January 29, 2025 • 48 mins
In this episode of Manufacturing Mavericks, Bob McGregor, President of Neo Industries, shares his journey of turning around a micro-machining company in Colleyville, TX. When Bob purchased the struggling business, he had to navigate financial setbacks and make strategic decisions, including firing unprofitable customers and even sending apology fruit baskets—ultimately leading to success in contract manufacturing.
Bob's persistence and optimism shine as he discusses learning new skills, overhauling operations, and rebuilding customer trust. The conversation offers insights into the challenges and rewards of revitalizing a manufacturing company.
SHOW NOTES
- 01:22 How the fight began (The Origins of Neo Industries).
- 06:00 Leaning on fFamily for support.
- 09:38 What comes after the fight?
- 10:45 Rebuilding begins with finding low-hanging fruit.
- 13:26 Navigating COVID and defense contracts.
- 15:48 Rebuilding trust and firing bad customers.
- 17:35 Overcoming cultural shifts and starting over.
- 24:32 What it means to be a Manufacturing Maverick.
- 26:32 The zero principal & putting your customers first.
- 28:38 When you’re ready to win, stop doing the things that cause you to lose.
- 30:38 Making the change to contract manufacturing.
- 40:32 What Bob would tell his younger self.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:03):
Welcome to Manufacturing Mavericks, a podcast where we showcase and celebrate
exceptional people from across precision manufacturing who are boldly
embracing new ways to improve their processes, grow their bottom lines,
and ensure American manufacturing will thrive for generations to come.
(00:25):
Welcome to this week’s episode of Manufacturing Mavericks.
I’m your host, Greg McHale, and I am very excited this week
to introduce our guest, Bob McGregor of Neo Industries.
How are you doing, Bob?
Great.
How are you today?
I am awesome, Bob, and very glad to have you on the show.
I know we had a fantastic conversation at the booth at
(00:46):
IMTS for a while a couple months ago, and I think we’re
going to get to dig into some juicy topics together today.
I appreciate it.
I’m excited about it.
So, Bob, first and foremost, why don’t you tell us a
little bit about yourself and about Neo Industries?
Well, Neo Industries is a small company—I call it a micro company, really;
(01:07):
there’s three of us—and it’s a machining company, primarily contract machining.
And as we’ll go through our discussion, we can talk a little
bit about how we’ve evolved into that kind of core competency.
But the company was started in 1992.
The original founder has long since left the building.
(01:28):
I bought it from a second owner five years
ago, and it’s been a turnaround project.
It’s been a lot of work.
The company was absentee-managed for several years, had kind of lost
their way, fallen on some hard times, and so we’re kind of rebuilding it.
So, Bob, I know that one of the things a lot of folks who
(01:50):
are looking to get into ownership of a manufacturing company
wonder, is just that (01:55):
how do I go about getting into it?
How do I find a business to buy?
What’s really involved in that?
So, how did you come across Neo and what ultimately
made you want to buy a shop in the first place?
And then, how did you go about that?
Well, you got a couple of questions in there.
(02:15):
One of them, you didn’t necessarily directly ask, but I would like to
answer, and that is, oftentimes people come up in the business and they’re
pretty talented, and they want to kind of go and do their own thing.
The first thing, regardless of financial resources and
opportunities, is you got to make sure that you’re up for the fight.
(02:37):
Owning your own company in any business is tough, and
owning your own manufacturing company is pretty tough,
and I think that a lot of people underestimate that.
I assume you, like many others, get auction notices daily, emailed to you.
And I saved one because it kind of cracked me up.
(02:59):
It was a company, brand new building, five brand-new Haas machines,
super-cool conference room, big flat screen in there, and a really clean shop.
And just kind of made me laugh.
I was like, okay, so here’s three guys on a hunting
trip and 12-pack a beer, going, “We should make guns.
Let’s go get some machines and figure out how to do this,” and you
(03:21):
know, it’s not really like that, but there’s a lot of dues to pay.
But specifically, getting into this business,
I grew up in the manufacturing business.
I’ve been in machine shops and other processing facilities for most of my
life until I was about 35, and left the industry kind of thought for good.
(03:44):
I relocated my family to Texas to be closer to family.
This town that we live in, Colleyville, Texas, it’s a pretty white collar town.
People have to go to somebody to get their tires inflated.
It’s not a real mechanical, industrial community.
So, there’s this little machining company a
(04:06):
mile from my house, and I found it kind of odd.
And I had discovered it a long time ago.
I actually came up here when I first moved to
town, and donated a whole bunch of books to them.
I said, you know, I’m not going to be needing these anymore.
But then many years went by, a dozen or more.
I was changing jobs again.
(04:26):
The company I was working for was kind of closing.
I was having a tough time finding a job because I had
been in family-owned and operated companies my whole life.
I had done pretty much every job on every rung, and didn’t really
have a resume that fit into—that matched up with a job application.
(04:52):
I was working with a recruiter, and I think on one interview
with a recruiter, I think they told me I was unhirable.
I thought, “Well jeez, that’s pretty motivating.”
Yeah [laugh]
. So, it just became quite apparent, okay, you’re not a nine to fiver.
Just you need to go be your own boss again.
(05:13):
You need to go find your own company.
And I know how to do this business.
This company a mile from my house came up for sale at this time.
I called up the agent and said, “Let’s do this.”
It was really quite that quick and serendipitous.
That’s incredible, Bob.
And there’s a couple things that you brought up
(05:34):
that I definitely think are worth digging into.
The first one is what you opened with.
You have to know whether or not you’re up for the fight, I
guess on one hand, or you actually have to be so unaware of the
fight that you try to do it anyway and you just make it through.
Yeah [laugh] , right.
So, [laugh] did you know you were up for the fight or did you start to
discover, going through the process, what all the twists and turns really are?
(06:00):
You know, the timing of this thing was kind
of funny, just how everything fell together.
My family-owned company had gone through some difficult
times, and so I’ve been through kind of some turnaround
deals, and some tough days, and some long nights before.
When this company wasn’t really in that greatest shape and it
(06:21):
had come up for sale, I was at an interesting point in my life.
I had done the dad thing for about 15 years, and was there for
my kids, and coached their sports, and was on the dad’s club,
and did all the school events, and the bands and all that stuff.
And my job as dad was kind of coming to an end.
(06:44):
My youngest child right now is 16 years old and the oldest is 26.
And so, you know, at this time, what, 2019, I think two were out of high school.
One was a senior, you know, one was 10th grade.
So, they’re driving.
They don’t need dad throwing the ball with them in the backyard anymore.
(07:05):
So, I come to look at this company and I brought my family up
here, and they’re just, like—they didn’t put it this way—but
they’re just like, “Holy shit, you’re out of your mind.”
And I was like, “Yeah, this is going to take
seven years.” And I was, like, dead serious.
(07:26):
And, you know, I believed in myself, and I knew
that I was just going to have to get after it.
And I pretty much work every day, and I have been for about five years.
And we’re making progress.
I’m on schedule.
Covid didn’t help, but I think I’m on schedule.
My name is not on the building, and I don’t need it to be, but my
(07:50):
goal is where you can say to the general public, hey, this is me.
This is my company, and it’s a pretty class-act operation.
And we got a little bit more work to do.
But it took some TLC and then some.
So, seven years, Bob, is very specific, which makes me wonder.
(08:12):
So, when you started evaluating this, you called up the agent, “Hey, I’m
interested.” You started looking at the business, you knew it was turnaround,
distressed, needs some TLC, what did you find at that point in time?
What did you look at?
What did you see that made you say, okay, I’m signing up for a
seven-year haul here, and then ultimately, here’s what that looks like.
(08:35):
It’s not written down.
It was just kind of a feeling.
It was just kind of almost a reaction.
And I kind of do things in phases and chunks.
I don’t know, that’s how I kind of mentally compartmentalize things.
Seven years is going to be kind of a crossroads, albeit at a
different age, the family will be in a different circumstance of life.
(08:57):
And then, you know, I want to be at a certain point
where I can say, well, what are we going to do now?
Does somebody want to get involved, in the family?
Do we want to get into, like, pretty aggressive
conquer-the-world kind of attitude now?
Do we want to build on this foundation that’s been established?
Or do I want to sell it?
(09:17):
Do I want to do something else?
I got all kinds of goofy other business
ideas, and you know, maybe I’ll be tired.
I don’t know, but I knew that it was going to take some time.
I think when we get to this mystical seven-year mark,
which may be six or whatever, it’s not terribly relevant.
(09:38):
It’s just, I’ll be in a situation where we can say, okay, what’s next?
What are we going to do here?
And we’re getting close to that.
And so, when you first came into it, I imagine there’s
probably many different aspects that need to be fixed.
I’m sure there’s financial things, and equipment things,
(09:58):
and team and people-related things, and vendor things.
I mean, how did you go about that?
Oh, it was everything.
I mean, you can keep going with your list until you get to—
[laugh]
. 20 or more items.
The answer is, you know, you just have to start.
The first thing I started with is, I hadn’t been in a shop for a long time.
(10:23):
So, I kind of stayed clear of those guys.
I was a little out of season, so to speak, on my metal-cutting aptitude.
I hadn’t ran a CNC machine for a long time,
but it didn’t look like the kind we have here.
I mean, I couldn’t even turn these things on.
I didn’t even—
[laugh] . Yeah you could.
— [laugh] I didn’t really remember any G code or anything.
So, I kind of stayed in kind of an executive management situation,
(10:49):
and started with the financials and some company infrastructure.
And we had some success there, like, really
low-hanging fruit, like, right out of the gate.
You know, we had no money, so I’m like starting with, I have to find money.
So, little things like our property and
casualty insurance was like $21,000 a year.
(11:12):
Well, it should be two, okay?
We don’t own the building.
I don’t need to ensure that.
So, okay, I just found 19.
Our phone system was $800 a month.
We had, like, eight lines.
We had Polycom phones all over the building.
No one answered them.
There were five guys working in the shop and a remote employee
(11:35):
that answered the main business number with a cell phone.
So, I whacked that.
So, there’s another, what, eight, nine grand a year.
Some of that just came quite easy.
The company had lost, you know, $100,000 the year before, and
(11:55):
cash was bad, and, you know, mending fences with some vendors.
And of course, looking to grow some sales, one of the reasons that—well,
there’s a lot of reasons that the company was losing money, but one
of them was they had just lost a pretty humongous piece of business.
They’d shipped, like, $800,000 or $900,000
(12:17):
in 2018, and it went down to, like, $500,000.
Without any executive management here kind of
running that, nothing was really ever scaled.
There was no reaction to that, whether you’d be looking to
fill those sales aggressively or trimming costs or something.
It just kind of was like… it is.
(12:38):
And so, what happened is, you lose a ton of money.
So, we tried to gain some sales.
And, you know, all this time, I’m trying to
figure out, you know, what are we doing here?
What are we good at?
Where are we going to go?
And we had a little bit of success.
So, I bought this company in the end of April,
2019, and we were just losing tons of money.
(13:03):
And by the end of 2019, we’d lost another $100,000.
But a lot of stuff was getting fixed, it just
hadn’t really had enough time to kick in.
The damage was done, so to speak.
So, we made money.
We started turning the profit every month in 2020,
January, February, March, and then… you know what happened.
(13:27):
So, it doesn’t matter how many MBAs you have, I mean, that’s uncharted water.
And this is an extremely fragile organization.
We’ve had, like, 90 days of winning built upon, you know, 24 months of failure.
So, [laugh] yeah, that was a tough time.
(13:48):
So, we made it through.
We survived.
That was a real setback.
And we made some decisions.
Not we; I mean, me, really.
We did some things that maybe weren’t that great of an idea
in 2020, just to survive that had a real ripple effect that
kept us in a pretty tough spot for the following two years.
(14:13):
Specifically, do you know what the DLA is?
Defense Logistics Agency, I think, is what it stands for.
No.
It’s Department of Defense parts, but really aftermarket,
MRO, a tank in Afghanistan is missing a bracket.
Oh, okay.
Sure.
Those all get filled by this Defense Logistics Agency.
(14:36):
So, we started doing work for them, and got filled up with all these
opportunities, a couple hundred thousand dollars worth of a backlog.
And we start getting into this, and it was turning
out to be more detrimental than beneficial.
You got a purchase order that’s worth a thousand dollars,
some strange material we can’t find goes to two vendors, gets
(14:59):
two outside processing, and has to be individually packed.
And there was just so much going into this that, there are a lot of people,
a lot of companies that do this exclusively for a living, and they’re very
successful at it, but they’ve got their whole business organized around this.
We’re throwing this into an organization that wasn’t
(15:20):
set up for this and it was pretty catastrophic.
We had to work our way through that.
Actually, I ended up canceling probably a hundred purchase orders.
It was just, like, by the time we get done with these, we’ll be out of business.
So, it did help in a way, but it did create a real hangover for us working our
way out of that, and kind of getting back to where we needed to be (15:42):
focusing
on our core customers—which is what we spent this year doing, really—is
getting out of the job shop business, focusing on contract manufacturing.
And I’ve increased our business with some customers that we have a really
(16:02):
great relationship with that, you know, I think didn’t trust us that much.
They bought from other vendors because we were unreliable.
One of the reasons we were unreliable was we were messing around with things
that were distractions, and costing us a lot of money in this defense business,
(16:24):
and a couple other customers that we ended up just kind of parting ways with.
So, much there, Bob.
That’s just an incredible timeline, and I
think an absolute sign of your persistence.
And clearly, you were ready for the fight because there’s about
a hundred exit doors in everything you just talked through that.
(16:44):
Man, if you wanted to tap out at any time,
there’s plenty of opportunity to do so.
One of the things you’re talking about is
the hard decision of firing bad customers.
And I love the way you said it of, like, look, if I look ahead a hundred POs,
I’m out of business if I do this anyway, so we might as well just cut it.
So, there’s that piece of it.
(17:05):
And then also rebuilding trust with, it sounds like, some of your more
established vendors who perhaps had known Neo for some time up to that point.
And then not to mention another piece of the equation, as you
mentioned, a fragile organization, and your team, right, and
(17:28):
keeping your team bought in and engaged through all of that.
So, how did the cultural aspect of Neo, and keeping the team together, and
keeping folks strong and bought in through all of this, how did you manage that?
It was a little bit of a rough road.
And I tried to manage it pretty well.
(17:49):
Maybe I could have done some things a little bit different,
a little bit better, but I’m not really a manager.
I’m a pretty hands-off kind of guy.
I let everybody kind of do their thing, and was just trying to create
the model, the vision, the executive, higher level kind of vibe,
I guess, and it was really having a hard time kind of sticking.
(18:12):
We went through some people that, they were talented,
but it was kind of a tough time on the people side.
And that’s been pretty well stabilized.
We kind of—you know those home improvement shows where the family
tries to remodel their kitchen, they paint the cupboards, and they
put in some new floor and then they find out that they can’t use
(18:36):
the toaster oven and the microwave at the same time because they
don’t know anything about wiring, and then they call in the pro.
I think I might have been a little bit too slow, a
little bit too patient, a little bit too forgiving.
And finally, about a year ago, I was just like, we’re going to the studs.
I cut the company down to just me and one guy.
(18:57):
And I threw away every fixture and program in the building.
I just, [laugh] I told my wife, I said, it’s
about to get real hard, and we’re starting over.
And I just started turning away work, and I focused on doing the
best job possible with the certain spaces that I wanted to excel.
(19:19):
I had to learn to be a mill programmer.
I’d never even run a mill in my life.
I started last November, and literally, it’s
like a Dilbert cartoon or something, you know?
Just, like, me staring at this Haas VF-4 going, “All right, man.
Just you and me.
Let’s see what we can do.”
“What do you got?”
(19:39):
[laugh]
. And learned how to use the Fusion 360, which is, you know, not super
sophisticated, but it meets our needs, start building fixtures,
and trying to dig ourselves out of a really, really bad situation.
I mean, we were really backed up, really late on a lot of stuff,
and a lot of people were really pretty frustrated with me.
(20:01):
And like Churchill said, “If you’re going through
hell, just keep going.” And so, we just plowed ahead.
And I got better at it.
I got a helper in here with no experience,
but super reliable, super hardworking guy.
I kind of did a 180.
I went from letting people do their own things
(20:21):
to nobody does anything unless I say it’s okay.
I mean, he doesn’t even make offsets.
He comes to get me to do that.
Now, that is not what I would recommend as a long-term
management arrangement or company culture, but I think we
(20:42):
just really needed to start over and build up incrementally.
And so, he’s learned a lot over the years, and he’s becoming—or not over
the years; over the year—and he’s becoming more and more self-sufficient.
And he’s doing all the setups now, and we’ve got a little
arrangement of how I diagram all that, and get him the program.
And basically by, I think it was April, we were on pace to ship
(21:07):
about $1.3 million with three of us after the first quarter of 2024.
That’s incredible.
And, you know, we were just kind of still getting going.
Now, unfortunately, the year didn’t turn out that great.
We had a profitable year and we had a good year, but our
(21:28):
second biggest customer went out of business, but they were
kind of a crummy customer, so it was kind of a not bad.
It’s just, when you lose a pretty 30% of your revenue pretty much
instantly, I can’t go knock on enough doors to get that back right away.
So, that was a setback.
(21:49):
But internally speaking, we’ve made a lot of progress and we’re
finally at the stage that I’ve been trying to get to for a long time.
We’re ready to really aggressively sell.
We have capacity, we have talent, we’re organized.
For a while in the early years, people are like, “Well, you calling on anybody?
(22:12):
Where are you looking for new work?” I’m like, “We’re not
even looking because all we’ll do is fall on our face.
It’s a mess.”
And first impressions, right?
You get a PO from somebody that you’ve been working on, and then you screw it
up, and well, that’s the end of that arrangement, which I actually did that.
And I’m—I sent him a really nice Harry and
(22:35):
David basket [laugh] a couple weeks ago.
[laugh]
. I’m still trying to mend that fence.
But we laid an egg with somebody that I was
really working hard to create an opportunity with.
So, we’re in a good spot.
I’m really, even though we ourselves have dropped off unexpectedly,
I’m pretty optimistic, probably more so now than ever before.
(22:59):
I was literally just going to say that, Bob, is you listen to every
topic we’ve talked about up to this point of, [laugh] you know, I was
listing off [laugh] [unintelligible] financials, people—you’re like,
“Just keep going.” Everything was basically broken, borderline DOA.
You tried to steer the ship.
You took it down to the studs.
(23:19):
You fired customers.
You found new customers.
Some of them maybe you disappointed more than you wanted to.
At the end of the day, what I knew would just make for
such a fantastic conversation is number one, your honesty
and objective analysis of facts is second to none.
(23:40):
I mean, the way that you just talked through everything that
you’ve been through is so pure and so raw, it’s incredible.
And then the second thing is your optimism behind all of that is unmatched.
I mean, I can tell by listening to you talk about it that you feel it right now.
You can feel it in the business, you’ve got it set up the way that you want.
(24:04):
And now I know why you’re saying, “Hey, I’m ahead of plan.”
You control what you can control, and you know, you chart your own course.
And basically as long as I want to keep plowing ahead, 14 hours a day for
seven days a week, I can pretty much meet any goal that I have set for myself.
(24:24):
I love that.
And I think one of the most important things about this
particular podcast is what it means to be a Manufacturing
Maverick comes in so many different forms, right?
It’s not just, I have a $100 million shop with 200 pristine machines
(24:45):
and hundreds of employees, and this, that, and the other thing.
Mavericks come from everywhere and getting the real stories of what it actually
takes to fight, and survive, and succeed in the business is what I think is so
important because it’s easy to get swept up in the, hey, being your own boss.
(25:06):
It’s simple.
Yeah, just go out and buy a shop.
Yeah, they’re just machines.
Get it run.
Oh, there’s already a crew there.
There’s so much that goes with what does it actually take to be successful,
and in this episode in particular, really getting the raw perspective
on what’s involved in doing that, I just think is so powerful, Bob.
(25:30):
Yeah.
I think that theme just runs through every organization.
If you think you can take your eye off the prize and everything
is smooth sailing, you’re about to get punched in the face.
No matter if you’ve got a great staff and great equipment
and great customers, I mean, you’ve always got to be pressing
ahead, and there’s always going to be some adversity.
(25:51):
When it gets too easy, you should be really nervous.
That’s right.
That’s the best time to be paranoid [laugh] . So, Bob, one of the things
you talked about, too, was you mentioned the tearing it down to the studs.
I mean, and what I almost hear in your story is that buying the
business and trying to turn it around actually unlocked in you
(26:16):
what is the real way that you would almost do it from scratch?
Because that’s essentially where you ended
up, right, is, okay, what’s the good here?
Let me keep the good.
What’s the bad?
Let me deal with that.
And then after a couple rounds of that, at the end of
the day, it was like, what’s the from zero principle
in every area that’s going to make that successful?
(26:39):
Is that kind of where you ended up?
Yeah, that’s a fascinating question.
You’re really spot on.
It’s kind of interesting how you gleaned that, I guess,
because I really didn’t even think about it until you said it.
But if I was to start over or start just a brand-new organization, I would
(27:00):
try to get to this place where you’ve got a foundation of, we’re down to,
like, four or five customers, but we’re doing a fantastic job for them.
I mean, they call, and there’s a crisis, and I’ve taken a phone call
at 4:30 in the afternoon and we’ve gotten them some parts at 8 a.m.
that weren’t even made, you know, out of Inkenel or something like
(27:24):
that, from a little slug I had laying around to save off a crisis.
[laugh]
. You know, if you can kind of come through like that, the competitiveness
of you versus the world, so to speak, it starts to fade away.
You’ve got customers that go, “I’m going to call this
(27:45):
group because I don’t even care what they charge.
I know I can count on them.
The parts are going to be great.
They’re going to be on time.”
And so, that’s the kind of position I want to be in with our customers.
That’s one of the reasons we kind of had to stop doing some work
is somebody calls once every six months for an $800 purchase
(28:06):
order, well, that just sometimes gets in the way a little bit.
It’s a little bit of a distraction.
So, we’re kind of hyper-focused.
That customer, I mentioned, is now our biggest customer.
When I started here, I think we were shipping them about
$40,000 a year, and we shipped them about $265,000 last year.
(28:26):
I think they still use other people.
So, we’re going for it all.
But to circle back to your point is, you’ve just got to get some stuff
just really dialed in to build upon and the all things to all people,
and just kind of getting by, so to speak, that just doesn’t work out.
(28:48):
We’re ready to build.
Love it.
I mean, one of the things we talk about here applies to any kind of company.
It doesn’t matter what you are—manufacturing, software—is
if you want to win, the first thing you have to do
is stop doing all the things that cause you to lose.
Yeah.
Exactly right.
It’s [laugh] —yeah.
The $800 order every six months thrashes everyone in the
(29:10):
company for X hours because of pick-your-reasons, right?
It’s a complicated customer, it’s a complicated
part, it’s this, that, and the other.
They want different terms, onerous terms,
whatever, deliveries that are not possible.
And it’s like, it’s $800.
Like, we’re going to spend ten grand fighting over 800 bucks.
Like, just don’t do it.
(29:31):
We’re not going to win by doing that.
That actually makes us lose.
Just, like, your perspective on the hundred purchase
orders, right, that were in the queue on the DLA work.
You just fast-forward and said, this will make
us lose, so we’re just going to stop doing it.
And a lot of people get lost in the, can I survive?
How do I try to win?
It’s like, if you know that you’re going to
(29:52):
fumble [laugh] if you do that, then don’t fumble.
Just don’t do it.
Yeah, great, great metaphor.
So, that’s one of the things that we did.
It wasn’t necessarily written down, but yeah, it was strategically
an objective, is just what you said, not focus so much on
winning; just stop doing the things that cause you to lose.
Yeah.
Yeah, when you filter them all out, all that’s left is how to win [laugh] . You
(30:16):
get all the crap off the table and next thing you know, there’s a meal there.
Yeah, right.
[laugh]
. Like, hey, look at that: prime rib roast
was just waiting in the middle of the table.
Couldn’t see it [laugh]
. That’s how it goes.
You’re right.
Yeah.
Yeah.
It’s true.
So Bob, in terms of the now state and the optimism and
(30:37):
what’s fueling that, so you mentioned getting into contract
manufacturing, some better longer-term contracts, more reliable
work, what did you have to do to build those relationships?
Was it just that get all that crap out of the way, and show
consistent delivery, consistent quality or how’d you fight for that?
Well, there’s a couple of things that you’ve
got kind of mixed into one question again.
(30:59):
So, I’ll kind of throw a few answers at you.
You know, the contract machining concept, there’s a couple of angles to that.
One is the job shop thing with taking orders, and spot
buys, and just, you know, cold-calling and doing things
as you get them, that’s kind of a thing of the past.
(31:20):
I mean, there’s people that are real successful doing that, and that maybe
that’s their niche, but we found ourselves in a situation where you’re pay
in guys sixty, seventy, eighty-thousand dollars, and we’re doing little job
shop things, and you’ve got a situation where all the machines are on setup
at once, and you don’t have enough setup people, or you got a circumstance
(31:41):
where the job you’ve got in now is something remedial, like we’re cutting
off a bar into little sticks and a guy, you pay him $34 an hour to do this.
It’s really hard to put the work, and the equipment, and
the people together in such a way that it always fits.
(32:05):
So, that’s one of the reasons for focusing on smaller customers,
repeat work where we basically tool things up, we effectively perfect
the process, and we expect to be doing that on a routine basis.
(32:25):
Monthly, you know, semi-annually, whatever the circumstance
may be, it’s just going to come back again and again.
And you know, I can leverage lot sizes when it’s convenient to do it, and maybe
how many we should make, or maybe we just build to a PO quantity, but there’s
a lot of things that I can take advantage of working that in to be a better fit
(32:51):
when you have those recurring jobs that have got a pretty well dialed-in process
versus the complexity of ten job shop type things that we’ve never made before.
The other thing is one of the—I don’t know if its characteristics or I don’t
know, a territorial kind of thing—we used to have three or four guys doing
(33:15):
setups, and even when we got a repeat job, they would always make a new
program, and reinvent the wheel, and we don’t do anything like that anymore.
That’s what we use Datanomix for is, you know, I’m analyzing
how much time each tool takes, and I’m like, oh, you know,
I got eight tools here and this one takes a whole minute.
(33:38):
Maybe I should use a different kind of tool or
go about the process a little bit differently.
And everything just gets more and more refined.
And that’s one of the reasons our output has increased significantly is we
just do everything a lot faster just by having it tried and true, so to speak.
The other part of restructuring that business, along that theme, has to
(34:04):
do with my background, I guess, some things that I’m used to working with.
I grew up in a fairly large job shop, which was also part of a
fairly large manufacturing family of businesses, and so I’m pretty
(34:25):
used to annual contracts, and continuous production, and designing
everything from—like, we used to have steel custom made, at the mill.
Full truckloads would drive in through the building, and it
would go into containers specially made and, you know, it was
pretty dialed-in continuous production process in a lot of cases.
(34:48):
I’ve got experience in putting a lot of that together when I was younger.
And so, I don’t know, I just kind of consider that kind of a skill set of mine.
I’d like to get some work in here that fits that mold.
We do have a candidate right now for that.
We make silencers.
(35:09):
We make six models.
This is all kind of new to me.
I’m a Yankee born and raised, so I didn’t, like, walk
around with guns all the time like people down in Texas do.
So, I don’t really know a lot about firearms, but I’m learning.
So, this was a project that we kind of fell into, and most of the summer
(35:30):
has been kind of the R&D, small batch kind of stuff, but you know, the
expectation is that this will be a continuous production situation.
We’re putting in those kind of controls, process
controls, and to basically run all the time.
And those are things that I’m kind of used to and I like doing.
(35:51):
So, those are some of the areas that we’re focused on
growth, and looking for, really, another really big customer
that we can kind of be a real supply chain partner to.
And that’s my project for 2025.
I’m not a professional salesman.
I don’t really know how to do it that well, and it’s changed from the old
(36:11):
days in the 1990s when I went on sales calls, and take people to golf or—
[laugh]
. Whatever.
You can still do that.
They just got to be worth it.
They just got to be worth it [laugh]
. But you can’t even find these people, you know?
There’s no receptionist anymore to bring a donut to, to get through the door.
So, it’s different, but we’re looking for a customer that kind
(36:33):
of fits that mold, so to speak, where we can just focus on
meeting their needs and excelling it at that, and not the shotgun
kind of approach that Neo has historically been known for.
Sure.
Well, I have no doubt, Bob, that given the journey you’ve been on and how
thoughtful you are about the approach you take to transforming the business,
(36:58):
and certainly the time and energy, and effort that you put into it, I have
no doubt that you will be successful in hitting that plan for next year.
I think you’re going to beat the seven years,
just listening to the optimism in your voice.
I think you are going to beat the seven years.
I bet you feel like you’re pretty close to really uncorking
(37:18):
the type of business that you ultimately wanted to build.
Yeah, we’re making some progress.
I’m pretty happy with things.
My wife is kind of getting tired of me saying,
“Well, it’s going to be another hard year.” [laugh]
. [laugh]
. She was like, “Don’t you ever have any… success?” And I said,
“Yeah, things are going great.” But I’m always moving the bar too.
(37:41):
Right.
It’s your job to be on to the next thing.
I always tell people, if you’re an entrepreneur, your spouse is your
company’s largest investor, regardless of monetary contribution.
Yeah.
It’s just how it is.
It’s great that you have that support, great that even
though you’ve been saying, “Hey, it’s going to be a hard
(38:03):
year,” that you’re still fully loaded, still committed.
Well, I think one thing is different.
When I told my wife that I was going to buy another machining company, she
said, “Oh, my.” She’s like, “You were like a real asshole back in those days.
You worked a lot and you’re always grumpy.” I was like,
(38:24):
“No, it’s going to be different this time.” It has been.
One reason is, I’m older.
When I was, like, 32 years old, maybe, I was running a machining
company that we had, like, 70 people, and it was a pretty big operation.
(38:46):
And I was a hot shot.
Really, I was just kind of the loud-mouth knucklehead is what I was.
And so, I’ve learned a lot.
And I like this small situation.
I need to focus on things other than running a machine in 2025.
It’s not that I dislike that.
(39:07):
It’s not good for the plan.
But I like what I’m doing, and so even when we have
a tough day, I always come home reasonably cheery.
That’s good.
That’s good.
So, she hasn’t had to call you an asshole, at least not for the business.
[laugh]
. Maybe
for other reasons.
[laugh] . Yeah, maybe for other reasons.
(39:28):
I don’t think it’s been work-related.
That’s good
[laugh] . That’s how it’s supposed to be.
So Bob, we like to wrap the show with a specific question.
And I just have to say again, I mean, your honesty, just getting into
the raw details of what it really takes, and telling the ups and downs
of the story, and hearing your optimism at the tail end of it, I find so
(39:54):
incredible, and much more out of the episode than—you know, I had a high bar.
I was like, Bob’s a thoughtful guy, smart guy, we’re going to really get into
it, but man, did you lay it all out there, and I definitely appreciate that.
I know the listeners will too.
So, what we like to close with is—and you’ve got a lot of lessons to pull from
here—but if you could go back in time and talk to the version of yourself,
(40:18):
that first got into to manufacturing, when you first were like, hey, this is my
career, this is what motivates me, what advice would you give to that person?
One thing I’ve learned as I’ve gotten older, and hopefully
wiser, and mellower is, you know, don’t think so much.
Every time I had a gut feeling about something and thought about it, I
(40:42):
talked myself out of it and I end up winding back right where I was—or, you
know, where I was going to go, just with a whole lot of pain in the middle.
So, that’s one thing that I’ve learned over the years, and I would recommend
to a younger version of myself or any other person is, just go with your gut.
If you think it, just lay it out there, and let the chips fall as they fall.
(41:05):
And you win some, you lose some; you know, make the most of it.
I love that one, Bob.
And what I love about how you explained it is when you’ve analyzed
it, it’s actually sometimes been the wrong path, you go back
and redo it anyway, and you made it out the other side, right?
So, knowing that’s going to be the framework some percentage of the
time, right, you’re not going to bat a thousand on your decisions, so
(41:30):
if you just go with it, and you end up having to course-correct, well,
you did that anyway when you thought about it longer, [laugh] right?
You ended up in the same place.
Yeah, it just finally occurred to me, after years and years, of kind of
like, boy, I’ve repeated this cycle, like, 30 times in my life, you know?
What are you, dense?
(41:52):
So, that’s the best advice I can give a younger person.
Love it.
Love it, Bob.
Great one to close on.
Fantastic episode.
Thank you again so much for sharing everything about your journey with
us, and best of luck to you in beating the seven-year plan, and getting
not just one, I’m going to say two really big customers for you next year.
(42:15):
How’s that?
Yeah, that’s what we’re hoping.
I appreciate the opportunity.
It was a pleasure to speak with you.
Awesome.
Thanks so much, Bob.
Thank you.
Thank you for listening to Manufacturing Mavericks.
If you’d like to learn more, listen to past episodes, or nominate
a future Maverick to be on our show, visit mfgmavericks.com,
(42:35):
and don’t forget to subscribe to and rate this podcast on
iTunes, Spotify, Google Play, or your favorite podcast app.
Welcome to Manufacturing Mavericks, a podcast where we showcase and celebrate
exceptional people from across precision manufacturing who are boldly
embracing new ways to improve their processes, grow their bottom lines,
and ensure American manufacturing will thrive for generations to come.
(00:25):
Welcome to this week’s episode of Manufacturing Mavericks.
I’m your host, Greg McHale, and I am very excited this week
to introduce our guest, Bob McGregor of Neo Industries.
How are you doing, Bob?
Great.
How are you today?
I am awesome, Bob, and very glad to have you on the show.
I know we had a fantastic conversation at the booth at
(00:46):
IMTS for a while a couple months ago, and I think we’re
going to get to dig into some juicy topics together today.
I appreciate it.
I’m excited about it.
So, Bob, first and foremost, why don’t you tell us a
little bit about yourself and about Neo Industries?
Well, Neo Industries is a small company—I call it a micro company, really;
(01:07):
there’s three of us—and it’s a machining company, primarily contract machining.
And as we’ll go through our discussion, we can talk a little
bit about how we’ve evolved into that kind of core competency.
But the company was started in 1992.
The original founder has long since left the building.
(01:28):
I bought it from a second owner five years
ago, and it’s been a turnaround project.
It’s been a lot of work.
The company was absentee-managed for several years, had kind of lost
their way, fallen on some hard times, and so we’re kind of rebuilding it.
So, Bob, I know that one of the things a lot of folks who
(01:50):
are looking to get into ownership of a manufacturing company
wonder, is just that (01:55):
how do I go about getting into it?
How do I find a business to buy?
What’s really involved in that?
So, how did you come across Neo and what ultimately
made you want to buy a shop in the first place?
And then, how did you go about that?
Well, you got a couple of questions in there.
(02:15):
One of them, you didn’t necessarily directly ask, but I would like to
answer, and that is, oftentimes people come up in the business and they’re
pretty talented, and they want to kind of go and do their own thing.
The first thing, regardless of financial resources and
opportunities, is you got to make sure that you’re up for the fight.
(02:37):
Owning your own company in any business is tough, and
owning your own manufacturing company is pretty tough,
and I think that a lot of people underestimate that.
I assume you, like many others, get auction notices daily, emailed to you.
And I saved one because it kind of cracked me up.
(02:59):
It was a company, brand new building, five brand-new Haas machines,
super-cool conference room, big flat screen in there, and a really clean shop.
And just kind of made me laugh.
I was like, okay, so here’s three guys on a hunting
trip and 12-pack a beer, going, “We should make guns.
Let’s go get some machines and figure out how to do this,” and you
(03:21):
know, it’s not really like that, but there’s a lot of dues to pay.
But specifically, getting into this business,
I grew up in the manufacturing business.
I’ve been in machine shops and other processing facilities for most of my
life until I was about 35, and left the industry kind of thought for good.
(03:44):
I relocated my family to Texas to be closer to family.
This town that we live in, Colleyville, Texas, it’s a pretty white collar town.
People have to go to somebody to get their tires inflated.
It’s not a real mechanical, industrial community.
So, there’s this little machining company a
(04:06):
mile from my house, and I found it kind of odd.
And I had discovered it a long time ago.
I actually came up here when I first moved to
town, and donated a whole bunch of books to them.
I said, you know, I’m not going to be needing these anymore.
But then many years went by, a dozen or more.
I was changing jobs again.
(04:26):
The company I was working for was kind of closing.
I was having a tough time finding a job because I had
been in family-owned and operated companies my whole life.
I had done pretty much every job on every rung, and didn’t really
have a resume that fit into—that matched up with a job application.
(04:52):
I was working with a recruiter, and I think on one interview
with a recruiter, I think they told me I was unhirable.
I thought, “Well jeez, that’s pretty motivating.”
Yeah [laugh]
. So, it just became quite apparent, okay, you’re not a nine to fiver.
Just you need to go be your own boss again.
(05:13):
You need to go find your own company.
And I know how to do this business.
This company a mile from my house came up for sale at this time.
I called up the agent and said, “Let’s do this.”
It was really quite that quick and serendipitous.
That’s incredible, Bob.
And there’s a couple things that you brought up
(05:34):
that I definitely think are worth digging into.
The first one is what you opened with.
You have to know whether or not you’re up for the fight, I
guess on one hand, or you actually have to be so unaware of the
fight that you try to do it anyway and you just make it through.
Yeah [laugh] , right.
So, [laugh] did you know you were up for the fight or did you start to
discover, going through the process, what all the twists and turns really are?
(06:00):
You know, the timing of this thing was kind
of funny, just how everything fell together.
My family-owned company had gone through some difficult
times, and so I’ve been through kind of some turnaround
deals, and some tough days, and some long nights before.
When this company wasn’t really in that greatest shape and it
(06:21):
had come up for sale, I was at an interesting point in my life.
I had done the dad thing for about 15 years, and was there for
my kids, and coached their sports, and was on the dad’s club,
and did all the school events, and the bands and all that stuff.
And my job as dad was kind of coming to an end.
(06:44):
My youngest child right now is 16 years old and the oldest is 26.
And so, you know, at this time, what, 2019, I think two were out of high school.
One was a senior, you know, one was 10th grade.
So, they’re driving.
They don’t need dad throwing the ball with them in the backyard anymore.
(07:05):
So, I come to look at this company and I brought my family up
here, and they’re just, like—they didn’t put it this way—but
they’re just like, “Holy shit, you’re out of your mind.”
And I was like, “Yeah, this is going to take
seven years.” And I was, like, dead serious.
(07:26):
And, you know, I believed in myself, and I knew
that I was just going to have to get after it.
And I pretty much work every day, and I have been for about five years.
And we’re making progress.
I’m on schedule.
Covid didn’t help, but I think I’m on schedule.
My name is not on the building, and I don’t need it to be, but my
(07:50):
goal is where you can say to the general public, hey, this is me.
This is my company, and it’s a pretty class-act operation.
And we got a little bit more work to do.
But it took some TLC and then some.
So, seven years, Bob, is very specific, which makes me wonder.
(08:12):
So, when you started evaluating this, you called up the agent, “Hey, I’m
interested.” You started looking at the business, you knew it was turnaround,
distressed, needs some TLC, what did you find at that point in time?
What did you look at?
What did you see that made you say, okay, I’m signing up for a
seven-year haul here, and then ultimately, here’s what that looks like.
(08:35):
It’s not written down.
It was just kind of a feeling.
It was just kind of almost a reaction.
And I kind of do things in phases and chunks.
I don’t know, that’s how I kind of mentally compartmentalize things.
Seven years is going to be kind of a crossroads, albeit at a
different age, the family will be in a different circumstance of life.
(08:57):
And then, you know, I want to be at a certain point
where I can say, well, what are we going to do now?
Does somebody want to get involved, in the family?
Do we want to get into, like, pretty aggressive
conquer-the-world kind of attitude now?
Do we want to build on this foundation that’s been established?
Or do I want to sell it?
(09:17):
Do I want to do something else?
I got all kinds of goofy other business
ideas, and you know, maybe I’ll be tired.
I don’t know, but I knew that it was going to take some time.
I think when we get to this mystical seven-year mark,
which may be six or whatever, it’s not terribly relevant.
(09:38):
It’s just, I’ll be in a situation where we can say, okay, what’s next?
What are we going to do here?
And we’re getting close to that.
And so, when you first came into it, I imagine there’s
probably many different aspects that need to be fixed.
I’m sure there’s financial things, and equipment things,
(09:58):
and team and people-related things, and vendor things.
I mean, how did you go about that?
Oh, it was everything.
I mean, you can keep going with your list until you get to—
[laugh]
. 20 or more items.
The answer is, you know, you just have to start.
The first thing I started with is, I hadn’t been in a shop for a long time.
(10:23):
So, I kind of stayed clear of those guys.
I was a little out of season, so to speak, on my metal-cutting aptitude.
I hadn’t ran a CNC machine for a long time,
but it didn’t look like the kind we have here.
I mean, I couldn’t even turn these things on.
I didn’t even—
[laugh] . Yeah you could.
— [laugh] I didn’t really remember any G code or anything.
So, I kind of stayed in kind of an executive management situation,
(10:49):
and started with the financials and some company infrastructure.
And we had some success there, like, really
low-hanging fruit, like, right out of the gate.
You know, we had no money, so I’m like starting with, I have to find money.
So, little things like our property and
casualty insurance was like $21,000 a year.
(11:12):
Well, it should be two, okay?
We don’t own the building.
I don’t need to ensure that.
So, okay, I just found 19.
Our phone system was $800 a month.
We had, like, eight lines.
We had Polycom phones all over the building.
No one answered them.
There were five guys working in the shop and a remote employee
(11:35):
that answered the main business number with a cell phone.
So, I whacked that.
So, there’s another, what, eight, nine grand a year.
Some of that just came quite easy.
The company had lost, you know, $100,000 the year before, and
(11:55):
cash was bad, and, you know, mending fences with some vendors.
And of course, looking to grow some sales, one of the reasons that—well,
there’s a lot of reasons that the company was losing money, but one
of them was they had just lost a pretty humongous piece of business.
They’d shipped, like, $800,000 or $900,000
(12:17):
in 2018, and it went down to, like, $500,000.
Without any executive management here kind of
running that, nothing was really ever scaled.
There was no reaction to that, whether you’d be looking to
fill those sales aggressively or trimming costs or something.
It just kind of was like… it is.
(12:38):
And so, what happened is, you lose a ton of money.
So, we tried to gain some sales.
And, you know, all this time, I’m trying to
figure out, you know, what are we doing here?
What are we good at?
Where are we going to go?
And we had a little bit of success.
So, I bought this company in the end of April,
2019, and we were just losing tons of money.
(13:03):
And by the end of 2019, we’d lost another $100,000.
But a lot of stuff was getting fixed, it just
hadn’t really had enough time to kick in.
The damage was done, so to speak.
So, we made money.
We started turning the profit every month in 2020,
January, February, March, and then… you know what happened.
(13:27):
So, it doesn’t matter how many MBAs you have, I mean, that’s uncharted water.
And this is an extremely fragile organization.
We’ve had, like, 90 days of winning built upon, you know, 24 months of failure.
So, [laugh] yeah, that was a tough time.
(13:48):
So, we made it through.
We survived.
That was a real setback.
And we made some decisions.
Not we; I mean, me, really.
We did some things that maybe weren’t that great of an idea
in 2020, just to survive that had a real ripple effect that
kept us in a pretty tough spot for the following two years.
(14:13):
Specifically, do you know what the DLA is?
Defense Logistics Agency, I think, is what it stands for.
No.
It’s Department of Defense parts, but really aftermarket,
MRO, a tank in Afghanistan is missing a bracket.
Oh, okay.
Sure.
Those all get filled by this Defense Logistics Agency.
(14:36):
So, we started doing work for them, and got filled up with all these
opportunities, a couple hundred thousand dollars worth of a backlog.
And we start getting into this, and it was turning
out to be more detrimental than beneficial.
You got a purchase order that’s worth a thousand dollars,
some strange material we can’t find goes to two vendors, gets
(14:59):
two outside processing, and has to be individually packed.
And there was just so much going into this that, there are a lot of people,
a lot of companies that do this exclusively for a living, and they’re very
successful at it, but they’ve got their whole business organized around this.
We’re throwing this into an organization that wasn’t
(15:20):
set up for this and it was pretty catastrophic.
We had to work our way through that.
Actually, I ended up canceling probably a hundred purchase orders.
It was just, like, by the time we get done with these, we’ll be out of business.
So, it did help in a way, but it did create a real hangover for us working our
way out of that, and kind of getting back to where we needed to be (15:42):
focusing
on our core customers—which is what we spent this year doing, really—is
getting out of the job shop business, focusing on contract manufacturing.
And I’ve increased our business with some customers that we have a really
(16:02):
great relationship with that, you know, I think didn’t trust us that much.
They bought from other vendors because we were unreliable.
One of the reasons we were unreliable was we were messing around with things
that were distractions, and costing us a lot of money in this defense business,
(16:24):
and a couple other customers that we ended up just kind of parting ways with.
So, much there, Bob.
That’s just an incredible timeline, and I
think an absolute sign of your persistence.
And clearly, you were ready for the fight because there’s about
a hundred exit doors in everything you just talked through that.
(16:44):
Man, if you wanted to tap out at any time,
there’s plenty of opportunity to do so.
One of the things you’re talking about is
the hard decision of firing bad customers.
And I love the way you said it of, like, look, if I look ahead a hundred POs,
I’m out of business if I do this anyway, so we might as well just cut it.
So, there’s that piece of it.
(17:05):
And then also rebuilding trust with, it sounds like, some of your more
established vendors who perhaps had known Neo for some time up to that point.
And then not to mention another piece of the equation, as you
mentioned, a fragile organization, and your team, right, and
(17:28):
keeping your team bought in and engaged through all of that.
So, how did the cultural aspect of Neo, and keeping the team together, and
keeping folks strong and bought in through all of this, how did you manage that?
It was a little bit of a rough road.
And I tried to manage it pretty well.
(17:49):
Maybe I could have done some things a little bit different,
a little bit better, but I’m not really a manager.
I’m a pretty hands-off kind of guy.
I let everybody kind of do their thing, and was just trying to create
the model, the vision, the executive, higher level kind of vibe,
I guess, and it was really having a hard time kind of sticking.
(18:12):
We went through some people that, they were talented,
but it was kind of a tough time on the people side.
And that’s been pretty well stabilized.
We kind of—you know those home improvement shows where the family
tries to remodel their kitchen, they paint the cupboards, and they
put in some new floor and then they find out that they can’t use
(18:36):
the toaster oven and the microwave at the same time because they
don’t know anything about wiring, and then they call in the pro.
I think I might have been a little bit too slow, a
little bit too patient, a little bit too forgiving.
And finally, about a year ago, I was just like, we’re going to the studs.
I cut the company down to just me and one guy.
(18:57):
And I threw away every fixture and program in the building.
I just, [laugh] I told my wife, I said, it’s
about to get real hard, and we’re starting over.
And I just started turning away work, and I focused on doing the
best job possible with the certain spaces that I wanted to excel.
(19:19):
I had to learn to be a mill programmer.
I’d never even run a mill in my life.
I started last November, and literally, it’s
like a Dilbert cartoon or something, you know?
Just, like, me staring at this Haas VF-4 going, “All right, man.
Just you and me.
Let’s see what we can do.”
“What do you got?”
(19:39):
[laugh]
. And learned how to use the Fusion 360, which is, you know, not super
sophisticated, but it meets our needs, start building fixtures,
and trying to dig ourselves out of a really, really bad situation.
I mean, we were really backed up, really late on a lot of stuff,
and a lot of people were really pretty frustrated with me.
(20:01):
And like Churchill said, “If you’re going through
hell, just keep going.” And so, we just plowed ahead.
And I got better at it.
I got a helper in here with no experience,
but super reliable, super hardworking guy.
I kind of did a 180.
I went from letting people do their own things
(20:21):
to nobody does anything unless I say it’s okay.
I mean, he doesn’t even make offsets.
He comes to get me to do that.
Now, that is not what I would recommend as a long-term
management arrangement or company culture, but I think we
(20:42):
just really needed to start over and build up incrementally.
And so, he’s learned a lot over the years, and he’s becoming—or not over
the years; over the year—and he’s becoming more and more self-sufficient.
And he’s doing all the setups now, and we’ve got a little
arrangement of how I diagram all that, and get him the program.
And basically by, I think it was April, we were on pace to ship
(21:07):
about $1.3 million with three of us after the first quarter of 2024.
That’s incredible.
And, you know, we were just kind of still getting going.
Now, unfortunately, the year didn’t turn out that great.
We had a profitable year and we had a good year, but our
(21:28):
second biggest customer went out of business, but they were
kind of a crummy customer, so it was kind of a not bad.
It’s just, when you lose a pretty 30% of your revenue pretty much
instantly, I can’t go knock on enough doors to get that back right away.
So, that was a setback.
(21:49):
But internally speaking, we’ve made a lot of progress and we’re
finally at the stage that I’ve been trying to get to for a long time.
We’re ready to really aggressively sell.
We have capacity, we have talent, we’re organized.
For a while in the early years, people are like, “Well, you calling on anybody?
(22:12):
Where are you looking for new work?” I’m like, “We’re not
even looking because all we’ll do is fall on our face.
It’s a mess.”
And first impressions, right?
You get a PO from somebody that you’ve been working on, and then you screw it
up, and well, that’s the end of that arrangement, which I actually did that.
And I’m—I sent him a really nice Harry and
(22:35):
David basket [laugh] a couple weeks ago.
[laugh]
. I’m still trying to mend that fence.
But we laid an egg with somebody that I was
really working hard to create an opportunity with.
So, we’re in a good spot.
I’m really, even though we ourselves have dropped off unexpectedly,
I’m pretty optimistic, probably more so now than ever before.
(22:59):
I was literally just going to say that, Bob, is you listen to every
topic we’ve talked about up to this point of, [laugh] you know, I was
listing off [laugh] [unintelligible] financials, people—you’re like,
“Just keep going.” Everything was basically broken, borderline DOA.
You tried to steer the ship.
You took it down to the studs.
(23:19):
You fired customers.
You found new customers.
Some of them maybe you disappointed more than you wanted to.
At the end of the day, what I knew would just make for
such a fantastic conversation is number one, your honesty
and objective analysis of facts is second to none.
(23:40):
I mean, the way that you just talked through everything that
you’ve been through is so pure and so raw, it’s incredible.
And then the second thing is your optimism behind all of that is unmatched.
I mean, I can tell by listening to you talk about it that you feel it right now.
You can feel it in the business, you’ve got it set up the way that you want.
(24:04):
And now I know why you’re saying, “Hey, I’m ahead of plan.”
You control what you can control, and you know, you chart your own course.
And basically as long as I want to keep plowing ahead, 14 hours a day for
seven days a week, I can pretty much meet any goal that I have set for myself.
(24:24):
I love that.
And I think one of the most important things about this
particular podcast is what it means to be a Manufacturing
Maverick comes in so many different forms, right?
It’s not just, I have a $100 million shop with 200 pristine machines
(24:45):
and hundreds of employees, and this, that, and the other thing.
Mavericks come from everywhere and getting the real stories of what it actually
takes to fight, and survive, and succeed in the business is what I think is so
important because it’s easy to get swept up in the, hey, being your own boss.
(25:06):
It’s simple.
Yeah, just go out and buy a shop.
Yeah, they’re just machines.
Get it run.
Oh, there’s already a crew there.
There’s so much that goes with what does it actually take to be successful,
and in this episode in particular, really getting the raw perspective
on what’s involved in doing that, I just think is so powerful, Bob.
(25:30):
Yeah.
I think that theme just runs through every organization.
If you think you can take your eye off the prize and everything
is smooth sailing, you’re about to get punched in the face.
No matter if you’ve got a great staff and great equipment
and great customers, I mean, you’ve always got to be pressing
ahead, and there’s always going to be some adversity.
(25:51):
When it gets too easy, you should be really nervous.
That’s right.
That’s the best time to be paranoid [laugh] . So, Bob, one of the things
you talked about, too, was you mentioned the tearing it down to the studs.
I mean, and what I almost hear in your story is that buying the
business and trying to turn it around actually unlocked in you
(26:16):
what is the real way that you would almost do it from scratch?
Because that’s essentially where you ended
up, right, is, okay, what’s the good here?
Let me keep the good.
What’s the bad?
Let me deal with that.
And then after a couple rounds of that, at the end of
the day, it was like, what’s the from zero principle
in every area that’s going to make that successful?
(26:39):
Is that kind of where you ended up?
Yeah, that’s a fascinating question.
You’re really spot on.
It’s kind of interesting how you gleaned that, I guess,
because I really didn’t even think about it until you said it.
But if I was to start over or start just a brand-new organization, I would
(27:00):
try to get to this place where you’ve got a foundation of, we’re down to,
like, four or five customers, but we’re doing a fantastic job for them.
I mean, they call, and there’s a crisis, and I’ve taken a phone call
at 4:30 in the afternoon and we’ve gotten them some parts at 8 a.m.
that weren’t even made, you know, out of Inkenel or something like
(27:24):
that, from a little slug I had laying around to save off a crisis.
[laugh]
. You know, if you can kind of come through like that, the competitiveness
of you versus the world, so to speak, it starts to fade away.
You’ve got customers that go, “I’m going to call this
(27:45):
group because I don’t even care what they charge.
I know I can count on them.
The parts are going to be great.
They’re going to be on time.”
And so, that’s the kind of position I want to be in with our customers.
That’s one of the reasons we kind of had to stop doing some work
is somebody calls once every six months for an $800 purchase
(28:06):
order, well, that just sometimes gets in the way a little bit.
It’s a little bit of a distraction.
So, we’re kind of hyper-focused.
That customer, I mentioned, is now our biggest customer.
When I started here, I think we were shipping them about
$40,000 a year, and we shipped them about $265,000 last year.
(28:26):
I think they still use other people.
So, we’re going for it all.
But to circle back to your point is, you’ve just got to get some stuff
just really dialed in to build upon and the all things to all people,
and just kind of getting by, so to speak, that just doesn’t work out.
(28:48):
We’re ready to build.
Love it.
I mean, one of the things we talk about here applies to any kind of company.
It doesn’t matter what you are—manufacturing, software—is
if you want to win, the first thing you have to do
is stop doing all the things that cause you to lose.
Yeah.
Exactly right.
It’s [laugh] —yeah.
The $800 order every six months thrashes everyone in the
(29:10):
company for X hours because of pick-your-reasons, right?
It’s a complicated customer, it’s a complicated
part, it’s this, that, and the other.
They want different terms, onerous terms,
whatever, deliveries that are not possible.
And it’s like, it’s $800.
Like, we’re going to spend ten grand fighting over 800 bucks.
Like, just don’t do it.
(29:31):
We’re not going to win by doing that.
That actually makes us lose.
Just, like, your perspective on the hundred purchase
orders, right, that were in the queue on the DLA work.
You just fast-forward and said, this will make
us lose, so we’re just going to stop doing it.
And a lot of people get lost in the, can I survive?
How do I try to win?
It’s like, if you know that you’re going to
(29:52):
fumble [laugh] if you do that, then don’t fumble.
Just don’t do it.
Yeah, great, great metaphor.
So, that’s one of the things that we did.
It wasn’t necessarily written down, but yeah, it was strategically
an objective, is just what you said, not focus so much on
winning; just stop doing the things that cause you to lose.
Yeah.
Yeah, when you filter them all out, all that’s left is how to win [laugh] . You
(30:16):
get all the crap off the table and next thing you know, there’s a meal there.
Yeah, right.
[laugh]
. Like, hey, look at that: prime rib roast
was just waiting in the middle of the table.
Couldn’t see it [laugh]
. That’s how it goes.
You’re right.
Yeah.
Yeah.
It’s true.
So Bob, in terms of the now state and the optimism and
(30:37):
what’s fueling that, so you mentioned getting into contract
manufacturing, some better longer-term contracts, more reliable
work, what did you have to do to build those relationships?
Was it just that get all that crap out of the way, and show
consistent delivery, consistent quality or how’d you fight for that?
Well, there’s a couple of things that you’ve
got kind of mixed into one question again.
(30:59):
So, I’ll kind of throw a few answers at you.
You know, the contract machining concept, there’s a couple of angles to that.
One is the job shop thing with taking orders, and spot
buys, and just, you know, cold-calling and doing things
as you get them, that’s kind of a thing of the past.
(31:20):
I mean, there’s people that are real successful doing that, and that maybe
that’s their niche, but we found ourselves in a situation where you’re pay
in guys sixty, seventy, eighty-thousand dollars, and we’re doing little job
shop things, and you’ve got a situation where all the machines are on setup
at once, and you don’t have enough setup people, or you got a circumstance
(31:41):
where the job you’ve got in now is something remedial, like we’re cutting
off a bar into little sticks and a guy, you pay him $34 an hour to do this.
It’s really hard to put the work, and the equipment, and
the people together in such a way that it always fits.
(32:05):
So, that’s one of the reasons for focusing on smaller customers,
repeat work where we basically tool things up, we effectively perfect
the process, and we expect to be doing that on a routine basis.
(32:25):
Monthly, you know, semi-annually, whatever the circumstance
may be, it’s just going to come back again and again.
And you know, I can leverage lot sizes when it’s convenient to do it, and maybe
how many we should make, or maybe we just build to a PO quantity, but there’s
a lot of things that I can take advantage of working that in to be a better fit
(32:51):
when you have those recurring jobs that have got a pretty well dialed-in process
versus the complexity of ten job shop type things that we’ve never made before.
The other thing is one of the—I don’t know if its characteristics or I don’t
know, a territorial kind of thing—we used to have three or four guys doing
(33:15):
setups, and even when we got a repeat job, they would always make a new
program, and reinvent the wheel, and we don’t do anything like that anymore.
That’s what we use Datanomix for is, you know, I’m analyzing
how much time each tool takes, and I’m like, oh, you know,
I got eight tools here and this one takes a whole minute.
(33:38):
Maybe I should use a different kind of tool or
go about the process a little bit differently.
And everything just gets more and more refined.
And that’s one of the reasons our output has increased significantly is we
just do everything a lot faster just by having it tried and true, so to speak.
The other part of restructuring that business, along that theme, has to
(34:04):
do with my background, I guess, some things that I’m used to working with.
I grew up in a fairly large job shop, which was also part of a
fairly large manufacturing family of businesses, and so I’m pretty
(34:25):
used to annual contracts, and continuous production, and designing
everything from—like, we used to have steel custom made, at the mill.
Full truckloads would drive in through the building, and it
would go into containers specially made and, you know, it was
pretty dialed-in continuous production process in a lot of cases.
(34:48):
I’ve got experience in putting a lot of that together when I was younger.
And so, I don’t know, I just kind of consider that kind of a skill set of mine.
I’d like to get some work in here that fits that mold.
We do have a candidate right now for that.
We make silencers.
(35:09):
We make six models.
This is all kind of new to me.
I’m a Yankee born and raised, so I didn’t, like, walk
around with guns all the time like people down in Texas do.
So, I don’t really know a lot about firearms, but I’m learning.
So, this was a project that we kind of fell into, and most of the summer
(35:30):
has been kind of the R&D, small batch kind of stuff, but you know, the
expectation is that this will be a continuous production situation.
We’re putting in those kind of controls, process
controls, and to basically run all the time.
And those are things that I’m kind of used to and I like doing.
(35:51):
So, those are some of the areas that we’re focused on
growth, and looking for, really, another really big customer
that we can kind of be a real supply chain partner to.
And that’s my project for 2025.
I’m not a professional salesman.
I don’t really know how to do it that well, and it’s changed from the old
(36:11):
days in the 1990s when I went on sales calls, and take people to golf or—
[laugh]
. Whatever.
You can still do that.
They just got to be worth it.
They just got to be worth it [laugh]
. But you can’t even find these people, you know?
There’s no receptionist anymore to bring a donut to, to get through the door.
So, it’s different, but we’re looking for a customer that kind
(36:33):
of fits that mold, so to speak, where we can just focus on
meeting their needs and excelling it at that, and not the shotgun
kind of approach that Neo has historically been known for.
Sure.
Well, I have no doubt, Bob, that given the journey you’ve been on and how
thoughtful you are about the approach you take to transforming the business,
(36:58):
and certainly the time and energy, and effort that you put into it, I have
no doubt that you will be successful in hitting that plan for next year.
I think you’re going to beat the seven years,
just listening to the optimism in your voice.
I think you are going to beat the seven years.
I bet you feel like you’re pretty close to really uncorking
(37:18):
the type of business that you ultimately wanted to build.
Yeah, we’re making some progress.
I’m pretty happy with things.
My wife is kind of getting tired of me saying,
“Well, it’s going to be another hard year.” [laugh]
. [laugh]
. She was like, “Don’t you ever have any… success?” And I said,
“Yeah, things are going great.” But I’m always moving the bar too.
(37:41):
Right.
It’s your job to be on to the next thing.
I always tell people, if you’re an entrepreneur, your spouse is your
company’s largest investor, regardless of monetary contribution.
Yeah.
It’s just how it is.
It’s great that you have that support, great that even
though you’ve been saying, “Hey, it’s going to be a hard
(38:03):
year,” that you’re still fully loaded, still committed.
Well, I think one thing is different.
When I told my wife that I was going to buy another machining company, she
said, “Oh, my.” She’s like, “You were like a real asshole back in those days.
You worked a lot and you’re always grumpy.” I was like,
(38:24):
“No, it’s going to be different this time.” It has been.
One reason is, I’m older.
When I was, like, 32 years old, maybe, I was running a machining
company that we had, like, 70 people, and it was a pretty big operation.
(38:46):
And I was a hot shot.
Really, I was just kind of the loud-mouth knucklehead is what I was.
And so, I’ve learned a lot.
And I like this small situation.
I need to focus on things other than running a machine in 2025.
It’s not that I dislike that.
(39:07):
It’s not good for the plan.
But I like what I’m doing, and so even when we have
a tough day, I always come home reasonably cheery.
That’s good.
That’s good.
So, she hasn’t had to call you an asshole, at least not for the business.
[laugh]
. Maybe
for other reasons.
[laugh] . Yeah, maybe for other reasons.
(39:28):
I don’t think it’s been work-related.
That’s good
[laugh] . That’s how it’s supposed to be.
So Bob, we like to wrap the show with a specific question.
And I just have to say again, I mean, your honesty, just getting into
the raw details of what it really takes, and telling the ups and downs
of the story, and hearing your optimism at the tail end of it, I find so
(39:54):
incredible, and much more out of the episode than—you know, I had a high bar.
I was like, Bob’s a thoughtful guy, smart guy, we’re going to really get into
it, but man, did you lay it all out there, and I definitely appreciate that.
I know the listeners will too.
So, what we like to close with is—and you’ve got a lot of lessons to pull from
here—but if you could go back in time and talk to the version of yourself,
(40:18):
that first got into to manufacturing, when you first were like, hey, this is my
career, this is what motivates me, what advice would you give to that person?
One thing I’ve learned as I’ve gotten older, and hopefully
wiser, and mellower is, you know, don’t think so much.
Every time I had a gut feeling about something and thought about it, I
(40:42):
talked myself out of it and I end up winding back right where I was—or, you
know, where I was going to go, just with a whole lot of pain in the middle.
So, that’s one thing that I’ve learned over the years, and I would recommend
to a younger version of myself or any other person is, just go with your gut.
If you think it, just lay it out there, and let the chips fall as they fall.
(41:05):
And you win some, you lose some; you know, make the most of it.
I love that one, Bob.
And what I love about how you explained it is when you’ve analyzed
it, it’s actually sometimes been the wrong path, you go back
and redo it anyway, and you made it out the other side, right?
So, knowing that’s going to be the framework some percentage of the
time, right, you’re not going to bat a thousand on your decisions, so
(41:30):
if you just go with it, and you end up having to course-correct, well,
you did that anyway when you thought about it longer, [laugh] right?
You ended up in the same place.
Yeah, it just finally occurred to me, after years and years, of kind of
like, boy, I’ve repeated this cycle, like, 30 times in my life, you know?
What are you, dense?
(41:52):
So, that’s the best advice I can give a younger person.
Love it.
Love it, Bob.
Great one to close on.
Fantastic episode.
Thank you again so much for sharing everything about your journey with
us, and best of luck to you in beating the seven-year plan, and getting
not just one, I’m going to say two really big customers for you next year.
(42:15):
How’s that?
Yeah, that’s what we’re hoping.
I appreciate the opportunity.
It was a pleasure to speak with you.
Awesome.
Thanks so much, Bob.
Thank you.
Thank you for listening to Manufacturing Mavericks.
If you’d like to learn more, listen to past episodes, or nominate
a future Maverick to be on our show, visit mfgmavericks.com,
(42:35):
and don’t forget to subscribe to and rate this podcast on
iTunes, Spotify, Google Play, or your favorite podcast app.
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