Among the many accomplished attendants of the 3DEXPERIENCE Conference, Todd White still stood out. After all, no one else had a 10-year-old daughter presenting a video demo on CNC machining and a complicated and colorful backstory.
Starting in sales, White worked for a start-up in Southern California until 2017. But after the company’s founder failed to pay him for four months, he lost everything. White had to move his family—a wife and four kids—to Arizona to stay with his sister. He was working as a handyman and repairing air conditioners to make ends meet. He recalls the time as “nerve-wracking.”
Nevertheless, he kept on learning more about machining from YouTube videos. White got his first machining order from Craigslist and filled that order in his garage using a Tormach milling machine he brought with him from California. That client is still with him today.
“We stayed with his sister for three weeks while our home was in escrow,” says White.
He then got more jobs, growing organically, and soon moved from his garage shop into a bigger shop space, and eventually growing into a business that employs two others and occupies 2,500 sq. ft. of manufacturing space with four machines.
Going from near-homeless to owning a shop that does close to a million dollars of business annually, in just over five years, took an interesting mix of strategies.
Trading Higher Production Costs for Time?
White first had to address a significant, if not the most significant, pain point of manufacturers who order parts from overseas facilities.
The model of off-shore manufacturing is based on trading time for lower production cost: you can get the goods more cheaply, but you have to wait for them.
American clients used to go overseas and order from manufacturers in China, Taiwan and the Philippines. It will take them six to eight weeks to get parts of unknown quality. If they find out the quality is not sufficiently high, they have to reorder and wait another eight weeks. Rinse and repeat.
But what if you trade higher production costs for time?
This is not an easy sell, and White’s clients were also skeptical initially.
However, while China has long been the world’s factory, it is predicted by the International Monetary Fund to run out of surplus, i.e., cheap, labor, between 2020 and 2025. In fact, it may have already been starting to feel the pinch as early as 2010. As a result, the wage costs in China’s manufacturing sector nearly tripled between 2002 and 2009, and rose by percent from 2009 to 2019 by the government’s own official estimate. In short, China’s labor cost has increased by a factor of six from 2002 to 2019, so much so that it is twice as expensive as that of Mexico. Cost is also no longer the only determining factor. Other disadvantages of outsourcing to China include quality issues, counterfeit products, inconvenient inspection due to long distances and long wait times.
White’s strategy on trading higher costs for time is based on his belief that “to succeed, you need to understand the technologies important to your clients.” He understands that his clients require technologies that will help produce parts of high quality. So, he buys machining equipment that is as high quality as that used by overseas manufacturers. He also makes sure he uses the best and most up-to-date software: the SOLIDWORKS platform for design, and Autodesk Fusion 360 for programming.
So, when White produced high-quality parts on the same day without having his clients wait six to twelve weeks, they were delighted.
“I also try to reprogram the mindset of my clients,” says White, “I tell them, if you use me, this is how I will help with your engineering department, your QC and your deadlines.”
With his background as a machinist, White also provides free consulting on process improvement and “making the client’s engineering department’s job easier.” As a result, “once my clients have gotten a taste of how high the quality is and how quickly they can get the delivery, they do not want to go back to waiting months.”
White’s clients stayed on; the increase in cost was no longer the central issue. They responded positively when White bought a mill-turn machine, which is even better than the machines used overseas and can make complex parts more quickly–though at a slightly higher cost. A client even ensured exclusivity and priority by paying for a machine designated for filling its orders in White’s shop.
In the process, White has shifted the conversation from price to timeliness and quality.
The Importance of Timing
White’s grit and resilience are remarkable and intentional or not, so was his timing. He started his business in 2017 when multiple factors worked in his favor. First, the reshoring movement, which started around 2010, was gaining momentum. In addition, the Tax Reform Act of 2017 lowered U.S. manufacturers’ tax rates to 21 percent, lower than the worldwide average manufacturer’s tax rate of 24 percent.
Moreover, there were the tariffs enacted during the Trump administration. The 301 China penalty tariffs on imports and the 232 tariffs on aluminum and steel have made imports more expensive, giving U.S. manufacturers a competitive edge in pricing. Furthermore, the many effects of the COVID-19 pandemic on the global supply chain have compressed the timeline for supply chain reorganization.
No wonder White’s clients changed their minds—and they were not the only ones. According to the Kearney survey, in March 2021, 49 percent of 120 U.S. manufacturing executives agreed that the benefits of onshore production outweigh higher labor costs.
Doing What Others Don’t Do
White also sees manufacturing differently from most machinists. “I never came from the manufacturing industry. I started in sales, where customer service is a big deal,” White recalled. He had worked as a blackjack dealer, a car salesman and an auto wholesaler (“400 cars per month”).
“I have lots of experience working with people, following up and closing deals,” he says. He also has experience dealing with people overseas and people who are hard to negotiate with. An extrovert, White loves to learn about people and is much more comfortable dealing with people than many machine shop owners.
Providing good customer service is one of the reasons White offers free consulting, which is an effective way for him to secure larger orders and longer contracts.
Once his clients have realized how nice it is to work with somebody who can make their lives easier, they stay on. Their working relationships have gotten so comfortable that now, deals are done via text messages and emails. White even acts as a middleman and helps clients find other reliable vendors and subcontractors. White has grown his business mostly by word of mouth and intends to continue doing so.
Conclusion
Going old-school as well as high-tech has worked out well for White. He places a greater emphasis on using the most up-to-date technology than many machine shops, takes customer service more seriously than many machinists and is a more knowledgeable machinist than many customer service people in manufacturing. All these attributes have placed him in a uniquely competitive position.
He also stresses the importance of being flexible. “You have to get with the times. Shops that don’t want to change habits, get technology updates, get re-tooled or use software will not survive.”
White also does parenting differently. His wife approached him about homeschooling their children, and initially he wasn’t in favor. However, as she presented data on how much time children spend in school, versus their actual time spent learning, there was a large gap due to class sizes and time spent maintaining order in the classroom setting. So, they chose to hire a teacher with a master’s degree in education who comes to their home twice a week and provides a fun and diverse learning environment with a tailored education for their two daughters. This approach allows them more time to pursue their own interests, just like when he was growing up and spending time in shop, woodworking and motocross.
For example, White’s daughter Saylor, who presented at the 3DEXPERIENCE Conference (“She can already do programming on SOLIDWORKS. How many 10-year-olds do you know that can do that?”), wants to become a commercial airline pilot. She is currently working on a letter to pitch the idea to the CEO of Southwest to create a scholarship for her to get flight education.
Looks like strategizing runs in the family.