Talking Shop

Canadian job shops share similar problems with their large counterparts, including finding skilled labour, staying current with their manufacturing technology, and seeking out new business opportunities.

Job shops that focus on custom work share many issues with large manufacturers, including the need to stay current and competitive and to take advantage of new opportunities. Some topics, however, that are front-and-centre for big plants that do huge runs, such as tariffs, material costs, and certain technologies, don’t loom as large in the job shop sector.

The main concern for all companies, both large and small, is the lack of new skilled workers entering the sector.

“Finding enough qualified, skilled machinists is by far our greatest challenge. The shortage of skilled machinists is hampering the growth of the machining part of our businesses,” said Sean MacPhee, president of Velocity Machining & Welding in Dartmouth and Techtronics Machine Works in Musquodoboit Harbour, N.S.

MacPhee has been forced to take a proactive approach to deal with this shortage.

“We have talked to and attended meetings with various government agencies. Also, we are sponsoring the Skills Canada National Competition this year, which will give us direct exposure to the best up-and-coming machinists,” he said.

While both his shops make custom, precision components using CNC and manual machines, Velocity also offers 3D printing, waterjet cutting, welding, fabrication, and laser engraving.

On the other coast, Paul Ellery, president of Ellery Manufacturing, Surrey, B.C., expressed many of the same concerns. Only for Ellery, the situation is compounded by soaring housing prices.

“Job shops face a number of challenges, but by far our No. 1 challenge has to be finding skilled workers. The type of work we do at Ellery Manufacturing requires a skill set that new grads simply don’t have. Experienced workers who have the skills usually are already employed and not looking for [new] work. Many of the better candidates we find often need to relocate, but this can be a big obstacle when they look at the high cost of living in Vancouver or Surrey, where our shop is located,” said Ellery.

Ellery sometimes has to turn down jobs because it simply doesn’t have enough person-hours to put into new work.

“To address this issue, we try to make recruitment an ongoing activity, so we have a steady flow of new candidates. We invest an equal amount of resources into ensuring that our existing workforce is happy and are given everything they need to be successful and productive,” he added.

In its Midland, Ont., shop Addley Precision makes precision dies, gauges, moulds, lift assists, and precision welded and fabricated components. The company also has its own product line of rifle scope mounts. Photo courtesy of Addley Precision.

A family-run business, Ellery Manufacturing performs custom CNC and conventional machining, project management, and fabrication services.

Growth challenges

In Midland, Ont., Gerry Addley, president of Addley Precision, cited development woes as his biggest challenge.

With seven CNC machines and roughly 20 manual machines, the manufacturer makes precision dies, gauges, moulds, lift assists, and precision welded and fabricated components. The company also has its own product lines centred on scope mounts for military surplus rifles, used primarily by civilian hunters.

The company has outgrown its current facilities and is working to get another building up.

“We don’t even have a building permit. It’s between the town and engineers and it’s been ongoing for about a year and a half. It’s a lot of red tape, a lot of back and forth. It’s a huge expense to develop commercially or industrially in Ontario right now,” said Addley.

Addley also criticized what he perceives as the overly bureaucratic manner in which the former provincial government regulated apprenticeships in the province. He is waiting to see how Ontario’s new Progressive Conservative government handles the apprenticeship portfolio.

He expressed concern about the massive amount of paperwork that makes it challenging for small businesses to apply for government grants, even as Ottawa feeds money to huge corporations like Bombardier.

Addley does, however, speak well about the Ontario Youth Apprenticeship Program (OYAP), which provides work opportunities for high school students.

Variable costs

Finding skilled workers is difficult and bureaucracy a nuisance, but job shops can generally take electricity and material cost increases in stride.

Addley said, “Because we’re a custom jobber, we’re a highly value-added business. Material cost is an extremely small part of what we do. We’ll take two dollars of aluminum and turn it into $250 in part price. So, if our material costs go up 10 to 15 per cent, it really doesn’t affect us at all.

Ellery Manufacturing, Surrey, B.C., performs custom CNC and conventional machining, project management, and fabrication services. Photo courtesy of Ellery Manufacturing.

“Hydro is much the same. It’s a factor, but I haven’t found it’s as big an issue as it is for some people. For [mass] production facilities, their margins are much thinner. Labour is the biggest [cost] input for me.”

MacPhee sees these variable costs in much the same way.

“We don’t do any long-term contract work, so the rising costs of electricity and materials are passed on to our customers on a job-by-job basis. The rising cost of labour is handled with carefully calculated increases in shop rates when necessary,” he said.

In a similar manner, tariffs on imported steel and aluminum imposed by the U.S. and Canadian governments have not significantly affected his business, he continued.

“As a machine shop, we have not seen a noticeable impact to our business based on the tariffs. We don’t use a significant amount of aluminum or stainless steel in the parts we produce, and we don’t export any raw materials, only finished parts,” said Ellery.

Adding technology

Acquiring new equipment and new space remains a no-brainer for job shops.

“We recently purchased another 10,000-sq.-ft. building that Velocity will be moving its fabrication and cutting shop into. That doubled Velocity’s production space, which will allow for expansion in our machine shop as the need arises. Also, we recently purchased a 4-kW fibre laser,” said MacPhee.

Once his new building is finally constructed, Addley hopes to fill it with larger CNC equipment like boring mills, bridge mills, and a 5-ton crane that will give his shop the capability to handle much larger components.

Addley’s existing CNC machines are all networked to make it easier to add new programs. He has not, however, set up an online system to remotely monitor machine performance when he’s away from the shop.

“[Remote monitoring] is not applicable in our operation, because we’re not production and our runs are not superlong. If we had a 5-axis CNC mill that runs a single part for four straight days, we might be interested in keeping an eye on it. Our stuff doesn’t run like that,” he said.

Addley Precision doesn’t operate in 24/7 fashion, though it runs 12- to 14-hour shifts when faced with a heavy workload.

Likewise, Ellery Manufacturing is very invested in new technology but doesn’t see the need for tools such as remote machine monitoring.

In 2017 it acquired an automated inventory system from AutoCrib®. Located on Ellery Manufacturing’s main production floor, the AutoCrib system resembles a vending machine with a computer keypad. It stores tools, inserts, welding supplies, safety gear, and other consumables and keeps track of larger items stored in cabinets and other spaces.

According to Ellery, the inventory system has reduced expenses and streamlined inventory management. The company also uses office software to automate and simplify administrative tasks and is completing a major IT upgrade to enhance the security of its network and data.

As for the shop floor, “We have recently purchased new tool setters and continue to consider our options with regards to adding or upgrading machining capacity,” said Ellery.

Looking at the future

Keeping an eye out for new opportunities and new markets remains vital for all job shops.

“We are currently spending a lot of time and money expanding our product line, making the public more aware of it. One of the things we need to do is find a way as a small business to make larger companies aware of our capabilities,” said Addley, who hired a full-time sales and marketing person three months ago.

Ellery Manufacturing is always working to expand its customer base within industries it serves, but it continues to promote its services within new markets.

“We’ve traditionally produced parts for customers working in oil and gas, mining, forestry, marine exploration, and construction. If the right opportunity came along, we wouldn’t hesitate to work on a project in an emerging industry. For example, we’d like to find more opportunities in the renewable energy sector,” said Ellery.

On a final note, these job shop owners were asked if they felt optimistic, pessimistic, or neutral about current economic conditions.

“I feel that the part of the Canadian economy that our companies are involved in will continue to chug along as it always has, no booms and no busts, just steady work. We are optimistic that things will continue as normal,” said MacPhee.

“I would have to go with neutral. I’ve tried predicting before. I’ve long since stopped listening to pundits from either side because, generally, everyone is wrong. [My advice to other job shops is] don’t get too deep into debt, keep everything running well, and don’t get into jobs that are too big. Do everything right and you will survive. I’ve been at this almost 20 years now through some pretty tough times and we’ve survived,” said Addley.

Velocity Machining & Welding, www.velocitymachining.ca