PERU – In 2009, workers at Snavely Machine and Manufacturing were scared, and they had good reason to be.
The recession had just hit, and the economy was taking a nose dive. Chrysler and GM were ready to go under.
As a machining company making its living mostly from automotive contracts, Snavely felt the pain more than most, and it was on the verge of permanently closing its doors.
“Companies that thought they were lean going into the recession quickly realized how lean you really had to get to survive,” said Snavely’s President and CEO Joe Kinney.
The company slashed its workforce from more than 100 employees down to 32. Every production line was probed for any waste or inefficiency. If they found any, they cut it.
Kinney, who served as vice president at the time, went out onto the floor along with the entire management staff to help run the machines and do whatever needed to be done to keep the company afloat.
“Everybody did what they had to do to survive,” he said. “It was a scary time, but if anybody wasn’t scared, then there was something wrong. They should have been.”
By cutting the company to the bone, Snavely held on during the recession and managed to pull through. Many machine shops ended up folding.
Fast forward to today, and any sign of a recession has evaporated. Business is booming. Kinney said production at the shop has grown by 700 percent since 2011.
The company now employs 123 workers, and it plans on bringing on at least 16 more. It’s now one of the biggest employers in Peru.
In just the last three years, the company purchased $4.8 million in new equipment, and it just received a tax abatement earlier this month on $4.5 million of even more new machines.
It’s an impressive comeback story for a company that first started with just one guy making parts out of his garage nearly 50 years ago.
Humble beginnings
Jim Snavely first started his business in Wabash, where he was working as a maintenance man at a local company, Kinney said. Instead of sticking with that job, he decided he could do better in the machining industry.
In 1967, he set up shop in his garage and started producing parts for the company for which he had previously worked.
For years, it was just Snavely and some of his family members working in the shop. But over the next 20 years, he grew it from a one-man show to a two-facility company with around 100 workers, Kinney said.
The business got so big that Snavely decided to move the company from Wabash to a much bigger facility in Peru. In 1999, he purchased the 172,000-square-foot building at 1070 Industrial Parkway and moved all production into the plant.
At that same time, the company won its first big automotive contract producing front-steering knuckles for cars like the Dodge Magnum. Before that, Snavely had stayed away from the automotive industry because of its volatility and risk.
That’s when Kinney came on board with the company. Snavely hired him to help launch the new production line.
“That contract kicked us off into more high-production automotive work, but it was a risky move,” Kinney said. “It required a lot of capitol and it was really labor intensive. We had to put a lot up front to get into it. So if the market got soft, we would be left carrying all this cost.”
But the move paid off. Snavely kept up with production, and as the company gained a reputation for producing quality parts, more and more auto contracts started coming in. The machine shop quickly evolved into a company that almost exclusively produced auto parts.
Running lean
With business booming, the company brought on more workers. Then the recession hit.
When Snavely emerged from the economic downturn, Kinney said they had learned an important lesson.
“We’re very thankful that we were able to get through that, and it’s something that we’re never going to forget,” he said. “Now, we know we have to stay lean. You can’t let the good times make you relax. You stay lean.”
Kinney said the company has been fostering that leanness by moving towards more automated, robotics-based production lines. With auto companies demanding near perfection from their suppliers, he said it’s the only way to ensure no bad parts reach their clients.
“There’s so much more efficiency you gain with robotics,” Kinney said. “ … Whether we like it or not, there’s human error. People are going to make mistakes. So we have to add lots of processes up front to eliminate that error.”
Kinney said the company also is working to diversify its production lines in case the auto industry takes another dip.
“As the automotive industry fluctuates, we can ride out the storm, so to speak,” he said.
By cutting the fat from its manufacturing lines and diversifying its products, Kinney said, the company is poised for explosive growth in the next few years. It’s already grown faster than most machine shops that survived the recession.