Let’s talk about Value and vision for 2022

By David Capkovitz, EBITDA Growth Systems
 
As Mike and I look over the last year we think of how thankful we are for all this is going on in the machining industry right now. Even in a time where we have to work against another COVID variant and whatever social tension may come our way there is so much to be thankful for.  We have seen record amounts of job availability in the market, a larger number of projects being awarded from large customers along with more company owners focusing on building strong cultures.  This mixed with a ton of enjoyment working with many owners has us really encouraged about what is to come in 2022.
 
We have more value today than what we perceived in the past.
The owners of many NTMA member companies are driving into 2022 with clear understanding of their value. This has been encouraging as this has not historically been “the norm” that we have seen over the past 10 years. Many companies’ owners value themselves at when they perceive as “what the market will bear”. The truth is that making a good part on time is so coveted in our industry that it is okay to pay a premium for reliability. There are three things that customers pay for: Quality (always non-negotiable), Delivery (negotiable), and Price (negotiable).  I have always said that the customer can pick any two with Quality being non-negotiable. There is value here!  If you purchase a new machine at $300k it will take you approximately 8,100 hours, or 4 years to pay for that machine using a $65/hr. rate and approximately 4,100 hrs., or 2 years using a rate of $100/hr. (applying standard rates). A $100/hr. rate is totally acceptable with our obligation to take care of our employees and assure that the customer is getting the highest quality possible with a quality piece of equipment. Our customers expect us to be consistent and reliable without aging equipment.
 
Vision is how we get to our goals.
As owners we have the opportunity every year to look at our mission, vision, and values and give ourselves a gut check to see if we are on the same set of train tracks that we laid out for ourselves when we set our goals.  This vision is what we need to keep our employees engaged, keep our revenue targets within reach, and to keep product flowing through our shops as we expect. This starts with a solid plan around our business from sales to production to our finances. As we build these series of plans, we align them with our financial goals, operations goals, sales goals etc. We use this as our roadmap to share with or team, share with our customers and with those who hold us accountable. Often times we manage by looking in the rearview mirror of what just happened.  I want to encourage you to manage looking through the windshield, a clean, clear windshield that provides vision to your roadmap that is in place.
 
As we go into the end of 2021 while casting our vision into 2022, be encouraged, you have a bright future ahead of you. Realize the value of what you provide, what your employees bring to the table, and the need for YOU in the market. Continue to drive your success with a clear plan, and strength in your vision to get up every day and accomplish your plan. In this you will set an example for your team, your family, and your peers. We are all in this together and know that we have some great times ahead!