A Case Review
Flying With Falcon: Improving Process and Profitability
Falcon Cold Forming
The Client Profile
Falcon Cold Forming
A Michigan-based parts pressing and machining firm that serves the automotive industry.
The Client Concern
The small, but well-established parts pressing and machining firm, was experiencing a common, but vexing, problem. Their products were increasingly viewed by their customers as commodities, forcing Falcon into margin-eating price reductions.
Falcon’s management team knew that change was critical. However, choosing advisors to help them improve was a challenge. Many consulting firms used the term “turnaround” to describe their services; few seemed to offer sensible approaches.
Some dwelled on one specific function, such as finance, while ignoring other key areas like operations or manufacturing. Others insisted on radical changes, demanding Svengali-like control. Falcon managers wanted day-to-day support; most advisors only wanted to drop in from time to time.
The Highline Approach
Enter Highline Controls - with a simple, uniquely different approach.
Falcon managers appreciated Highline’s extensive experience in the automotive industry and respected their established track record for operational improvement. They also responded to Highline’s philosophy that large-scale change derives from a series of small, well-planned and highly focused efforts.
Most importantly, they recognized Highline’s commitment when the firm offered its most senior principal, Gregg Ekberg to serve as an interim executive for an extended period. Ekberg made it clear that he wanted to be a peer, not a parent.
As advertised, Ekberg launched work at Falcon by leading the team through a series of small, but interrelated improvement projects that added measurable value in the form of efficiency, cycle time or product quality - without large impacts on a lean budget.
Next, Ekberg taught the value of modest challenges designed to build organizational confidence and competence. On one occasion, he encouraged Falcon to accept a small bid from a major automotive supplier to build a product requiring tighter tolerances than Falcon had ever attempted. Through close attention and monitoring the Falcon team met the specs. The product produced modest revenue, but maximum confidence that the business could compete at a whole new level.
Finally, Ekberg recognized Falcon’s need to change its mindset from “product producer” to “value provider”. One especially tough customer helped provide a turning point. Able negotiators, the customer’s purchasing representatives made clear that they wanted low prices and would ignore claims of added value.
Undeterred, Ekberg launched an effort, which included site visits, to more carefully understand the customer’s requirements. Involving a cross-functional team of Falcon’s sales, quality, scheduling, engineering and manufacturing professionals, the customer’s story unfolded. They frequently experienced bottle-necks while producing a particular machined part – resulting in costly delays and expensive overtime. Ekberg’s team proposed a means to ease these production crunches.
The offer to take over overload manufacturing opened a small trickle of overflow business that turned into a steady stream of orders, eventually involving other troublesome parts. Meanwhile, a contentious customer relationship evolved into a working partnership – as margins from the customer’s business increased.
Before Ekberg returned the reins to the Falcon management team, margins stabilized and grew – increasing net income by almost 25%. This provided capital for additional investments in manufacturing equipment and efficiencies that reduced inventories by 39%. And there were other benefits, too: over time, Falcon reduced its debt by 34% - and its labor force by half.
But Highline’s most valuable legacy was a permanent change Falcon’s perceptions, processes and profitability. Falcon is no longer views themselves as a vendor; their goal is to be a partner recognized for their willingness to listen, learn and respond to changing customer needs.
For Falcon, the decision to hold out for Highline was first step on the journey to profitability. The resulting knowledge, experience and confidence are now in place to support the rest of the Falcon’s flight.
Rainmakers helps clients locate hard-to-find the technical and professional resources needed to achieve business results from Process, Technology and People-related activities. Learn more about Rainmakers at www.rainmakers.us or contact Jon Liberman at 847.251.3327.