While it took a big hit from the economic downturn and near-collapse of the American auto industry, Alliance CNC bounced back through equal doses of reinvention and diversification.
Alliance Cutter Grinding Service Inc., commonly known as Alliance CNC, started life primarily as a supplier to the automotive industry. But when a key customer moved operations south and the auto industry collapsed, the small manufacturing company was forced to look to other industry segments for survival.
Dick Czarniecki, Alliance CNC’s president, said that while the company came from humble roots, it hit its stride when it began doing business with Diesel Tech, an auto supplier that was formerly owned by Penske Corp. However, when Diesel Tech was sold and “90 percent of their operations” moved south, Alliance lost a significant amount of business and needed to make some deep cuts.
“We lost about half of our business,” Czarniecki said.
The company took a second big hit when the domestic auto industry nosedived. Two of Alliance’s biggest customers, General Motors and Chrysler, went from being among the largest manufacturers of automobiles in the world to getting bailed out by the U.S. taxpayers in 2009.
The GM and Chrysler bankruptcy and the coinciding loss in sales came at an inopportune time for Alliance CNC: The company had just purchased $1.5 million in new equipment to help improve operations at its Grand Rapids plant.
This lost business caused Czarniecki to think creatively about where Alliance CNC needed to go next.
“That gave us the reason to diversify and move out into other industries,” Czarniecki said. “We worked with the machines and technology to develop a greater variety of product offerings.”
Alliance is a manufacturer of custom cutting tools primarily for the auto industry, although its product line also includes tools for the medical device and steel markets. Founded in 1995, the Grand Rapids-based company grew from a one-man shop and now employs 20 workers in its 10,000-square-foot facility just south of 44th Street.
The company branched out into serving other industries including other second-tier automotive suppliers, medical device companies and steel manufacturers. For example, it picked up work with Kentwood-based Autocam Corp., Czarniecki said.
This diversification allowed Alliance CNC to survive as the economy plodded along and helped it bounce back as the economy rebounded, he said.
Currently, Czarniecki said he is running two, 50-hour shifts at the 20-person operation. Sales grew by 20 percent in both 2011 and 2012 to reach $4 million, up almost $3 million from the depth of the recession, Czarniecki told MiBiz.
Industry-wide, sales for many of Alliance CNC’s peers stayed flat in 2012 despite starting the year strong, according to the Precision Machined Products Association 2012 business trends report released in January. Sales were negatively affected by the “brinksmanship leading up to the election,” Miles Free, director of industry research and technology at PMPA, stated in the report.
Free’s outlook for 2013 was “gently optimistic” based on the strength of the auto industry, a resurgence in housing, increased aerospace sales, and strong performance in the medical device industry.
“We are guardedly optimistic about our industry sales for 2013 if Washington can stop paralyzing the markets we serve,” Free stated in the report. “Our data suggest that the precision machining industry is well positioned to take advantage of growth in demand that can be reasonably foreseen in automotive, housing, aerospace and medical devices, if — and this is a strong if — the pols in D.C. can get the heck out of the way and let our small business job-creator entrepreneurs — and our customers — have confidence in the year ahead. If not, the opportunity for growth that is 2013 will go to waste just like it did in 2012.”
At Alliance CNC, Czarniecki said the company continues to develop its manufacturing process over years of working with clients to identify the specific needs and how best to serve them.
“We work with the customer to develop the tools and develop the process we use to manufacture those tools,” Czarniecki said.
Alliance CNC works in small batches to better serve its customers by reducing lead times. Working in small production batches also allows for a greater variety of product offerings and customization including special coatings and laser etching as well as multiple options for edge preparation.
Additionally, Czarniecki told MiBiz that the company’s designers use their combined 75 years of experience to develop the tools best suited to clients’ needs. Quality is assured throughout the manufacturing process though a quality control department that maintains its objectivity by being independent of the manufacturing department.
As with many West Michigan manufacturers, one of the greatest obstacles to growth for Alliance CNC is the lack of skilled labor to fill open positions.
“I guess our biggest challenge is getting the talent, getting those jobs that aren’t necessarily college jobs,” Czarniecki said.
The challenge with the candidates Alliance CNC does find is that they are often inexperienced and lack the self-motivation and initiative to be effective workers. Czarniecki hopes to remedy the problem by working with local colleges to develop the kinds of employees manufacturers need today.
“Nobody’s going to be babysitting you. Nobody’s going to be handholding. So we need self-motivated, hard-working people who can show up every day and produce,” Czarniecki said.