February 16, 2024
One last thought before we leave the subject of evaluating incoming quotes — doing nothing is risky. The gear business may seem like a stable, well-understood marketplace with established competitors. Don’t be fooled into thinking you know your customers and their needs so well that you can play it safe and just do what you have always done. Every week we hear of plant closings, mergers, and relocations; every one of those changes can interrupt long-established commercial relationships. If a big portion of your business comes from a single industry or, worse yet, a single plant within that industry, you incur risk every time you no-quote something from a potential new account. In my career I have seen a firm with 90% market share in bridge machinery close its doors. Recently, a hundred-year-history of making big gears, often with a multi-year backlog, came to an end in my home town. At the auction of a noted gear maker in 2001, an entire suite of gear grinding equipment did not draw a single bid because the technology was too dated to be competitive. The same thing can happen to you today with the rapid changes in machine tool technology. You would like to think that you could have avoided these tragedies if you had been making the right decisions at the right times. Believe me when I say the management teams involved thought they were doing the right things to minimize the risk to the company. Each of those situations would be interesting case studies for budding executives to read. Unfortunately, we seldom get books written about “losers” and many of the “winners” books are short of on the unique circumstances or inside information that made them possible. So what can you do to minimize the risk of doing nothing? I am a big believer in taking on a few “science projects” to test the capability of the shop. I like breakdown/rush service jobs too. You learn a great deal about your team when time is critical and decisions have to be made without a dozen meetings. Not every new product has to be a homerun either. The most important thing is to establish a culture that wants to try new things and that doesn’t get discouraged if the first couple of attempts at new markets fall short of goals.