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Re-tooling business

Re-tooling business

Machining and tooling company reassesses its customers

Dayton Business Journal - Tuesday November 22, 2005 - John Wilfong

Beverly Bleicher likes the idea of outsourcing.

Beverly Bleicher of BITECThat's because her company, Bitec Inc., has enjoyed 20 percent revenue growth in each of the past three years by picking up the work many of her existing clients were looking to unload.

Traditionally a tooling and machining shop, Bitec has added services such as inventory management and assembly work. Bleicher started to offer the new services when her company's growth slowed after the terror attacks of Sept. 11, 2001. She leveraged her long-term relationships with customers to identify new services her company could provide.

The new approach is helping Bitec boost revenue about 22 percent this year to $3.5 million. The company has 40 employees, and Bleicher plans to have hired another 10 employees by this time next year. In addition, the new services are fueling a planned $1.25 million expansion, which mostly involves the purchase of high-tech tooling equipment to modernize the shop.

"You have to try to fill more needs other than just being a components supplier," Bleicher said.

Bitec started 20 years ago as a tooling shop, making parts for customers mostly in the aerospace and defense industries. But changes in the defense industry, including the end of the Cold War in the 1990s and the terror attacks in 2001, stalled the company's growth. There was a shift in military weapons production, and many of Bitec's federal clients were not ordering any new work in the transition.

That's when Bleicher decided to look deeper into her relationships with current customers, which include major industry leaders, such as General Electric Co., Procter and Gamble Co. and John Deere. She was able to identify new services Bitec could offer each that would make each company more efficient and boost her own bottom line.

Foremost among her efforts was creating an inventory management service where Bitec would manufacture the components for its customers and then warehouse and manage the inventory and deliver the intricate machined pieces on an as-needed basis. In one case, she said such an arrangement freed up an entire department for a customer, which then was able to expand its work in another area with the extra employees.

Bleicher said the company's inventory tracking system allows it to cater a program to meet the customer's need. For example, some companies receive monthly inventory reports, some have direct access to Bitec's system to track their stockpiles on their own, and some depend on Bitec workers to access their systems and completely handle their inventory needs.

Among the products Bitec makes are nonmetallic parts for John Deere's outdoor farm equipment, advanced composite pieces for the blades of Sikorsky Aircraft Corp. helicopters, and engine pieces for the space shuttle.

"The great thing about being small is that it allows you the flexibility to meet the need or to come up with innovative solutions," Bleicher said. "And in there is your opportunity."

Working with her customers, Bleicher also saw an advantage of providing more kit work, meaning that Bitec now makes several components for a particular assembly process and packages them as a kit. So instead of only making one or two of the components for the customer, Bitec now may make six or seven pieces and sell them as a package to the customer. She said she was able to sell the kits at a better price while helping increase her customer's efficiency on their assembly lines.

In addition, Bitec is getting into assembly and testing. In the past, before customers could move into full production, their product would need to be strenuously tested to industry standards. In some cases, Bitec would create the pieces, assemble them, and then have to ship them back to the customer or even off to another company to be tested. Now Bitec can test locking systems, such as seatbelts.

Angelia Erbaugh, director of the Dayton Tooling and Manufacturing Association, said Bitec is among the first of the smaller shops in the Dayton area to apply supply chain management techniques similar to those used by larger manufacturers.

"Some of the large automotive suppliers have been doing that for some time," Erbaugh said. "It's unusual and probably a very good thing that Bitec's watching that type of technique and is setting it up within a smaller organization. Our industry needs to have that kind of vision and understand that if they keep doing what they've been doing, they're not going to be around that long."

This transformation to accommodate multiple tasks has done more than deliver revenue, Bleicher said. Having a more steady revenue stream has freed up time to track down more work, and the additional capabilities and equipment have helped Bitec cut costs.

"It's what they used to call your bread-and-butter work," Bleicher said. "It covers your overhead and gives you the ability to be more competitive to attract other business, and that's where you'll find your growth. If you're out there constantly hustling for that new contract with a new customer, it's a way to survive, but it always leaves you in survival mode. And that can really wear on a small-business owner."

The additional services, most important the inventory management, also makes Bitec and its customers co-dependents, she said. The agreements make Bitec concerned about the longevity of its customer for continued work, and the customer in turn becomes concerned with Bitec's health to be able to continue to maintain their supplies.

"You become critical to a company's success," Bleicher said. "You want to be the one they're depending on."

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