Precision Metal Machining Inc. is a veteran owned company that operates in the machining industry, which is part of the manufacturing process of many metals and other composites. The company is ITAR certified, which is important considering the company deals in imports and exports. The company offers CNC machining, Swiss machining, and electrical discharge machining services to its customers. PMMI enjoys a competitive advantage over other machining companies as a result, as most of the industry’s market share is composed of smaller companies. PMMI overall faces numerous internal and external strengths and opportunities while they have minimum weaknesses and threats due to their competitive edge and the market size; and their capacity for growth is very high.
There are several strengths PMMI possesses. PMMI has remained updated with the latest trends and technology in the machining industry, which is absolutely vital in maintaining an edge over their competition. Technology is the cornerstone of the machining industry, making this extremely important in the long run. PMMI is also very flexible in its processing, due to the fact that the company offers three different types of machining, which is another strong way to remain competitive (Thomas Publishing Co, 2016). The flexibility of the company is demonstrated by the testimonial products it shows on its website, as the images and stories help prove that the company can manufacture almost anything for customers. The company offers CNC machining, which is one of the most technologically advanced forms of machining and it is one of the biggest machining trends of today, which increases PMMI’s business potential. CNC machining is highly automated, and while it reduces the overall employees needed for a specific job it is a useful tool for PMMI because it dramatically increases PMMI’s efficiency. The pool of potential employees in the entire machining industry is very large, and the skill set of the average machinist is far above average, making the easiness of finding good workers much higher than in other industries.
In addition to these facts, the government has continued support for machining indirectly through government contracts. Sequestration hit the industry pretty hard a few years ago as government contracts significantly decreased as a result of the shutdown, but once congressional parties got their affairs in order the contracts started flowing again. The American government is a major buyer of machinist goods, and will continue to be so for this time. Thus, one of the greatest external strengths of this entire industry is the government relying on it for production purposes in order to meet their goals, and it is likely to remain fairly consistent as the governments needs do not disappear.
The weaknesses with PMMI are not so much associated with the company, but with the machining industry as a whole. In America, machining is a relatively small industry, only employing roughly 76,640 people in 2006 (Free, 2010). This does not reflect the small demand of the industry, as its overall effects provide for thousands of other jobs and provides the world with countless products. However, the small size of the industry makes it very volatile to economic shocks and other external events. Thirty-eight percent of the industry is employed with a machining company that employs a hundred or more people; only twenty-five percent of the industry is employed with a company that employs 100-499 people. Thus, machining companies are typically not very large in size and scope, which further hurts them in the long run with regards to external shocks. PMMI is no different from the other companies, who surely must consider this as well.
One notable weakness does exist, but it is more of a hindrance. PMMI is not a publicly traded company, meaning it is not a corporation. There are few corporations in the machining industry, as the whole market is relatively small. This is a weakness because it may make future investments for the firm difficult in the long run because PMMI does not have the opportunity to issue stocks or bonds. Publicly traded companies also have an increased ability to raise money through financial markets, such as from banks, because being publicly traded usually carries with it some clout. However, some consider being publicly traded a strength in the manufacturing world, as businesses do not have to worry about increasing shareholder value in order to remain in power. This is important because several key companies had to lay off thousands of worker during the International Financial Crisis in order to remain financially competitive, but they lost many highly skilled workers who provided more value to the business (Collins, 2016). Thus, it is not always clear whether this is a weakness or a virtue, but we will consider it a weakness for capital raising purposes.
Opportunities are open for PMMI. The company should seriously consider into expanding their precision machining ability, which is very important on this market. In addition to this, PMMI could also begin using water machining techniques, but only in order to increase the potential size of their cliental. The airline industry is a huge stakeholder in the machining world, and recent business dealings have shown that major airline companies are seriously upgrading their inventory, which will certainly provide PMMI with an opportunity to expand (Brooks, 2016). PMMI has ample opportunities to increase its production capacity by expanding into new aspects of the machining industry. The past few months have seen an increase of technologically related parts orders as the general public wants to purchase drones and other new, modern goods (LaWell, 2016).
The industry exports far more than it imports into the country (bls, 2015). Thus, it is highly possible that PMMI could increase its export capacity by locating foreign markets and discovering what they need. The opportunities to export appear only limited by a company’s ability to produce, which means there are limited barriers to increasing revenue through this means. The Trans-Pacific Partnership, otherwise known as TPP, will increase PMMI’s ability to export to East Asia, which will also help increase its business revenue. While the bill is still being worked out and decided upon, it may have important benefits and opportunities for PMMI to take advantage of, as it will open up an entire new market seeking to take advantage of cheaper American imports.
There are a few threats to PMMI, but they appear to be industry wide and not just geared directly at PMMI. It is important to keep this in mind, because while most companies have threats to their performance that are related to internal factors, most of PMMI’s threats are external in nature. The country saw a year of declines in the aluminum and steel, totaling in the double digits. The converse nature of the machining industry is a threat to PMMI, as the company cannot expect to lump all of its eggs in one basket. While the airline industry is building new planes, steel production has dropped, and it is unclear how exactly these factors will affect PMMI. Thus, one of the biggest threats to the company is the volatility of doing business and the lack of reliable business predictions.
Another strong external threat to PMMI is the protectionist policies of the US. While it was mentioned that this is changing, it is unclear as to the future of freer trade as both major political candidates in this year’s presidential election hold protectionist viewpoints. This may spell trouble for global exports from America, as protectionism will reduce the number of buyers worldwide for PMMI’s product. Thus, it is paramount that the management of the company consider this when deciding what is the best option to pursue in regards to production planning and marketing.
PMMI has numerous strengths. Their biggest one is their competitive technological edge over many of the companies on the market today. In addition, market demand is high among all sectors, thanks in part because of the continuous demand provided by the United States government and international importers who rely on American made machining products. The machining industry is also full of skilled laborers as the demands and rigors of the jobs typically require skilled work to accomplish the goals of the company, which has led to a significant development of higher educated workers; this can only benefit PMMI, as they rely on this type of work. The weaknesses of the market rest of the difficulties of the company in regards to raising capital due to their status as a non-publicly traded company, which can be seen as both a strength and a weakness. The industry also is relatively small, meaning it is highly susceptible to demand and supply shocks, which will affect PMMI in various different ways depending on the scale of the external event. For example, if another financial recession hit, the machining industry would be highly damaged and would find it difficult to immediately bounce back to their current state.
The opportunities for expansion on the part of the company are endless, as the potential export market is huge, provided American protectionism does not hinder it. PMMI also has the opportunity to delve into new aspects of the industry, in terms of producing new goods and ensuring that they are met with the appropriate demand; they should also increase their current technological ability and continue to adopt new methods of machining to increase their marketable capacity. Thus, PMMI is a strong leader in the manufacturing world, and the threats to its existence are outweighed by its strengths and opportunities. PMMI should continue to develop contacts abroad to build revenue through sales, while continuing to focus on machining for new products and industries in an attempt to expand.
References:
bls. (2015, October 29). Industries at a glance: Machinery manufacturing: NAICS 333. Retrieved August 23, 2016, from Bureau of Labor Statistics, http://www.bls.gov/iag/tgs/iag333.htm
Brooks, R. (2016, July 14). Billions and billions in new orders for aerospace industry. Retrieved August 23, 2016, from American machinist, http://americanmachinist.com/news/billions-and-billions-new-orders-aerospace-industry-0
Brooks, R. (2016, August 16). Double-digit declines in metal service centers’ shipments. Retrieved August 23, 2016, from American machinist, http://americanmachinist.com/news/double-digit-declines-metal-service-centers-shipments
Collins, M. (2016, August 19). Is focus on shareholder value killing manufacturing? Retrieved August 23, 2016, from Industry week, http://www.industryweek.com/strategic-planning-execution/focus-shareholder-value-killing-manufacturing
Free, M. (2010, May 19). About the precision machining industry: Production machining. Retrieved August 23, 2016, from Production machining, http://www.productionmachining.com/articles/about-the-precision-machining-industry
LaWell, M. (2016, January 11). Manufacturing tech orders bump up for November. Retrieved August 23, 2016, from Industry Week, http://www.industryweek.com/technology/manufacturing-tech-orders-bump-november
Machining, P. M. (2014). CNC milling & turning - Carlstadt, new jersey. Retrieved August 23, 2016, from Precision Metals Machining Inc, http://www.gopmmi.com/cnc-machining-services.html
Thomas Publishing Co. (2016). 10 tips for growing your CNC machining business. Retrieved August 23, 2016, from Thomas Publishing, http://www.thomasnet.com/articles/custom-manufacturing-fabricating/growing-your-machining-business
