Volcanic Growth

“We stand behind it!” – It’s the one sure thing you hear from thriving businesses everywhere. Accomplished shops realize their serious customers are buying a reputation first – the parts just come along with it.

We’re always impressed with second-generation success, but it’s becoming surprisingly rare in today’s small-business arena. Time and again we see impressive shops grow to prominence through the persistence, fire and passion of their founders. But steamship personalities leave large wakes, and their legacies often are hard for the next generation to live up to. We recently visited a booming family shop in Auckland, New Zealand, however, that’s a solid exception to the trend.

Swages Engineering Limited’s Managing Director, Mike Graham, grew up with machines shaping his distinctive character. “My father was an engineer all his life,” he says, “and I don’t remember a time when machining wasn’t a part of mine.” His father confidently started the small venture that became Swages back in 1980, with little more than a capstan lathe, a cold saw and a drill press.

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When the self-assured younger Graham took over the thriving business a generation later, it boasted eight loyal employees and a sterling local reputation. Swages was a well-established company with a proven business model that the father, most likely, hoped the son wouldn’t muck up. But Mike Graham is the epitome of no-nonsense independence; there simply was no way he could leave well enough alone. The son jumped in and boldly started changing everything . . . except the shop’s unflappable commitment to “stand behind” everything they did.

Graham invested heavily in “new plant,” upgrading his father’s manual shop to new CNC equipment, and expanding his machinists’ training. Some associates viewed the changes as risky, but Graham saw them as essential. “I knew if we didn’t grow, we would stagnate and disappear,” he says, seriously.

Growth was slow at first, and then suddenly, the revamped company took off at a volcanic pace. Within a few short years, Swages Engineering grew into a global subcontractor with 50 employees and 30 modern machines. Today, they’re the largest subcontractor in New Zealand. “We’ve been lucky,” claims Graham.

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Perhaps, but the road wasn’t always rosy.

The first vertical machining centre Graham bought was a reputable brand from a successful and reputable dealer, but it developed problems. “Machines are machines,” Graham says, philosophically, “and the reality is, they will eventually break. We all make mistakes; it’s just how you react to them that’s important.” Regrettably, according to Graham, the manufacturer didn’t react very well.

“All told, we were down for twenty weeks! We had a lot of contracts to honor, so we were forced to ‘sub out’ all of that machine’s work at costs far above what we were making on the jobs.” The thought of walking away from the contracts never occurred to Graham. “No way!” he exclaims. “That would have been like shooting ourselves in the foot! We had to ride it out, but it nearly killed the company.”

Yet, Swages Engineering survived, reputation intact, and moved steadily toward the phenomenal growth it soon would see. The turning point came when a local lighting manufacturer approached the shop with a rough sketch of a garden light they wanted to make. “I sat down and designed it so we could manufacture it efficiently, and quoted them a fair price,” says Graham. The rest is history. The success of that first piece for Hunza Productions Ltd. led to an entire line of decorative outdoor lighting products that now are marketed worldwide.

“Virtually everything is machined,” boasts Graham. “That’s what sets the product apart. We aimed for the top end of the market, which means we can keep the volume down to a manageable level, yet still keep the margins attractive.” The stylish and robust products are made primarily from solid 110 copper or solid 316 stainless steel. A smaller number are made from cadmium-plated aluminum.

“Everything’s lifetime guaranteed,” adds Graham. “A lot of it’s machined from 10-millimeter-wall stainless tube. You can drive a truck over it!

“They’re exclusive products, somewhat expensive, but since we’ve presently got a good monetary exchange rate with customers like the U.S., our being on the other end of the world is a real economic advantage.”

Success bred success, and Swages quickly landed more international contracts, including a series of highly complex enclosures for electronic security devices. As a result, they became the first engineering company in New Zealand to obtain both ISO 9002 and RFO 001 certification.

The superb, waterproof, RF-shielded enclosures are as small as 2 inches square, but are so complex they take up to 15 separate machining operations to produce.

“They’re ongoing contracts,” says Graham. Rapid technical advances mean the electronics inside are always shrinking, and therefore the enclosure designs are always changing. “That’s great for us,” he adds, “since it makes die-casting uneconomical.”

Everything is 6061 billet: machined, anodized, remachined, shot-blasted and acid-washed to seal the anodized surfaces. Finally, they’re fitted with threaded inserts, ultrasonically cleaned and inspected by CMM – often with up to 200 measurement points.

“We don’t even bid on the jobs anymore,” Graham says, with a smile. “The client just sends us the new changed drawings, we make and ship the parts, and then bill them a fair amount. They trust us to do whatever’s necessary to get the job done, and not gouge them.”

How did Swages arrive at such an enviable place in the world of international business? Their hard-won reputation for serving their customers opened the doors, and Mike Graham’s commitment to continuously grow his shop’s technology to meet his customers’ demands cemented their trust.

Soon after weathering that 20-week catastrophe back in the late ’90s, Swages bought its first Haas machine – only the second ever seen in New Zealand. Why? “You’re either serious about service or you’re not. It’s not something you can dabble at,” Graham declares, flatly. “And that’s why we bought Haas.

“We learned the hard way,” he says. “Being at the other end of the world, local support and backup is a major, major thing.” Aotea Machinery, the New Zealand Haas distributor, promised to stand behind their products. “And if they hadn’t,” stresses Graham, “that first Haas machine would have been our last! As it turns out, that first VF-3 has been running 20 hours a day for nine years, now. And, we’ve been adding another half-dozen Haas machines every two to three years since,” he adds. “We’re now up to fifteen of them. All the other machines we had are now gone. We’ve replaced everything with Haas.”

Needless to say, Graham likes the brand, and feels the company stands behind its products after the sale – the same way he does. “If there’s ever a question with a Haas machine,” he says, “the guys at Aotea are straight on the phone, either to Australia or the U.S., and we get answers straight away. A machine we just landed had a slight issue, and within 6 hours, they knew what the problem was and had it sorted out. With other brands of machine tools we’ve had, I’ve found we might get an answer three weeks later. I said might.

“Another time, we called late at night and found the service guy was away,” remembers Graham. “Aotea’s Managing Director, Peter Thompson, came in and fixed the machine himself! That’s the sort of support we get, and that’s what makes a difference to our business.

“The reality is, we bought Haas for the service,” says Graham. “Basically, the machine was solid, had excellent production rates and was tailor-able to fit our demands quite well.”

But when his job demands began to change, Graham occasionally had his doubts. “We’re now running five Haas Super Speed machines, three with pallet loading, to keep up with volume demands. For the value of the machines, they do very good production – a lot of bang for the buck.” But when he got one particular job – a deeply shaped mounting plate for the security equipment – Graham was uneasy.

“It was a stainless steel plate, 250-millimeters long by 130-millimeters wide by 25-millimeters thick, and 60 percent of the material needed to be hogged away. We put it onto one of the SS pallet machines. I was quite concerned about the machine’s rigidity and power to cut that product, especially the rigidity of the pallet.” The happy ending? “Absolutely creamed it,” Graham says with a smile. “Rigidity was just not an issue, and we’re holding them to 0.015 millimeter! It just went marvelously!

“Another component we do needs a small 1-millimeter groove cut about 2.5-millimeters deep,” says Graham. “The only efficient way we’ve found to machine it is to mount an air turbine in our Haas Toolroom mill. The turbine runs at 25,000 rpm and the mill traces the path at full speed.

“We didn’t buy the machine for this; we bought it for making jigs and fixtures. Now, we wondered if it was up to it,” Graham reveals. “The mill has no high-speed machining features, but it’s in there profiling a complex little groove at 3-meters a minute. It now spends all day doing production. I was amazed at how it would profile at those speeds. Just a slight overcut or undercut on a corner because of servo lag, would break the tool. But we put a little 1-millimeter endmill in there, and it will run for a week. We’re impressed.”

Despite its imposing size and global reach, Swages Engineering is still a family-driven business. “My brother Ross does all the programming for us,” says Graham. “And my father still comes in . . . and sort of annoys us,” he adds, tongue-in-cheek. “He just can’t believe how big we’ve grown. He’s basically retired and lives offshore. But every three months he comes back, wanders in the door and grumbles about what I’ve bought now. Then I tell him how much more money we’re making with it.”

Clearly, the second generation didn’t muck it up.

“Yeah, the place has grown phenomenally well,” muses Mike Graham. “We’ve been lucky, very lucky. We’ve got good guys onboard, a devoted staff, steadfast customers and a reliable, dedicated dealer. It’s the same with any business: You can’t do it yourself. Unless you’ve got the right guys behind you, who’ll stand with you, it’s just not going to happen.”