Innovative Rack & Gear recently became a part of Avers Machine. What advantages does this bring to Avers Machine?
Innovative Rack’s customer list is completely different than our existing customer base. We really do not have any contacts that overlap, which gives us much better diversification. Together, we now have our product offerings being manufactured and supplied across more industries, and that makes our company stronger. Being in more diverse markets allows us to have a good balance of business when some industries are up while others are down.
In addition, the most amazing synergy the merger has brought, for every rack that is manufactured, we can reach out to that customer and make a mating gear or other machined component that would be used in the customer’s assembly. The new opportunities for our company are exciting and abundant.
What was the process in adding Innovative Rack & Gear to the Avers Machine family?
We worked through a business broker. Our company has been actively pursuing an acquisition for the last 24 months. We looked at many different companies in similar industries as ours but did not act until recently. Our goal was to try and find a company that had different customers and processes than ours but would still allow us to merge them with our operations. Finally, after a lot of effort and searching we came to this opportunity, Innovative Rack & Gear. It was almost too good to be true as it matched so well with our machining and gearing background.
How has the merger affected the different companies’ departments and equipment consolidation?
One of our strengths is milling, and Innovative does a tremendous amount of milling because every rack blank needs to be milled or surface-ground before the rack-cutting process can begin. By merging our milling departments, we were able to get our Mastercam programmers and lead men working together to gain machining efficiencies. In addition, we are able to link jobs that have longer cycle times with shorter cycle jobs, which allowed us to better utilize our equipment by running multiple machines with each operator.
There was a lot of extra equipment at both facilities that
was underutilized. Some of the pieces were similar or duplicates. We identified which equipment was in better condition, newer
vintage, or more efficient and then auctioned off the surplus
equipment.
Other departments worth mentioning pertains to the front office. Innovative Rack had a less efficient system that handled their order processing and accounting functions. We are on a newer updated M1 ERP system, so when we merged the companies, we were able to input all their open transactions onto our system within the first month and get more done with less resources. Our average processing time for new orders and quotes has typically been cut in half.
What’s been the industry response to Innovative joining Avers?
It has been very favorable. A lot of the people in the industry were surprised that Innovative Rack was even available to acquire. The response from the companies we do business with in the gear industry has been the same in that they’re very excited for us. The comments have been in line with our thinking that this was a golden opportunity for our team that has great growth potential.
Additionally, we have done a lot of work with merging the companies together, and as a result, we’ve seen a major increase in sales. Also, our on-time delivery is up and measuring 93-percentile range. Customer responses have been very favorable. We have retained existing customers and gained new ones.
What kinds of positive aspects do you expect the merger to bring to future jobs?
Most of Innovative’s management and even some of their supervisors were engineers. Over on our side, engineering was an area we felt could be improved. By bringing their people on board with ours, it strengthened us as a whole. We have become a lot more technical and have picked up a lot of very good experience. That is going to strengthen us going forward.
We are also going to be more efficient. Innovative had a second shift, so we can now run extended hours on critical jobs. Those are all things that are going to make us a very strong company for years to come.
Another thing was Innovative has milling machines that can run a much larger part. On the Avers side, we had size constraints because our business is primarily what I would call small to medium. A lot of their equipment would run medium to large. Those are things that we did not have to really invest heavily into getting, and the new machine capacities are marketed to our entire customer base. With the acquisition, we brought in that equipment and the business that came with it.
We have put a lot of money into our QC department, and pretty much all the equipment that we have in QC, we’ve been able to use for the rack product line. This has been very helpful with gaining some efficiencies and providing customers with accurate inspection data.
The only other thing that I would like to mention is we have been able to utilize our machining expertise and develop some different fixtures for parts where they were doing one piece in a vise needing flipping for multiple-sided machining. Now, parts are run eight pieces on a fixture and are being machined in one operation. This has improved efficiencies for some jobs as much as 60 to 70 percent.
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