A business mix for today’s global world

Over the past 15 years, Western Pennsylvania manufacturing has been hit hard. Jobs went to other states, or Mexico, Japan, China and now India.

Small and midsize manufacturers struggle to create consistency and make long-term investments, says Bill Starn, CEO of Starn Tool & Manufacturing Co. The U.S. thrives on low volume, high mix, and overseas manufacturers survive on high volume, low mix.

“Companies have got to find ways to expand, ways to do things that can’t be offshored,” he says. “Or they are going to be literally so competitive with some sort of automation or technology that they will survive for some period of time until somebody threatens it.”

Starn Tool & Manufacturing has diversified its business mix more than most. The Starn Family of Cos. includes software development, service advertising, welding and fabrication, electrical distribution and precision machining.

By specializing in R&D and focusing on intricate projects, the company also diversified its client mix.

Meadville, Pennsylvania, where Starn companies are located, is a manufacturing community. The 150 tool shops each have unique talents and skills.

“Those of us who have been around a long time have always had the attitude: Bring it to Meadville,” he says. “If somebody shows us something we don’t know how to do, we’ll send it to somebody that does.

“I’ve often said the shops in Meadville are my competitors, my friends and my customers all in the same day.”

But even with strategic partnerships, Meadville manufacturing jobs have declined, Starn says.

Another diversifying strategy has been Mecal by Starn — teaming up with Italian MECAL to become the North American manufacturer and distributor of its machines and systems. Starn says the partnership took eight years to build two part-timers in the building’s corner into 18 employees.

“Each company has to find and utilize their strengths to apply them in some other market, some additional market,” he says.

Open your mind

While global competition is a continual risk, it may also require a change in mentality.

Pittsburgh manufacturers who own companies started by their fathers or grandfathers need to be open to the idea that outsourcing isn’t wrong, says Principal Henry Wang of TMD Holdings LLC. They have to ask, “How do we become a part of globalization?”

“You can cut your costs, and then you can use those costs to actually grow your company — you can hire more employees to do other things,” he says. “You want to innovate. You want to build better distribution. You want to come up with new ideas, new products. And then, what you do is you have people manufacture for you, and manufacture efficiently.”

TMD Holdings, a manufacturing service provider, helps major brands — Spencer’s, Williams-Sonoma, Target, Kohl’s, Wal-Mart, T.J. Maxx, Anheuser-Busch and Comcast, to name a few — design products and manufacture overseas, primarily in Asia.

Like a general contractor in construction, TMD manages and troubleshoots the manufacturing process, Wang says.

“A lot of people think a square [hole] goes with a square peg, but sometimes we could shave some corners and make a triangle,” he says.

Although onshoring jobs are a popular idea, in his experience overseas manufacturing is increasing.