Going small, thinking big: Absolute Tool Technologies Inc.
"You don't tug on Superman's cape, you don't spit into the wind, you don't pull the mask off the Lone Ranger, and you don't mess around with Jim," folksinger Jim Croce once warned. And if he'd been si...
“You don’t tug on Superman’s cape, you don’t spit into the wind, you don’t pull the mask off the Lone Ranger, and you don’t mess around with Jim,” folksinger Jim Croce once warned. And if he’d been singing about modern-day Windsor, Ont., Croce might also have cautioned against starting up a tool shop during tough economic times.
But such a fear didn’t discourage Denis Comartin, Jeff Pillon, Gaetano Scalia and Anthony Piazza, the owners of Absolute Tool Technologies Inc., which opened its doors in Windsor in January 2006.
“We were ridiculed when we announced that we were starting up the company,” Pillon, sales and program manager, recalled. “A lot of people said, ‘What are you doing opening a tool shop now?'”
But while it might have seemed ill advised to some, Pillon and his colleagues — who all have extensive backgrounds in the tool and mold industry — believed they saw a niche that they could fill. “We wanted to make service the main priority of our business while offering full support to our customers, 24/7,” operations manager Comartin said.
Moreover, the men were convinced they had a strategy for making their venture a success. “When the four of us first sat down together, we drew up one, three and five year business plans,” Comartin explained. “The biggest part of each of those plans was controlled growth at a slow, steady pace. We’ve seen too many tool shops that grew too quickly, lost control, jeopardized quality and lost business as a result.”
With a 6,500 square foot facility and approximately 18 employees, however, the owners of Absolute Tool Technologies believe that their shop is small enough to provide personalized service without sacrificing technical quality. “We have the high-speed machines and the equipment like the VISI-Series CAD/CAM software that our customers require to get mold build, tool and mold repair, machining and fitting jobs done,” Piazza, the company’s machining manager, said. “But at the same time, we have a competitive edge in that the size of our shop allows us to keep our finger on quality and timing.”
And being able to deliver product on time, manufacturing manager Scalia stressed, is a paramount issue for today’s North American tool shops, which are facing increasing pressures from overseas competition, particularly China. “Everything is about timing now,” he explained. “A smaller shop like ours can work fast because we don’t have to go through the layers of infrastructure that a larger company does.”
Unlike large shops, Pillon explained, Absolute Tool Technologies’ smaller size provides the flexibility to take on sudden assignments and complete them virtually overnight. “We can commit on a Friday and have the work done over the weekend, which is the kind of service that customers need in today’s market,” he said.
In addition to offering control and timing benefits, Absolute Tool Technologies’ size provides an economic advantage, according to Comartin. “We are basing our business on very low margins and are happy with that. We need to do things faster while cutting costs,” he explained. “Larger tool shops get into trouble because their overhead costs make it harder to compete, causing them to lose business to China.” Comartin and his partners minimize Absolute Tool Technologies’ overhead expenses by renting their facility, and by keeping control over other costs. “We don’t purchase components for a mold, for example, until we absolutely need them, and we also try not to have more people than is necessary working overtime,” Comartin said.
A key element for a smaller tool shop to survive in today’s climate, the four men agree, is to reassure customers that it is a stable supplier. To this end, Absolute Tool Technologies has taken advantage of financing and risk management provider EDC, a Crown Corporation servicing Canadian exporters and investors. “EDC receivables insurance insures our money for 90 per cent of its value,” Comartin explained. “We use it for 95 per cent of our business, and it gives us and our customers a comfort level. It’s a good tool to have that encourages us to aggressively chase business.”
While Absolute Tool Technologies has been successful to date, this breeds its own dangers. Recently, for example, a customer approached the company with an offer to go bigger with the promise of more work. “It was tempting, but we declined,” Pillon said. “We think that a big part of our success is sticking with the plan of controlled growth. Before we grow any bigger, we want to have steel stacked to the ceiling.”
This doesn’t mean, however, that the company isn’t looking ahead to future expansion, including the possibility of collaboration with companies overseas. “Our customers certainly don’t want us to ignore China, for example,” Pillon said. “Right now, we are developing connections in China, and when the time comes we’ll embrace them.” One possibility, Pillon continued, is to have mold bases and components that are built in China and then shipped to Absolute Tool Technologies for the machining of the inserts. “The advantage of this approach is that everything that is critical will still be done in-house, which allows us to retain control,” he explained.
Paradoxically, one factor in Absolute Tool Technologies’ success thus far may well be that the company did, in fact, open its doors during an economic downturn. “When you start a company in good times, it’s easy to get carried away; starting the company when we did gives us discipline,” Pillon said. “For us, there’s nowhere to go but up.”
Absolute Tool Technologies Inc. (Windsor, Ont.)