Family-owned machine shops are not unusual but Smiths Machine, a second-generation, business with two state-of-the-art operations in Tuscaloosa, Ala., is carrying on more than a legacy. The CNC milling, turning, and grinding business has redefined itself in recent years, finding a formula for growth that has resulted in adding 70 workers since 2009. That’s a 300% increase, mostly during a time when many machine shops (indeed, many manufacturers) were struggling to break even.

Ahead of the recession, Smiths Machine was operating like many other machine shops doing at that time, coasting along with a solid business in automotive parts production. The financial crisis hit the automotive sector particularly hard, and the bankruptcies of General Motors and Chrysler Corp., as well as many of their top-tier suppliers left many machine shops vulnerable to volume-based supply from overseas competition. A once well-oiled machine tool business model suddenly seemed unstable.

The idea of moving the Smiths Machine business into a new manufacturing sector seemed uncertain, however necessary. Defense and aerospace part manufacturing require a different business approach than auto parts production, according to Tim Smith, vice president of Smiths Machine. “It is specialized work that requires special approvals, log-down processes and complicated procedures,” Smith said. “The complexity is challenging. And it all starts with a different way of thinking, more of an engineering approach than a production approach.”

Smith said his company needed to build a new business model and the operations to support it. Defense and aerospace machining is characterized by small lot counts, generally lower margins, and a very low tolerance for errors. Scrap rates thought to be nominal in the past would now be out of the question.

“You can’t make a $6,000 part and have a 30% scrap rate, or even a 10% scrap rate,” explained Smith. “The emphasis is not on throughput, but on the high quality, highly precise manufacturing of very complex parts.”

Based on these three, inseparable machining requirements — quality, precision, and complexity — Smiths Machine set out to reach its greater potential in the machine tool market, not as a production machine shop but as company focused on complex part manufacturing. Having achieved some early success in this new direction, the way forward for the company soon could be summed up more simply:

“The more complex the part, the more competitive we are,” Smith stated.

To protect and grow this competitive advantage, the organization’s leaders knew that internal processes and technology needed to match up with the particular requirements of the defense and aerospace industries. Major investments in large, complex, five-axis machines would need to be enhanced by equally complex control capabilities. Smith recounted how a decision made previously by the company would have a profound effect on the changing profile.