chain in which a secondary supplier does not interact with the end client,” said Aberle. “Todd’s team is fronting it, but we’ve both been to the customer together. Rather than being an arm’s length relationship, we present ourselves as one team. It is a more collaborative supplier-supplier relationship providing a seamless face to the customer.”
Entering the Public Sector
Having demonstrated success working together, Premier and PLM recently joined forces with two Pekin-area companies—Excel Foundry & Machine and Illinois Machine & Tool Works—to expand on the teaming idea and take it into new territory, the potentially lucrative world of government contracts.
There are many opportunities in the public sector, but the process can be cumbersome and difficult to understand. A single component, for example, might require 40 to 50 pages of documentation, and few small companies have the time or resources to compete. “Believe me, it’s a whole different world,” says Berry. “We had actually delved into [government work] ourselves, and Illinois Machine & Tool Works had done the same thing. But it’s not easy as a single entity. Not insurmountable, but tough.”
“We don’t have all of the resources from a procurement and contract administration standpoint—that overhead structure to navigate the work and understand the regulations involved in a government procurement process,” added Aberle. “So we’d talked about building a larger team of trusted partners with complementary manufacturing capabilities to go after contracts that, alone, we were less likely to entertain.” Further discussions eventually led the group to ACES Enterprises.
Based in Dunlap, ACES is owned and operated by Tom Johnson, who has decades of experience with the military, government and private industry, administering contracts for government work. PLM, Premier, Excel and Illinois Machine have teamed up to sign a consulting agreement under which ACES will solicit and find governmental work for them, and manage the work once it has been landed.
“They recognize what we need to do to pre-qualify and how to pull the documentation together,” said Aberle. “So we now have both a conduit and a teamed set of skills to help us pool capabilities and submit proposals or quotes, while before we were just trying to understand the process.”
These manufacturers understand that they can’t sit idly by and expect their world to stay the same. “We’re trying to move our organizations out of their comfort zones,” said Berry. “For me, it’s about moving my business forward, and constantly evaluating our business strategies. That’s why we’ve been keen on the teaming concept. It’s not like it was 20 years ago.” iBi