Missoula Firm Plugs In to Region's Supply Chain for Growth
By Deborah Nash, MMEC, 406-994-4507, email@example.com
Manufacturing technology products right here in the USA offers benefits that are surprisingly satisfying, according to B.D. Erickson II, President of Satic, Inc., in Missoula, Mont. The company manufactures line conditioning, harmonic reducing, energy saving products known as Global Energy Savers (GES) and a ‘Power Perfect’ product line of both energy savers and high quality lighting.
BD (l.) and Jeremy Wolf (r.) at one station of the assembly work cell.
Satisfaction has come from contributing to job creation in the region, not just for Erickson’s firm but also for several western Montana suppliers. These are fellow manufacturers that do injection molding and sub-assemblies to help Satic meet customer demand while keeping capital investments manageable. Satic has 11 employees and hopes to add two more to “do what I plan to do in the near term,” the company’s leader said. Satic also provides internships to Missoula’s UM College of Technology students to help them gain real-world experience as part of their required curriculum.
Reward has also come from building strong resource partnerships and lasting friendships across the state that have led to greater success, as well as from having better control of production and of research and development to continue innovating the product line. The Montana Manufacturing Extension Center is one of Satic’s trusted advisors.
More Than Bottom Line To Be Considered
Such intangible benefits are over and above bottom line ramifications a business must consider when choosing whether or not to manufacture in a place like China, Erickson said; things like cost of shipping, wait times, import duties and other hidden fees. Intellectual property threats are very real as well, a painful lesson the entrepreneur learned first hand.
After developing an in-home energy saving product about five years ago, he opened a sales and marketing office in Missoula and took the first prototype GES to China for manufacturing. He then made a promising sale in Dubai for 3,000 of the devices only to find that his manufacturing partner in China decided to sell direct to the customer, cutting him out of the deal.
“I’m sure they thought, ‘who needs a sales office in Missoula, Montana?’” he said. “I hadn’t really planned to be a manufacturer. But by then I knew I had an idea that would sell, and that’s when I decided it would be smart to manufacture here.” The business model changed, and the product line has since expanded to include an improved residential plug-in model as well as wire-in residential and commercial models. It also includes Satic’s proprietary energy saver bulbs, which operate at a much cooler temperature than a typical CFL (compact fluorescent lamp) and last longer. The bulb, still manufactured overseas, has sparked some interest for having it made here, Erickson said.
The P’s of Success
Passion, positive attitude and perseverance have contributed to growing success and innovation at Satic. Erickson has taken the business from an idea to a full line of Energy Saver products that are UL (Underwriter’s Laboratories) product safety certified and now have CE marking for sales into the European market. Both a positive attitude and building strong partnerships has played an important role, he said.
Injection molded box has wire harness manufactured at S&K Electronics in nearby Ronan.
“We went from starving to back-ordered,” he said. The company expects to catch up on back orders as soon as its first local shipment of plastic junction boxes for its commercial model arrives. That box is now injection molded just down the road in Stevensville. Satic owns the molds, and RAM Industries uses them to make the boxes. Erickson looks forward to receiving the shipment to “seal the deal with several prospective customers” now that he will be able to ensure prompt order fulfillment.
“You don’t want to tell new customers they have to wait for their order while molds are built!” the savvy marketer said.
Systems and Focus for Growth
The entrepreneurial “do what it takes to get the job done” attitude that sustained the business early on is now combining with methods to better manage higher capacity manufacturing. Erickson and his staff have been learning about and putting LEAN systems in place to enable the company to reach its full potential in the eco-friendly technology marketplace.
To get started, Erickson looked to the outside expertise of MMEC to get solid building blocks for growing his business through a feasibility plan, a training plan for LEAN Manufacturing concepts and techniques, and design of a capacity calculator to determine the impact of changes in demand on its resources.
“Lean thinking has been ingrained into Satic’s culture from the top down. A majority of the staff has attended full day lean training and implemented the concepts into their manufacturing processes,” MMEC Field Engineer Jeremy Wolf said.
Ragan Erickson, a LEAN Champion, manages the interns and production; here he demonstrates how parts fit together.
“I’ve gotten so much help from your organization,” Erickson said. “I could make a list. Lots of the people I do business with I met through your meetings [Lean and ExporTech training, and the Compete Smart Manufacturing Conference]. Many are now good friends.” In fact, the wire harnesses used for the wire-in GES are now being made by S&K Electronics in Ronan. Erickson first met General Manager Larry Hall at a quarterly Western Montana Manufacturing Forum facilitated by Wolf.
He credits MMEC with helping him reach out to a pool of area engineers to make his first engineer hire several years ago. After sending most of his staff through the Lean Manufacturing workshop, he called on Wolf and Todd Daniels, another MMEC field engineer, to review process flow for the company’s assembly area to maximize Lean cell development. Satic now has a neat, well-lit assembly and solder work cell with five stations. Each uses Point of Use storage and pleasant “full spectrum” lighting using Satic’s own energy saver bulbs.
With Manufacturing Come Capital Investments
UM College of Technology intern gains real-world experience at Satic.
Capital investments are part of growing a manufacturing operation. Wolf and MMEC’s University Technical Assistance Program have performed several equipment searches for the company, exploring a wave solder machine to speed up production of the GES units and a sonic welder to automate the sealing of plastic enclosures that hold the circuit board. The welder would eliminate a manual process that requires a lot of training. Both methods meet UL standards.
The new equipment will increase productivity for the growing number of orders. “We have already seen $80K this year in just the first two months,” Erickson said. Now that the new molds have arrived he expects to handle a much greater volume of sales.
A make/buy decision spreadsheet is another tool created by MMEC for the company. It is used to evaluate when it makes sense to make or to buy parts. Erickson took projections a step further by having MMEC develop a Proposed Production State to plan for possible expansion or even a move to a new facility.
“Having a well thought out plan helped land some dough,” Erickson said, adding that it is important to show potential funders that you have a growth plan.
Satic is considering ways to better manage purchasing and inventory control and took an MMEC facilitated visit to manufacturing neighbor Nutritional Laboratories International to see how an ERP (enterprise resource planning) system is used. ERP is business management software that allows an organization to use integrated applications to manage operations, including development, manufacturing, purchasing, inventory control, sales, and marketing.
Services Can Generate Real Impacts
Coaching and guidance from MMEC has not only helped make the case for attracting funding, it has helped Satic with costs savings of nearly half a million dollars. Sound advice for setting up the manufacturing side of the business helped the company increase sales by $300K last year. The company was also able to hire five people. So far it has invested $34,000 in workforce training and several hundred thousand in other investments. In addition to about $8,000 in equipment purchases for the Lean work cell, other capital equipment purchases on the horizon. The results of the equipment searches will also provide investment savings that could be as high as $40K per year.
“MMEC has really helped me find grant resources for aspects of my business over the years,” Erickson said. Incumbent Worker Training grants have been one source of those. Trade show assistance and several other special programs developed after Erickson participated in the MMEC ExporTech training in summer 2011.
“BD has taken advantage of every local resource available to help his business grow. He understands that he does not have all the answers and that there is no shame in asking for help,” said Wolf.
Savvy Export Advice Helps
“The information provided by ExporTech speakers and coaches was excellent and very applicable to where we plan on going with our products and our business,” Erickson said. “We gained real usable information that will serve us right away. We’ve already implemented some of it or started to expand our minds and operations in that direction. It will also serve well into the future.”
Building relationships with the Sara Warren from Montana Department of Commerce Office of Trade and International Relations, Carey Hester from U.S. Commercial Service, and several folks from the Montana World Trade Center (MWTC) has boosted the skills needed to export into foreign countries. Satic now has a distributor to sell products in France after MWTC provided an intern to translate documentation into French. Paul Safford, A specialist on currency exchange, has been exceedingly helpful (Paul Stafford).
Ingredients to Grow Successfully
Along with great coaches, a responsive supply chain, a well-developed story about what your products are and what’s in it for the customer, and a demo kit for products like Satic’s are important to continue growing the business, Erickson said.
“We’ve been building a number of demo kits for distributors and sales people so people can actually see the energy saving potential using a measuring device and not just hear it from me,” Erickson said. Backing up your story with data (providing the customer with a reason to believe you) is a great sales tool. Continuing to innovate is also essential. He’s already thinking about design features for the generation three Global Energy Saver model.
“Regarding MMEC, let me say any manufacturer would love your services if they know they are available. The people, the services, the seminars have all been outstanding. MMEC is a community asset to be certain.”
You can learn more about Satic, its products and Erickson at www.saticsaver.com.