Published 12/1/2008

Using the Internet to Start Your Diversification Strategy

Rather than downsize or give up, one mold shop decided to find new opportunities to apply their skills and equipment, outside of the local moldmaking industry using an online marketplace.

Dave Turbide

Business Challenge

The company finds itself in a challenging situation. Despite a solid reputation based on years of experience making molds for rubber parts for the automotive, railroad and appliance industries, Ron-Al is facing a declining industrial base in their local Midwest region along with increasingly stiff competition from overseas.

Ron-Al Mold & Machine is facing a challenge that is becoming increasingly common among U.S.-based manufacturers. Ron-Al’s traditional customer base is declining, and at the same time many of their remaining customers have been forced to source overseas in order to save money and remain competitive in their own markets. Rather than downsize or give up, Ron-Al decided to find new opportunities to apply their skills and equipment, outside of the local moldmaking market.

Solution

While searching the Internet, Ron-Al owner/vice-president Alan Siciliano found MFG.com, but he didn’t join the online marketplace right away. “Bill Ryan at MFG.com called me a number of times after that first contact,” Siciliano says, “but I didn’t join in and start using the site until last year (2007). I wish I had done it two years ago.”

Early in 2007, Ron-Al began to shift the focus of their business away from being exclusively focused on moldmaking to add a more diversified machining service operation. “We are still a moldmaker,” Siciliano stresses, “but it used to be our only business. Now we have established a machining division that does short-run, general machining, turning, EDM, and deep-hole drilling for customers in a lot of different industries, all around the country.”

While they have been able to find and service local business in and around their home base in Kent, OH, Ron-Al has now been able to secure considerable work from customers in Texas, California, Pennsylvania, New Jersey, Colorado, Illinois and other states through MFG.com.

“There is plenty of business out there and we’ve found some great customers,” Siciliano says. “We are targeting the oil industry, but we have also done some work in robotics, aerospace and other industries as well.”

Ron-Al specializes in short-run orders—generally less than 50 or 100 pieces, although they do complete the occasional larger order for small parts. “We just completed a job for a Pittsburgh company that was for 16 each of four parts,” he says, “A Texas company awarded us an order for 11 each of three parts, then re-ordered six more of each a short time later. Now we just quoted another job for them.”

Repeat business is common. Once Ron-Al has been able to demonstrate their quality and responsiveness on that first job, customers often come back for more of the same or for another part that they need.

Benefits

While freely admitting that he has not really used the site to its fullest, Siciliano is very pleased with the ability to find the work he needs to keep his shop busy. “I’m on the site every day,” he says. “At first I was submitting three or four quotes a week after searching and locating the kind of jobs that we wanted. I’m actually still putting in about the same number of quotes every week, but I’m a lot smarter about it now. I’ve been able to refine the searching and quoting process so our success rate is a lot higher.”

Benefits of an online marketplace include:

Market services nationwide
Finding business as-needed to fill available capacity
Diversifying away from traditional market into more robust industries
Following business cycles a particular industries grow or contract
Selecting the kind of business that is the best use of capabilities

Summary

Siciliano admits that there is a learning curve. “We hit the ground running, and got business pretty quickly from MFG.com, but I’m still learning. It’s a heck of a tool, and there’s a lot more information out there than I am taking advantage of at the moment.”

Right now, about 40 percent of Ron-Al’s business comes from MFG.com and Siciliano expects that percentage to grow. “The mold business is pretty busy right now,” he says, “but when it slows down again I know I can go right out to MFG.com and fill up our capacity.”