Friday, September 28, 2012

Colorado success stories: Vforge --Innovative manufacturing process spurs consistent growth

Colorado success stories: Vforge
Innovative manufacturing process spurs consistent growth

By David P. Mead

Editor's note: This is another in the 2012 series of Colorado company success stories as told by CEOs and business owners. Vforge was recognized as a 2012 Colorado Company to Watch.

Tucked just off 6th Avenue and Sheridan in Lakewood is an innovative company in the aluminum semi-solid manufacturing business. Vforge uses a process that enables the manufacture of high precision aluminum parts for a variety of industries. While their products may not be widely known since they are components in other companies’ products, you may have seen their components on popular motorcycles, snowmobiles, wheelchairs, and robotic arms for surgery. Vforge capabilities are in high demand and the company has been growing at 15% per year, year after year, with only low-key sales or marketing efforts.

I met recently with Ken Young (CEO) and Jon Young (VP and General Manager), the father and son who own and manage Vforge which has grown to 110 employees.

Mead: What is Viscous Forged Semi Solid Manufacturing (SSM)?
Ken Young: Typically, aluminum parts require significant amounts of machining. Aluminum is forged into billets which then are machined into the end shapes. Semi Solid Manufacturing (SSM) makes parts that are near to the final desired form without machining – resulting in dramatically improved shapes with high precision, high performance, but at lower manufacturing cost.

Mead: How was this process developed?
Ken Young: I worked, along with several others, on the development of the technology at MIT in the 1970’s. MIT owned the patents until the 1990’s and everyone was precluded from entry other than the large companies (mostly in automotive) that had licensed the technology.

When the patents expired we wanted to broaden the applications. We learned how to take existing manufacturing equipment and modify it to run the SSM process and decided in the mid-1990’s to locate in Colorado. We had lived in Colorado in the late 1980’s and so it was an easy choice to start the company here – it was a decision based on life style.  We are fortunate that Chris Rice, our VP Engineering and Technology and also an MIT alum, shares our love of Colorado and joined Vforge shortly after we opened.

Mead: How do you compete?
Jon Young: We have the equipment and process know-how that makes SSM viable. SSM makes designs possible that would be impossible or cost prohibitive by other manufacturing processes. Many product designers and engineers are unaware of the capabilities of SSM. So we work to captivate engineers and designers to imagine new ideas and how to use the technology. While the process works well with large volume components, it also makes sense even at some low volumes. Once an engineering or design group has worked with us, they understand the unique capabilities of the technology and continue to design components that require SSM.

Mead: Has the growth always been smooth?
Ken Young: There were two big bumps in the road. We were doing huge business with a mountain bike manufacturer that went through bankruptcy in 2003, sticking us with over $700,000 in receivables. In one day we went from 48 employees to 17. Our bankers at Citywide Bank were extremely helpful in working with us to restructure so that we could survive.  Then, during the 2008-9 downturn, we were dependent on raw materials exclusively from Europe. When the exchange rate for the Euro went from $0.90 to $1.40, our costs went through the roof at a time when we also had just lost approximately 20% of our revenue. We launched our own raw material production – again with the help from our bankers.  Today we are much more in control of our own destiny.

Mead: How would you describe your culture?
Ken Young: We are a very customer-responsive supplier, very agile. It’s a family-style organization with a commitment to promote from within and develop our team.
Mead: What are the factors influencing your growth?
Jon Young: Most companies grow by succeeding in marketing and sales. We’re very fortunate to be growing with minimal sales effort.  Our issue however is meeting our blue-chip client’s expectations to deliver Six Sigma excellence with today’s production staff.  We have an ongoing problem maintaining a workforce interested in working in manufacturing as a career. Most of our jobs do not require specialty skills or training, but our wages and benefits are considerably better than industry average.  Developing staff remains a continuing challenge – even at today’s unemployment rates.

Other challenges are in managing the growth. This is a capital-intensive business with each SSM workstation costing $1 -1.5 Million. So we want to be cautious about how we grow.

We also need to continue to develop a middle management group so that Ken and I can transition out of the day-to-day management of operations. This is an ongoing issue as Colorado is not a center of metal manufacturing and finding the emerging middle managers has been a challenge. We are developing these managers internally and are always looking from a young engineer or person with technical background with a good work ethic who wants to develop a manufacturing career.

Mead: Comment on the climate for business in Colorado. Would you build your business here again?
Ken Young: We love Colorado – the climate, the outdoors, the mountains. Jon just completed the Triple Bypass Bike race last weekend. Even with all of the trials and tribulations, we’re glad we’re here.  We would like to see if there are some incremental resources that might help us with some of our staffing issues. Since Colorado is not yet known as a metalworking state, it is a daily challenge! 

Tuesday, September 11, 2012

Colorado success stories: SKYDEX

Company succeeds by ‘protecting the American soldier’

By David P. Mead
Editor's note: This is the first of the 2012 series of Colorado company success stories as told by CEOs and business owners.
From the moment you meet Mike Buchen it is clear that he passionate about the safety and well-being of the American soldier. Virtually every paragraph is punctuated with references to the mission at SKYDEX and the accomplishments of its team of employees in meeting that mission.

SKYDEX Technologies, Inc., manufactures patented geometrically designed products that mitigate (absorb) shock, concussive forces, and vibration for military and commercial applications. Products include blast-mitigating flooring for combat vehicles, padding for military helmets and shock absorbing decking on high speed interceptor boats.  Mike Buchen has been President and CEO since 2003. SKYDEX, based in Centennial, has grown the company ever since, doubling revenue each year for the last three years. The company ranks among the top 40 largest private companies in Colorado according to a recent list. Mike was recently recognized in Ernst & Young’s 2012 Entrepreneur of the Year program.

Mead: What is SKYDEX’ differentiation in the market?
Buchen: It’s our people. Our competitive advantage is our passionate, committed people. One of the early requirements at SKYDEX is for the newly hired person to accompany me to Washington, D.C. They stand by the Lincoln Memorial, visit the other memorials. We then travel to Arlington National Cemetery and go to Section 60. This is where the boys and girls come home. We see the names, ranks, and the dates killed. My message is clear: ‘The better you do what you do, may enable the next person to live. Let’s go save some lives.’ This is our ‘fuel’. My job is to be sure we are pointed in the right direction, that the engine runs well, and has the fuel.

Our mission is to serve those that put themselves in harm’s way. We protect things that matter. We have done well because the more that things matter, the more people are willing to pay.

Mead: Were there any bumps in the road?
Buchen: Not only bumps, but huge potholes. In January 2004, sales were at $0. By the end of 2004, we had to empty our IRA’s/401k’s in order to make payroll.  A number of our vendors helped us and hung with us so we were able to make it through. We learned from failure, as we looked for product opportunities. We looked at everything – from computer bags to football and lacrosse helmets to padding for athletic shorts. It may sound corny, but I have been confident about our success from the very start. I believe that good things are meant to happen to this company. In order to capture the opportunity, you need to use your gifts and work hard. We have lives to save.

Mead: What was the biggest ‘Aha moment’?
Buchen: We started listening to our clients, the combat troops. We were initially focused on the wrong products and markets. As I have said, we were focused on inches, instead of acres.” We learned that the military had a serious problem equipping the troops and gained some early success. Then we started listening to them, as they told us about their problems. We observed them stuffing paper into their helmets as padding. We gave away 45,000 helmet pad sets. Through sampling (technical evaluation) and the feedback, we learned that they were horribly underserved. We started looking for areas of the warrior’s body that were exposed to impact.

Mead: So it was market research and technical evaluation that led to successful products? 
Buchen: Yes, we kept improving the products based on soldier feedback. We’ve fielded over 800,000 helmet pads to date.

Mead: So what new products are coming out?
Buchen:  We will be introducing a SKYDEX shoe – a military PT shoe. People in uniform  tend to run a lot more than civilians. We have engineered it so that we can sell it for about a $60 price point.
We are also expanding into commercial products and markets. We are experts with cushioning technology. Peter Foley, Chief Technology Officer, previously worked with Reebok in Advanced Materials so we have a number of “crossover ideas” such as a boot crossover, forklift seats that absorb vibration, etc. Lighter and faster sells today. We think we have some great opportunities in commercial markets.

Mead: What are the keys to growth over the next five years?
Buchen: I would classify the keys in five areas:
First, we need to look at acquisition of compatible or competing technologies; second, we have opportunities to expand internationally; third, we will be continuing to look at ways to expand into commercial products and markets; fourth, we need to be continually looking for new ways to do business with the government; and fifth, we have to continue to excel at segmenting the market and above all, executing well.

Mead: Mike, when you were named Entrepreneur of the Year, you brought the entire team to the stage to accept the award.
Buchen: I have been blessed to be part of a phenomenal team at SKYDEX. Between them and my wife of 37 years, it’s their award.