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Patti Engineering goes from 25 to 33 people in 2 years

I am pretty proud of the fact that Patti Engineering was recently published in Control Engineering Magazine. The article is about an automated system we did for Ancor in Troy, Michigan. The system packages Federally Mandated Vehicle Information Labels for all Ford Vehicles sold in North America. You can check the article out yourself:

http://www.controleng.com/article/CA6620339.html

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In May 2006, I first heard Alan Beaulieu speak at the annual Control Systems Integrators Association (CSIA) conference. During the Florida-based conference, Alan remarked that the nation was in a one-state recession, and jokingly advised those from Michigan not to return home. That drew a hearty laugh from my fellow integrators and a couple of teasing smiles my way. I have since become a big fan of Alan’s and would recommend that business owners subscribe to his monthly analysis newsletter (www.ecotrends.org).

Beaulieu predicted back then that the rest of the country would join Michigan in a recession in 2008 and that it would be a pretty deep one – unlike any in the past 30 years. True to his prediction, the country has joined Michigan in the recession and there seems to be a reaction of panic across the nation. Beaulieu also has said that if you think 2008 is bad, wait until you experience 2009!

The politicians in Washington think that if they throw enough money at the financial industry, the recession will go away. Again according to Beaulieu, their moves will only act to prolong the downturn and hamper our children with a debt that they will have a hard time repaying.

Having seven years of experience with a recession, here are my tips on how you can cope with it:

• Do not feel sorry for yourself! Your business can be nimble enough to survive the downturn and even prosper. Many of your competitors will go away. With the banking industry being so tight, there is very little capital for startups. When the economy turns around (and it will) you will be ready!
• Do not look at your 401(k) and/or IRA statements. They will only depress you. If you have not moved them to cash yet, you are probably too late.
• Keep making your monthly mortgage payments and do not think about the shrinking equity in your house. Housing lead the recession in and prices have probably hit the bottom.
• If you own a business, be very careful who you work for. Nothing is more brutal for your business then to have a big collectable for a customer who claims Chapter-11, which ensures you only pennies on the dollar. Get as much money up front and give companies on shaky ground to your competitors.
• Do not skimp on sales and marketing. It is even more important in bad times to get in front of existing and potential customers.
• Do not listen to the mainstream media. The economy will come back. According to Beaulieu, mid-2010 will bring new signs of economic growth. He is very positive about America’s prospects over the next 40 years and I couldn’t agree with him more.

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Last weekend, I attended the 15th annual Control Systems Integrators Association (CSIA) Conference in Savannah, Georgia. Patti Engineering staff has attended 12 of these conferences missing only one since 1996. The organization was started with a monthly newsletter prepared by Charlie Bergman in 1989 that targeted control systems integration (CSI) companies. Charlie, who retired from Bailey Controls, organized a conference with about a dozen companies in 1994 at Wrightsville Beach, NC. The 2008 conference had more than 150 companies represented as the organization has grown in excess of 325 companies.

The conference is a great way to remove yourself from the day-to-day operations and take a 30,000 foot view of your company. Some people are hesitant to go to the conference, feeling that they will lose a competitive advantage by talking to their competition. I look at it as talking with my peers.

There are enough industries and niches that there is plenty of CSI work out there. At one time, controls were used strictly in manufacturing facilities, but now you see application of control systems in amusement parks, farms, libraries, police departments, distribution centers, municipal systems and energy management. Add to this, the line between I/O electrical controls and information systems has blurred.

In 1997, the CSIA released the “Best Practices and Benchmarks” publication. In 2001, the CSIA started auditing companies against this standard to verify that its certified member companies are implementing these best practices. Patti Engineering was one of the early CSIA companies to be certified and were recertified in 2006 (CSIA requires recertification every 3 years).

CSIA has also been particularly helpful with our insurance and legal matters. For insurance, the CSIA has pooled about 70 members to a common broker and carrier. This has helped ensure that the member companies are properly insured. In the legal realm, Mark Voigtmann, of Baker Daniels, has given a great presentation at each annual conference and offered many companies (including Patti Engineering) outstanding legal advice. He has helped the membership with many terms, conditions, and contract issues.

I look forward to the 2009 conference in Naples, Florida so I can catch up with all my peers who face the same challenges as Patti Engineering. I also look forward to the great list of speakers that will be invited. The CSIA is helping to raise the bar for the control systems integration field.

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Paying attention to details is what separates the great organizations. That pertains to baseball and it pertains to business. Dave Dombrowski, president and CEO of the Detroit Tigers, is a leader who makes sure that his organization pays attention to the details. I have an interesting story that highlights what kind of organization he runs.

I sent the following e-mail to Dave Dombrowski last July 9th:

Dave, My name is Sam Hoff, I have had season tickets for the last 10 years. I really enjoy having access to the Tiger Club and the Tiger Den Lounge. There are some great pictures from the Tigers Past on the South Wall of the Tiger Den Lounge. Unfortunately there is no way to identify the pictures on this wall. I recognize Ty Cobb and Hank Greenberg, but beyond that I am pretty well lost. I am sure most people who attend the park are even more lost than me. I have a couple of questions:

• Are there presently any plans to put identifiers on these pictures?
• If there are no plans, would you support it if I helped to organize an effort to do this?
• Do you have any contacts at the Mayo Smith Society, or other Historians who would be a good resource for such an effort?

Much to my surprise, he answered the e-mail the same day:

Thank you for the note and comments. Presently, there have been no plans to put the names on the pictures. However, we will be glad to review the request and see if we can make this happen.
 

The fact that he actually answered my e-mail was a shock. The bigger shock was when I arrived at the park Monday for Tigers’ Opening Day and noticed that every picture along the south wall of the Tiger Den Lounge had a professionally engraved placard noting the player’s name as well as the years he played for the Tigers.

One person outside his organization came up with an idea and mentioned it once. He obviously reviewed it within his organization and figured it was a worthwhile idea and got it done. Hats off to Dave Dombrowski, he obviously would be successful in whatever organization he ran. Hopefully, his organization (and the City of Detroit) is rewarded with a world championship in the near future.

GM, Ford, and Chrysler’s corporate headquarters are within 30 miles of my office. They used to be called the “Big 3,” but since their combined US market share fell below 50% for the first time last August, the “Detroit 3″ seems like the proper moniker.

I worked for GM for six years and have many family and friends employed by the “Detroit 3″ in labor and management positions. Through Patti Engineering, I also have managed various projects in most of the automotive assembly plants in the US (both foreign and domestic nameplate).

So what is the problem? Many people point to high US labor costs and the fact that vehicles can be built cheaper overseas. I don’t buy into that. If that were the case, why do Toyota, Honda, and Nissan build nearly 80% of their US cars domestically?? Shipping cost and distribution logistics cause another set of headaches when producing in foreign countries. I also have observed that American workers are smarter and more efficient than their foreign counter-parts.

In my opinion the problem with the “Detroit 3″ comes from their corporate culture which lends itself to adversarial relationships. These relationships are found in 3 different areas:

An Adversarial Relationship between Management and Labor: The UAW has been fighting for years to get into the Honda and Toyota Plants. They have been unsuccessful so far. Most workers I have dealt with in these facilities see no need for the UAW. They get good pay, great benefits (onsite daycare, a world class workout facility) and are very happy. I can write a whole another post on the pros and cons of the UAW (and may someday), but needless to say the relationship between the UAW and Detroit has a history of being tense and adversarial. The last UAW contract was more sane than recent contracts and provides hope that the “Detroit 3″ and the UAW realize that they need to work together to ensure both of their survivals.

An Adversarial Relationship between Different Departments: There are too many turf wars that take place inside the “Detroit 3.” When working with the Detroit 3 you see this first hand. There are lots of grey areas as to who the decision maker is in regards to your project execution. As a vendor, you better be SURE to get any decision in writing as another department will later come by, flex their muscles, and force you to make a change. Working with a transplant, you do not get this at all. There is one person who is empowered to make all of the final decisions for that particular (though he will get input from different departments). It saves a lot of change orders.

I have also observed first hand where a really valuable employee will never be promoted. His supervisor realizes his importance to the department and does everything possible to hold onto him. As less qualified and talented people get promoted to other departments, the talented employee may become apathetic, burnt out, or leave the company.

Consolidation of like groups has been taking place and needs to continue to take place. GM no longer has a BOC, CPC, and Truck & Bus controls group, but instead has one group called CCRW (Conveyor, Controls, Robotics, and Welding).

An Adversarial Relationship with Vendors: When I worked at GM, the superintendent of my department used to have vendors take him to dinner and he would order two lobster dinners for himself and one to go for his wife. Working for GM, we figured vendors would only answer “how high” when we told them to “jump.”

This type of abuse is mild compared to the wringer that the “Detroit 3″ now puts their suppliers through. Too often the suppliers readily line up and take a program thinking that volume will make up for tight profit margins. When that volume never comes, or raw material prices go up, the supplier is in trouble. Bo Anderson, and his counterparts at Ford and Chrysler, will not give any relief to the vendor and another company such as Plastech is in Chapter 11.

Guardian Industries, privately owned by Bill Davidson, has continued to make money as an automotive supplier in these tough times. How have they done it? A good friend of mine, Michael Caruso, once sent me an article about Bill Davidson where he answered that question by stating “we have learned to say ‘no’ to our customers.” By that, he meant that he will not go along with unfair customer demands. It is a lesson a lot of suppliers should take to heart.

Conclusion: Can things be turned around? There is lots of talent in these companies, and you can sometimes see glimmers of hope such as the 2007 UAW agreement and the recent success of the Cadillac nameplate. If one of the “Detroit 3″ has a talented leader rise to the top then a great comeback will happen. That leader will change the corporate culture of the “Detroit 3.” He will have to implement:

• Open, honest communications on all fronts.
• Stress innovation in the products.
• Make purchasing a lieutenant rather than a captain.
• Develop win/win relationships with a select group of key vendors.
• Foster and grow the talented personal that the company already employees. 

In 1964 IBM released the System/360 which was the first “large” family of computers to use interchangeable software and peripheral equipment. I believe this was the birth of the modern day I.T. department.

In 1969 Modicon introduced the “084″ PLC, this was the birth of modern programming based operations engineering.

Ever since then there has been a war between I.T. and operations engineering. If a company is to survive the in the 21st century, that war has to end!

Personal History: 

In the late 80’s, I was a Co-op student and a young engineer working at General Motors Truck and Bus in Baltimore, MD. At that time, I fell in love with plant floor control systems. Being assigned to the Body Shop was lots of fun as the place was full of Cincinnati Milacron Hydraulic Robots, Allen-Bradley PLC-2’s, and other automation. I learned tons about floor level control systems.

About the same time I started, Ross Perot’s Electronic Data Systems (EDS) was purchased by GM. EDS supported the front office business systems at the Plant. They would occasionally make the 1/2 mile walk from the front office to the Body Shop. The EDS people would look like fish out of water with their 3-peice suits and total lack of understanding of automation and production systems. We did not relate with the front office I.T. people and they did not relate to us plant rats.

None of the production systems in the Body Shop had any ties to the front office business systems.  Paper manifests were used for scheduling and quality control was done with a clipboard. Somehow we were able to crank out 250,000 M-Vans a year and make the General some money in those days.

Today:

Today, the smart manufacturers and distributors realize that I.T. and Operations must work seamlessly.  The I.T. people must be cognizant of the challenges the operations people face (multi-shift operations, little downtime, high turnover and uneducated workforce). The operations people must also be cognizant of the I.T. challenges (need for change control, thorough testing, task prioritization, many systems interacting together).

If an operational process is running efficiently, it will be a paperless process, and production information and results will be available instantaneously. This creates the real time information that allows management, quality, scheduling, and shipping to improve.

My business, Patti Engineering, has defined itself as a company that can work with both I.T. as well as operations. We can program the most complicated real-time control applications on the floor, but we can also do database design for enterprise wide data tracking systems. The concept of I.T. and operations engineering working together synchronously is a brave new concept for many companies. But if those companies want to survive into the 21st century, they need to get on board and end the war.

Often, these same companies will spend months of time and resources to select a package, then select an integration partner in a couple of days with limited research and limited due diligence, thereby treating the integration as a commodity.  Take this as gospel:  this solution is going to come off poorly unless properly integrated.

The Package Supplier is often not a good resource as the common sales pitch is “our stuff is so easy, anyone can program it,” or “we have our own integration team” (which mean they will charge 50% more for personnel who has 50% less experience and will never address or use any other solutions to work around the shortcomings that any package has).

An independent systems integrator is the key to your program being successful. If you are looking at the MES and plant floor level, I would highly suggest using a certified control systems integrator. By being certified, the company has been audited to ensure that they are meeting the best practices and benchmarks of the CSIA. The CSIA puts out a great resource for companies that will be selecting and working with an integrator. The document is completely free and titled “Guide for Selecting and Working with a Control Systems Integrator”

A good Integration partner will be concerned about your overall success as well as the success of the project. They will understand the need for the ERP, MES, and Floor Level Systems to appear seamless and support all phases of the business. Often the good integration partner will question and suggest ways to improve the business. They will also document the planned system before any code is written through means of a detailed functional specification.

Good Luck on your next project, and remember selecting the right integration partner is as important or more important than selecting the package.

Because we need some clothes for the next day and it was late in the evening, we went to the only place open, a Wal-Mart. I remember thinking at the time of purchase how nice the clothes looked and what a cheap price I had paid for the outfit (a golf shirt and khaki pants).

The outfit did not last me through Labor Day. After two washings the shirt was faded and frayed and the pants had holes worn in them. So in the end I got a good looking outfit for $25 that lasted 2 months.

I could of bought a nice Ashworth Shirt and a pair of Dockers Khaki Pants for $125. These items typically last me about 3 years. To emphasize my point, let’s assume that they only last 2 years.

So for the Wal-Mart outfit, my cost was $12.50/month. For the more expensive outfit, my cost is $5.22/month. Even if I the Wal-Mart outfit last 3 months, my cost is still 45% more than the expensive outfit.

I sometimes have a customer call me to complain about our hourly rate. They say they can get a cheaper rate elsewhere (which no doubt, they can). They will pay $50/hour to some guy working out of his garage who will take 1000 hours to complete a job. Often, even if this completes the job, he will not be able to be found in 6 months time. 

Are they getting a better value when we will take only 400 hours to complete the job (and yes – we will comlete the job) and will be around for any service, upgrade, or other related issues that may come up in the future?