3 Benefits of Consolidation in the Manufacturing Industry
What’s the first thing that comes to mind when you think of acquisition? Many larger organizations are working to consolidate manufacturing businesses, and the idea of job shops being acquired often conjures up fears of big corporations squashing “the little guy,” and shedding people, capabilities, and equipment until there’s nothing original left.
In the past, this scenario may have held at least a modicum of truth. But our industry is changing. More often, consolidation helps create and strengthen partnerships—not tear down existing organizations.
I recently led my company, InterPRO Additive Manufacturing Group, through an acquisition process with TriMech, a business solutions company providing CAD software, additive and subtractive manufacturing solutions, training, consulting and staffing services for clients across every industry. I can attest that the relationship dynamics between the parent company and the acquired company reflect a value exchange, not a power play.
Consolidation Can Make Us Stronger Together
My experience got me thinking—what if we allow ourselves to become stronger by coming together instead of going it alone out of fear?
Manufacturing is navigating unprecedented challenges, from a global pandemic and geopolitical tensions to supply chain disruptions and a skilled labor shortage. Smaller companies don’t always have the resources to overcome these hurdles. By consolidating into fewer but mightier companies, we can combine resources to solve problems more successfully.
At the same time, there’s a drive to adopt innovative solutions as new technologies become available. Many job shops cannot invest in the latest and greatest tools and services because they lack the necessary capital. Consolidation begins to make sense when companies need help financing their path to exponential growth.
3 Proven Benefits of Consolidation
I know acquisitions aren’t for everyone. I’d never dream of recommending consolidation as the blanket solution for every small shop in the industry, but it is something to consider.
At InterPRO, we were able to join a company that genuinely values what we have to offer, and my team and I are happy to be part of a bigger manufacturing family.
Even though we’re in the early days of our acquisition, I can already see three clear reasons to consolidate manufacturing businesses:
1. Single-source solution
The market is demanding a move towards shops being a single-source solution. Clients don’t want to juggle an endless network of suppliers—especially in the face of ongoing supply chain disruptions. We have already seen this bear out with many clients since joining TriMech. In particular, clients love being able to take advantage of our Project Engineering Group for special projects.
Consolidation creates the opportunity for more capabilities and a broader network of internal resources under one roof.
As an integrated, single-source solution, businesses can expedite processes for clients, cutting down lead times and freeing up capacity to take on more projects.
2. Visibility and growth
Many manufacturers struggle to market themselves effectively, and we were certainly no exception.
We were successful in our niche and experienced 20% year over year (YOY) growth, but marketing never came easily to us. We knew additive manufacturing and delivered world-class 3D printed products, but it was hard to hire excellent marketers when we weren’t marketing experts ourselves.
A shop is like a bistro kitchen—you might serve high-end dishes, but you also serve sandwiches. We needed a salesforce that understood how to communicate our services, and until we arrived at TriMech, we never quite got it right.
While we’re proud of our organic growth in the past, joining TriMech was a significant inflection point. Today, we have access to a professional marketing team and a salesforce with 120+ professionals. We’re growing far beyond what we could have achieved alone.
Now we have the best kind of challenge: staffing up to meet pent-up demand and accommodate massive growth.
3. Operational efficiency
As companies grow, the chance of risks, liabilities, and other issues increases. A mentor once told me, “There are no real technical problems, only people problems.” It changed how I view challenges.
A larger company offers a broader pool of experts who can help solve problems efficiently. If you’ve ever had to Google your way through an issue, you know it’s easier to ask a specialist directly.
For example, many manufacturing leaders got into the industry because, at heart, we’re engineers or machinists who love the trade. We didn’t become shop owners because we’re exceptionally gifted at accounting or creating legally binding contracts. Still, as business leaders, we need to roll up our sleeves and learn the skills required to run our companies.
Consolidation can enable business leaders to take off a few of the many hats they’ve been wearing. Today, I can focus on my team and clients, knowing I can rely on other teammates to handle some of those administrative issues.
No matter what your plans are for the future of your business, the critical thing to remember is that there are options.
Only you can decide what’s right for you, but keep your head up and see what’s available. Think about your personal and professional goals—you may be surprised by the path that appeals most to you.
Check out “Acquisition Lessons: The Importance of Leading with Consistency and Compassion” for More Content Like This
Dan Straka was the President of InterPRO Additive Manufacturing Group, a service bureau focused on solving manufacturing and engineering challenges with 3D printed and fabricated parts. Dan started at InterPRO in 2005 as a model maker on the shop floor and worked at every position in the company, giving him a broad perspective on additive solutions. In January 2022, Dan led InterPRO through an acquisition and is now the General Manager of the Advanced Manufacturing Services team at TriMech. Today, Dan oversees a team working in three manufacturing facilities with over 40 3D printers and coverage in Canada and the Eastern United States. Dan continues to focus on growing a team culture dedicated to solving client problems with specialized additive manufacturing, fabrication solutions, and secondary operations.