Technology Drives Hiring At Small Shops

Matthew Doom texts a lot at work and is a whiz on the 3-D printer. Unlike most tech workers, his office is a wooden workbench next to a milling machine where he cuts metal for medical devices and other parts.

Eight months ago, the 20-year-old was milking cows at a nearby dairy farm.

Doom is one of a dozen employees at Baklund R&D in Hutchinson, Minn., using Internet connections with far-flung customers, smartphone chats and the latest in computer equipment to squeeze more business out of traditional tool and die equipment.

“We’re taking an approach that is extremely nontraditional and we’ve even been able to beat prices offshore,” said Jon Baklund, 44, a second-generation toolmaker who runs the small shop 60 miles west of Minneapolis. He estimates his factory doubled its business with the innovations, getting inquiries from companies in 37 states last month.

Baklund, which hired four people in the last year including Doom and is seeking two more, is one of hundreds of small shops across the U.S. leveraging technology to meet demand for low volume, highly customizable products. Other companies, such as Etsy and TechShop, serve as online marketplaces or starting grounds for tiny manufacturers to churn out new inventory in metal, wood and even fabric.

Makers of dies and machine tools have increased employment by about 18 percent since August 2009, compared with a 2.9 percent gain for overall manufacturing, according to Dan Luria, an independent manufacturing economist in Brighton, Mich.

The growth in low-volume, high-variability production is catching the attention of companies such as Wal-Mart Stores, said Wally Hopp, a professor at the University of Michigan’s Ross School of Business who has worked with the world’s largest retailer to study U.S. manufacturing trends. Wal-Mart said this year it wants to buy an additional $50 billion in American-made products in the next decade.

“You’re seeing these mom-and-pop operations picking up manufacturing, doing it in a highly flexible, highly local kind of way,” Hopp said in an interview. “This is something that’s going to permeate through the whole manufacturing economy. We gave up on manufacturing too soon.”

It’s too early to call it a renaissance because hiring gains are scattered and hard to quantify, he said. As of September, the U.S. has regained about 503,000 of the 2.3 million factory jobs lost in the aftermath of the 18-month recession that ended June 2009, according to Bureau of Labor Statistics data.

Specialty operations are finding new opportunities because of 3-D printers, said Patrick Hunter, senior vice president of marketplace operations for MFG.com in Atlanta. The technology allows three-dimensional designs created on computers to be sent digitally to industrial machines, which put down layers of materials ranging from plastic to metal to create parts or products.

“It’s opened the doors to smaller shops because people aren’t tied to the large mass manufacturers,” said Hunter, whose company has been matching companies with parts makers for about a dozen years.

Low volume typically means runs of products of more than 1,000, which exceeds capacity of a home workshop, and less than 5,000 to 10,000, which is usually the minimum to get work done overseas at a factory in China, he said.

More than 58 percent of small shops added new machines for so-called additive technology in 2012, the third year of gains since the recession ended, according to Wohlers Report 2013, which tracks the industrial market for industrial 3-D printing technology from Fort Collins, Colo.

A new army of entrepreneurs is also leveraging connectivity and 3-D printing to create demand for manufacturing from the grass-roots, said Dana Mauriello, director of new business opportunities at Etsy, an online marketplace which has about 1 million sellers of handmade and vintage goods.

Etsy said in October it will let its sellers use outside manufacturers and hire as many employees as needed, rather than requiring products be purely “handmade.”

Allison Faunce, founder of Little Hero Capes, which makes customized super-hero capes for children, is one of the Etsy artists already doing this. She’s hitting 1,000 capes a month in the peak season and plans to start marketing at toy fairs early next year to increase sales, she said.

“I was turning into my own little sweat shop, and I knew it was too much when I sewed my finger into a cape,” said Faunce, who got the idea for the company in 2007 after seeing her son run around the house with a dish towel as his cape. Now she pays a local textile mill and helps keep six people there employed, she said.

Some entrepreneurs are skipping the middleman and going into production themselves, said Brandi Tysinger-Temple, CEO and founder of Lolly Wolly Doodle, a children’s clothing line in Lexington, N.C., that gets many customers through Facebook.

Founded in 2008 out of her home, the business now operates out of a 19,000-square-foot factory with 230 employees, many of them former textile workers, Tysinger-Temple said in an interview. She’s about to roll out software that will allow customers to design clothes on the Internet to be made on her machines, creating new demand and more jobs, she said.

Ryan Lorenz, CEO of body jewelry maker Omerica Organic, says he is devoting about 20 percent of the output from his 7,000-square-foot shop in Denver to outside work. He’s confident it will be half of his production in the next couple years.

Because the equipment can be programed, he can make products ranging from wooden parts for musical instruments to knives, said Lorenz. He has 13 employees at the business, which he started in 2004 to make small wooden jewelry called plugs, used by customers to insert in their earlobes.

All the experimentation and new equipment are translating into hundreds of small companies, each with the capacity to hire more employees, said Mark Hatch, CEO of TechShop. The company offers monthly memberships, training and access to advanced manufacturing equipment to more than 6,000 members at six locations from Detroit to San Francisco.

Square Inc., which makes a credit card paying system that plugs into mobile devices, and Lumio LLC, a rechargeable lamp that unfolds from a book, are two companies that used the San Francisco TechShop, Hatch said.

“There’s a whole ecosystem being created and people are creating their own jobs in ways that are probably not even being counted,” in official employment figures, he said.

Businesses with fewer than 50 people have added workers for 34 straight months to a record high in October, according to data from Automatic Data Processing in Roseland, N.J.

As technology such as 3-D printing gets less expensive, it can also supplant manufacturers that don’t adapt, said Claus Moberg, CEO of identity verification company SnowShoe, in Madison, Wisc.

A key tool for his business is the MakerBot Replicator 2, a $2,199 3-D printer that creates computer programed shapes out of plastic, Moberg said.

Last year, SnowShoe was paying a traditional machine shop about $70 apiece to have small stamps milled out of aluminum, each with a unique shape, that could be pressed on a phone or tablet touchscreen to verify identity, he said. On a MakerBot, they cost 17 cents each. The company now owns three machines, which running 24 hours a day can churn out about 300 parts, he said.

When he needs more capacity, he rents it from a company in Denver that runs a sort of MakerBot “farm” with multiple machines available for custom orders in one location, he said.

It’s easier to conceive ideas than to translate them into products that can be made on an assembly line, said Dorian Ferlauto, 35, the founder of Elihuu, a company in Boulder, Colo., that helps designers match with small manufacturers in the U.S. For every company like Omerica Organic there are dozens that stall out when they try to start production, she said.

“A lot of people get stuck in engineering because their parts are not designed to be manufactured,” she said.

This is where traditional machine shops, enhanced with technology like the 3-D printers, can bridge the gaps, Minnesota shop owner Baklund said.

The world of technology-enabled manufacturing continues to surprise Doom, the new machinist said. A year ago he was working at a dairy farm, milking and breeding cows, when a friend told him about the job at the machine shop. Now he’s helping create parts for medical devices and even NASA.

“I didn’t have that high of expectations,” said Doom, who already had familiarity with computers. “Eight months later I’m running multiple machines. Everyone says machine shops, it’s just a shop. But there’re computers everywhere. We’re using Internet everywhere. I wasn’t expecting it.”