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MAKING CHIPS Podcast for Manufacturing Leaders with Jason Zenger & Jim Carr

Welcome to MakingChips - We believe that manufacturing is challenging, but if you are connected to a community of leaders, you can elevate your skills, solve your problems and grow your business. Making Chips is a weekly podcast that will EQUIP and INSPIRE MANUFACTURING LEADERS to succeed in the challenging world of manufacturing. Our mission is for the METALWORKING NATION to Think Differently About Manufacturing In Order to Elevate their Game. Your hosts, Jason Zenger & Jim Carr, own manufacturing businesses and interview other leaders in the metalworking, machining, fabrication, tooling and machine tool industries. We have interviewed successful manufacturing CEOs you may have not heard of and also the biggest names in manufacturing like Titan Gilroy from Titans of CNC, John Saunders from NYC CNC, Mark Terryberry from Haas Automation and others from MakerCast, Sandvik Coromant, Autocrib and more. Think of us as your virtual community of manufacturing peers to help solve your toughest problems and grow your business. "Making Chips has provided a transparent approach to sharing within the manufacturing community and a modern platform to do so. Thank you both for taking the lead on moving our industry segment forward!" Patricia Miller - CEO & Visionary (Matrix IV) I really think what you guys are doing is a great, great thing for manufacturing. I have learned so much already from many of your episodes, and am so thrilled to have met people that get as revved up about manufacturing as I do! Cassandra Haupers – Vice President of Operations (Swiss Precision Machining) I love being able to experience what manufacturers are doing to promote culture and engage their team members and community. All of us are smarter than one of us. That is why I am part of the Making Chips tribe. Barry E. Walter, Jr. – Chief Operating Officer (Barry E. Walter, Sr. Co.) Finally, relevant manufacturing media that is actually entertaining! Dietmar Goellner – Chief Executive Officer (Advanced Machine & Engineering / Hennig) The more manufacturing companies we can get to think this way, the stronger our industry will be. Thank you for sharing! Jess Giudici – Manager, Talent and Culture I’m thankful to you for creating MakingChips for the Metalworking Nation so that Owners / Employees can strengthen their companies. Phil Sponsler – President (ORBITFORM) I love the podcast! It really serves to fill a void in the manufacturing world. I will admit I always feel a little more inspired. Jason Falk – Senior Application Engineer, CMTSE (HURCO) Thanks to all the great info on your podcasts and the website. Dave Lechleitner – Director of Solutions and Product Marketing (KEYEDIN) I really love what you guys are doing to advance the mfg industry in a way that really reaches the right audiences. Jeff Rizzie – Senior Manager-Business Development (Sandvik Coromant)
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Now displaying: August, 2021
Aug 30, 2021

Everyone is familiar with the concept of networking. But how many people actually implement it to grow themselves and their businesses? In this episode of Making Chips, Jim, Jason, and I dive into how networking has impacted our businesses in unexpected ways. To hear the good, bad, and the ugly—give it a listen!

Segments

  • [0:18] Check out ProShop ERP for more information on manufacturing software!
  • [3:04] Learn what’s happening at ZENGERS
  • [3:51] Nick welcomed a baby boy to his family on June 27th!
  • [4:54] Boeing Slows Dreamliner Production After New Manufacturing Issue
  • [9:17] Can Networking Change Your Manufacturing Business?
  • [12:41] How networking has changed Jim’s business
  • [16:10] Amper Technologies machine monitoring systems
  • [16:54] The Making Chips Network of Manufacturing Leaders
  • [20:59] Should increasing sales be the objective of networking?
  • [24:41] A working relationship built on mutual interests
  • [26:15] Ad-hoc networking: Keep your ears to the ground 
  • [28:58] Accelerate your digital transformation with Xometry
  • [30:09] Networking is like growing a 401k

Networking is what brings us together today

I think it’s important to point out that networking is why all of us are here. It’s why we all know each other and host a podcast together. But where did this partnership start? 

Jim was spending money at ZENGERS and was a great customer for them. So Jason loosely knew who he was. Why did Jim purchase from ZENGERS in the first place? One of his friends—a production manager at a shop—recommended ZENGERS. One would’ve thought that’s how their relationship started. But it wasn’t. 

Jason and Jim were both asked independently to be on an AM radio show at 6 am on a Saturday (the time slot when you know only serious entrepreneurs and business owners would be awake and listening). Jason was talking about creating a vision for your company and Jim talked about social media marketing for manufacturers. They were both impressed by each other, their business acumen, and how well acquainted they were with the industry. They realized they’d make a great combination and the podcast was developed from there. 

The question is—without networking, would they have gotten the opportunity to speak on the same radio show?

How networking has changed Jim’s business

Jim had a strategic vision for networking for his business. He became a member of the Technology and Manufacturing Association (TMA) who had recently hired a marketing manager to help machine shops with their marketing. Jim got on the phone with him and they got along. He became instrumental in helping Jim develop networking within the association. 

Jim was asked to join a young leaders group where he was able to meet like-minded people. He knew if he committed his time to networking and building relationships within the community, that he would grow in some capacity. He didn’t know where it would take him but that he’d walk away from networking events learning more. 

If you go to a networking event and leave feeling like you learned nothing, you’re doing something wrong. You’re either in the wrong place—or not asking the right questions. 

Jim also joined the Greater O'Hare Association and the Valley Association. He met great people in all of them. Networking is a great way to listen to other people and learn from their experiences. 

The Making Chips Network of Manufacturing Leaders

Some of our Making Chips sponsors have been a great way for us to realize connections across the industry.

Amper can help you better understand your shop and help you solve problems on your shop floor. Nick, our guest on a previous episode, also works with Amper. It was a game-changer for him. Nick had emailed me a year or so ago and I hadn’t followed up with him. Luckily, Jim met him again at a networking event and we all got back in touch.

Another sponsor, Xometry, asked us to be part of a focus group consisting of manufacturing leaders. This shows that Xometry cares about their network. How often do companies hire a credible third party to dig into discovery? How often do they dig into their segments to find out what they care about and need? They got a third party to investigate and find out what’s happening. They wanted to re-engineer their value proposition to serve their customers better. 

In the Xometry focus group, we heard that four of the individuals were all ProShop ERP users—and had heard about them through the Making Chips Podcast. These leaders all loved ProShop. It certainly gave us more structure for our processes. You’ll become more efficient, productive, detail-oriented, data-driven, and results-oriented. 

They heard about ProShop because Jason and Jim had the courage to create a podcast just for the manufacturing industry. I joined them because I’m just as passionate about the space and I know that this show delivers valuable content.

People tend to think networking has to be about growing your business and making connections to make sales. Why is that the wrong mindset to have? What mindset should you embrace instead? Learn more by listening to the whole episode!

BAM!

– Nick

Resources mentioned on this episode

Get The Boring Bar Newsletter - Text CHIPS to 38470 to subscribe!

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Aug 18, 2021

Part of being a machine shop owner—and a business owner in general—is that every day there’s a new challenge to navigate. A machine might break down. Perhaps someone who has been a team member for decades quits. Your factory could burn to the ground. Or your Dad—the owner and manager of the shop—gets sick with cancer. That’s how Nick Sainati was thrust into becoming the GM of Belden Universal. In this episode, he shares his journey. It will resonate with some of us, fascinate most of us, and impress all of us. Don’t miss this inspiring family story!

Segments

  • [0:26] Amper Technologies machine monitoring systems
  • [6:24] Dealing with supply chain issues caused by COVID
  • [8:09] Fun facts about family-owned businesses
  • [14:07] Create a Formal Business Succession Plan in 7 Steps
  • [16:52] Today's guest: Nick Sainati, GM at Belden Universal 
  • [24:00] Check out ProShop ERP for more information on manufacturing software!
  • [27:42] When everything changed: How Nick took over his Dad’s machine shop
  • [40:10] Managing a machine shop through COVID
  • [44:35] What the future looks like for Belden Universal
  • [46:32] How Nick’s experiences have prepared him for the future
  • [48:42] Accelerate your digital transformation with Xometry

The history of Belden Universal

Belden Universal is an AS9100 manufacturer of precision universal joints and drive shafts. They started in 1970 as Belden Tools, founded by Nick’s grandfather and his brothers on Belden Avenue in Chicago. They used to buy tools from ZENGERS, which was just down the street! 

Instead of going into the family business, Nick ended up in San Francisco in investment banking. He spent two years at an eCommerce startup and eventually moved back to Chicago. After both he and his wife got an MBA, they moved to Seattle for her job. After running a wine business, Nick transitioned into Starbucks Corporate in brand management. He helped launch the Starbucks evening program that tied-in with wine. He transitioned to a strategy team after that. He learned about culture, managing people, and running complex projects. 

How Nick took over his Dad’s machine shop

Two months after Nick’s first daughter was born, his parents came to visit them in Seattle. They told Nick that his Dad had a rare form of Leukemia. He needed to take time off of work for treatment. They were going to have to sell the business unless Nick or his sister could come back and run it. Nick was shocked. His parents were healthy active people who were never sick. 

After processing the news and discussing it with his wife, Nick decided to move back to Chicago to take over Belden Universal, an AS9100 manufacturer of precision universal joints and drive shafts. Four months later, he was in Chicago running a machine shop—and he knew nothing about manufacturing. Nick bought a large book about manufacturing that was for a college-level manufacturing class and dug into back episodes of Making Chips, which helped him get immersed in the language of machining. 

Navigating challenges while learning the ropes

When Nick took over in 2018, the machine shop had just moved into a new facility, doubling the size of their manufacturing floor. They had a tenured team and people to help get Nick up to speed. But he was also their boss—and couldn’t do most of their jobs. 

Soon after taking over, Belden lost their biggest customer—which was one of the reasons they had moved into the bigger space. They immediately lost what would have been ¼ of their business. Nick knew it would be his first challenge. But then his sales manager of 19 years quit three months in. Instead of panicking, he took stock of the situation and helped define where they wanted to go in the future.

They hired an internal candidate for the sales management position. She blossomed as a leader and got their team back on track. They worked hand-in-hand on the culture so people were excited to come to work every day. In an era like today where every shop is competing for employees, the culture matters. A shop can’t survive with a negative culture. 18 months later, after continuous incidents with the production manager (who had been there 29 years), Nick decided it was time to part ways. They let him go. But this man had been involved in every part of the business.

The benefit of letting him go was that Nick was forced to get more involved in floor operations. He began to work closely with his engineers on improvement projects and personnel issues. He got to know the people on the factory floor. He stepped up and earned respect from his team.

How did Nick manage the machine shop through COVID? What does the future hold for Belden Universal? Listen to the whole episode to hear more of his unique story. 

How Nick’s experiences have prepared him for the future

What did Nick learn? The most important thing is that problems can look very daunting in the moment—especially multi-faceted problems. But the most important thing is to take a break, formulate a plan, understand what the desired end outcome is, and start chipping away at it. Family businesses have long timelines where things don’t have to be solved overnight. They can make progress every day, month, and year towards that vision. Eventually they will find success. A problem now may seem like a bump in the road over the arc of your career. 

— BAM!

Resources mentioned on this episode

Get The Boring Bar Newsletter - Text CHIPS to 38470 to subscribe!

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Aug 9, 2021

What is the Cybersecurity Maturity Model Certification (CMMC)? The DOD is implementing the CMMC to normalize and standardize cybersecurity preparedness across the Federal government’s defense industrial base. Meaning? If you’re doing DOD work, they’re mandating that you get this certification. So you need to know what this is all about. We’ve brought in Paul Van Metre and John Bilek to help fill in the blanks. Check it out!

Segments

  • [0:00] Amper Technologies machine monitoring systems
  • [3:39] Cybersecurity Maturity Model Certification (CMMC)
  • [5:05] Let’s talk acronyms (there’s one for everything)
  • [7:20] What’s happening at ZENGERS?
  • [8:20] The amount of money wasted on cybersecurity
  • [11:05] We welcome our two guests to the show
  • [14:48] What is CMMC really all about?
  • [17:09] Who is impacted by the CMMC requirement? 
  • [19:44] Check out ProShop ERP for more information on manufacturing software!
  • [20:44] The five levels of CMMC compliance
  • [21:56] The CMMC implementation process
  • [27:19] What does “CMMC Compliant” mean?
  • [29:02] What ProShop ERP is rolling out to enhance security

The amount of money wasted on cybersecurity

Cybersecurity is a large problem. Most attacks originate from Russia but there’s also a lot of domestic hacking happening. Because of this—according to MXD—the DOD is now spending more than $300 billion each year on government contracts. The DOD Directive 8140 requires that any contractor must satisfy specific training and certification provisions to ensure sensitive data remains secure. The qualifications can be transferable and useful across the board. 

Jason points out that this cybersecurity effort is how we protect our country, industry, economy, and more. Our enemies want to steal our technology, which is why we must keep it secure. Because manufacturing is a huge part of what the DOD does, anyone in their supply chain must follow the same cybersecurity protocols. 

Who is impacted by the CMMC requirement? 

CMMC applies to anyone in the defense contract supply chain. That includes both contractors who engage directly with the DOD and subcontractors who fulfill and/or execute those contracts. The CMMC standards will affect over 300,000 organizations. If you want to continue to do work for the DOD, you will have to get certified over the next 4–5 years. 

Paul has heard of shops that are starting to lose work because they aren’t on track to get the CMMC certification. John has been asked multiple times if he’s been certified. While you cannot get certified yet, he is working toward compliance. There are five different levels of CMMC compliance. Most machine shops are expected to be certified at level three.

How soon do you have to implement this? Paul points out that you can’t sit on this. There are very few approved auditors, so if you wait until the last minute you’ll lose out on a significant amount of your sales. If 30% of your business deals with the DOD, you could lose millions without the certification. 

The financial impact on machine shops

In May 2021, an entity was announced that would start handling the CMMC audits. What kind of costs will be put on machine shops? It’s going to be far more expensive to implement than an AS9100 audit. The CMMC is built on cybersecurity standards, the main one being the NIST 800-171 standard

If a company is already compliant with that standard, they can likely check off the boxes for CMMC Level one. If you aren't compliant with this standard, to reach level one compliance could cost you between $5,000 to $25,000. For level three, it will be around $15,000 to $100,000, depending on the size of your shop. This is going to be a large financial hit no matter what you do. The certification is costly—but if you don’t get it, the loss of business may cost you more.

A shop in Florida was quoted $100,000 for a company to “help” them get CMMC certified. Be wary of who you look to for help—a lot of unscrupulous people will take advantage of this rollout. Find accredited and reputable consultants. There will be grant money offered to help companies get this certification.

Can you swing the cost of the certification? 

What can help cover some of these costs? IMEC gave Carr Machine a grant to get ISO certified years ago, which covered some of the implementation and auditor fees. IMEC will be giving grants out to augment the cost of implementing this. Paul points out that the MEP gets its money from the Federal government and allocates it to different organizations like IMEC. The unknown? The amount of labor you may have to invest in to get to level three certification. 

So what does CMMC compliant actually mean? How is ProShop ERP implementing updates to help you walk through the process? John and Paul share a few examples, so keep listening!

If you have an idea for a MakingChips message, please ask us a question or leave us a message at 312-725-0245 and let us know!

Resources mentioned on this episode

Get The Boring Bar Newsletter - Text CHIPS to 38470 to subscribe!

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Aug 2, 2021

In this episode of Making Chips, Jim and I chat with Paul Van Metre—the Co-Founder of ProShop ERP—about the process of selling his machine shop. We dissect the process, including how to understand the valuation of your company and how to make your shop more attractive to potential buyers. If you’re considering selling in the next few years, this episode is full of actionable tactics and strategies that will help you succeed. 

BAM!

- Jason Zenger

Segments

  • [0:07] Amper Technologies machine monitoring systems
  • [3:10] How to sell your machine shop
  • [5:11] Ozark Technical Community College offering a two-week manufacturing bootcamp
  • [7:49] Jim shares what’s new at Carr Machine
  • [8:42] Paul Van Metre’s experience selling his machine shop
  • [13:42] Is this a big change in the manufacturing industry?
  • [15:27] Why would a strategic buyer pay more? 
  • [16:40] Understanding the process of valuation 
  • [17:35] Check out ProShop ERP for more information on manufacturing software!
  • [26:10] The experiences of Paul’s customers buying shops
  • [28:12] How to make your company more attractive for buyers
  • [30:53] How buyers can make sure they’re getting a fair valuation

Now is a great time to sell—or buy—a machine shop 

I bought ZENGERS from my Dad in 2019, right before the pandemic hit. learned that there’s a lot involved in buying/selling a machine shop. Not only that, but it takes multiple years to get to the point to learn how to run a shop by yourself. Running any business that employs a team of people takes a lot of work. 

A lot of people are looking to retire and sell their machine shops. The youngest people of the Baby Boomer generation will be 65 by 2030. And of the 18,000 machine shops in America, the majority are owned by Baby Boomers. The vast majority will have some type of transition of ownership in the next 10–15 years. 

Jim is getting calls from M&A companies all the time about buying his shop. He isn’t even close to ready to sell. I’m on the buy side, and I think this is a great time to buy a machine shop. Whether you want to merge, participate in a roll-up, etc. now is the time. Even if you’re not ready for several years, you need to start planning.

The experiences of Paul’s customers buying shops

Paul notes that owning a business is one of the most significant financial decisions anyone can make in their lifetime. These shops are the baby of their owners. They’ve poured 10, 20, 30, 40+ years into them. Leaving that behind and passing it on to the next generation is a difficult and taxing process. Some shops may close their doors and sell off their machinery. 

A client of Paul’s, Mike, was deeply involved in the M&A and private equity space. He was trying to sell a shop where the owner wasn’t interested in making her business attractive for sale. They couldn’t sell the shop for years. So Mike decided to buy the shop himself. He knew it was a good business at the core and got it for a great deal. He also recently acquired another machine shop.

Paul worked with a small shop in Colorado—Focused on Machining—who was in banking before moving into manufacturing. He looked at 4–5 shops before landing on this one. Because he was in banking he understood the financial side and has done an incredible job growing the business.

Paul’s experience selling his machine shop

Pro CNC was founded in 1997 when Paul was just 23—straight out of college. When they sold in 2014, they were a mature company with 17 years of experience under their belt (Paul shares his story in episode #98 of Making Chips).

In hindsight, Paul had been preparing the company for sale for many years. They started hiring people to replace the three partners so they weren’t working in the business every day. They then hired an M&A company to take them to market (the whole process took around a year). 

Sadly, Paul points out that 80% of businesses that get listed for sale never sell. Many businesses end up selling off their assets. Those people are likely making only a fraction of what their company could be worth. So how do you set your business up for success? What can you do now to make it more attractive to future buyers? Listen to the whole episode to learn the process!

Resources mentioned on this episode

Get The Boring Bar Newsletter - Text CHIPS to 38470 to subscribe!

Connect With MakingChips

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