Number of employees – 39
2007 sales – $10 million
Markets served – Oil exploration and production.
Alan Smith of Paragon Precision in front of one of his "newer" machines.
Alan Smith and Mike Keithley do some of the most complex, 5-axis machining on the West Coast, and ignore the conventional wisdom that says you need the newest machines to do that.
The average age of the machines at Paragon Precision is 15 years. None are new, most are older, but they all are meticulously maintained and produce high-quality, complex parts for the demanding aerospace and turbine engine industries.
“Our operating philosophy is to keep costs down, make quality products and always deliver on time,” Smith said.
“When it comes to buying equipment, I’m frugal and my partner is cheap. We buy used machines by the pound. The key is to know what you are buying and how you are going to make money with it,” he added.
Paragon traces its history back 50 years, but really is going into its fourth year of operation.
The company started after World War II making parts for the aerospace industry in southern California. It was reasonably successful and eventually was acquired by a large conglomerate.
When Smith was hired in the late 1990s to be the manufacturing manager for the shop, the company had 128 employees and was not the most efficient operation. He rearranged the shop’s layout and introduced lean manufacturing processes and was able to cut the work force to 80 while increasing output and improving delivery.
A short time later the customer that provided 80 percent of Paragon’s work cancelled its contract, and the parent company decided to liquidate the operation.
Smith saw that the core of the machining operation could be profitable and, with Keithley, made a deal to acquire its assets and remaining orders. By judicious selection and negotiation, Smith acquired some of the best of the old equipment.
In July 2003, Smith and Keithley started the new/old business with 7 employees.
They doubled the build plan in their original business proposal in the first year and doubled projected output in each of the two years after that.
Today they have 39 employees, twice the shop space that they started with and enough orders to keep them going into 2009.
The shop’s forte is machining blisks, which are the combined rotor- and-blade components used in turbine engines that are machined from solid stock. The shop focuses on making chips. It does not weld, plate or heat treat.
The shop has capacity to produce blisks that range in size from those that can be held in the palm of your hand to ones that are more than 36 in. in diameter and weigh several tons. It does CNC programming with NCL CAD/CAM software on state-of-the-art computers. Smith and Keithley buy new information technology and equipment and upgrade it as needed.
The partners have developed their customer base so that only 50 percent of their sales come from the aerospace industry, and no single customer provides more than 20 percent of total sales.
A number of elements become apparent in analyzing what makes the shop successful:
- An ability to attract and retain a skilled workforce.
- A thorough knowledge of the equipment and the know-how that draws the most from it.
- Continuous upgrading of capacity and continuous productivity gains.
- And, a shop-wide program of continual improvement.
The foundation of their success is the integrity Smith and Keithley built into their company and the way it drives what they do: They deliver product on time because they give their word they would. They treat their employees fairly because that is how they want to be treated. And when current or potential customers make demands, they work with them to find solutions.
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