March 2003
MCN Case Study: Dix Metals Inc.
Momentum is 'Made to Order'

By specializing in machining aluminum blanks and progressively securing new customers, Dix Metals foresees continued growth.

BY CORINNA C. PETRY,
MANAGING EDITOR

• Quick Facts
• Equipment Vendors
  

Dix Metals Inc., Huntington Beach, Calif., is basically a pre-machining shop for manufacturers. The company supplies precision “made to order” machine-ready blanks, primarily from aluminum plate and sheet, to machine and mold shops and OEMs in the medical device, aerospace and automotive industries, among others.

The company performs value-added processing on virtually every order. “The least amount we do is precision cutting bar or plate. The big bulk of our business is precision cutting to plus or minus 0.001-inch [tolerance] flat, square and parallel,” President Bob Dix explains.

Of its 52 employees, Dix Metals has 30 machinists, nearly all of whom are trained in-house. Another 11 warehouse workers are in support functions: supervisors, planners, quality control, packaging and drivers.

“We run two shifts a day, and right now we’re working overtime, too. Our forecast for this year is 10 to 12 percent sales growth,” Dix says.

2000 was a boom year for the company, followed by two years of flat sales. However, “we retained positive cash flow and we were able to gain a lot more new customers. Whether business is a little slow or if it’s busy, we continue to get new business—at least 250 new customers a year,” Dix says. “That momentum hasn’t stopped since the 1990s.”

Dix Metals sends representatives to five metalworking trade shows per year, and uses other marketing methods such as direct mail, but “referral is by far our biggest source for new business. At least two-thirds of our new customers have been referrals. It’s the best way to get business.”

The company ships coast to coast throughout the NAFTA region, but 75 percent of its customers are within California. The facility typically holds between $1.2 million and $1.8 million in aluminum plate and bar inventory. Several customers are on hold-and-release programs, and others under contract are guaranteed speedy turnarounds on their processing orders.

Company history
Bob and Bonnie Dix founded their business in 1972 with little more than a customer list and a truck driver. Now the couple’s son, daughter and son-in-law all work for the family firm, whose annual sales range from $9 million to $12 million.

Bob Dix was hired as a general manager for a metal service center many years ago. When that company closed its doors three months later, “I thought that, even though I had no experience, maybe I could continue with a little piece of the business.”

The couple rented 6,000 square feet in Santa Ana and mailed fliers to customers of the closed company. “With very low overhead, we were able to eke out a lean first year, but we made it,” Dix recalls. In 1977, as revenues grew, Dix Metals moved its 20 employees into 18,000 square feet in Tustin, Calif.

The company remained in Tustin for 22 years, and grew to 50 employees. “We were busting at the seams and renting other spaces. We opened another warehouse in Santa Ana, but we just couldn’t keep up [with the volume]. So in 1999, we built a new facility, 110,000 square feet. That gave us plenty of room and more for growth,” Dix says.

Processing and automation
Dix Metals operates nine precision aluminum plate saws, two Amada band saws, a saw to cut circles and rings, and three cut-off saws. Two machines are dedicated to surface improvements. “We can take any material and give it a fine-line grain. Mill stock, marked, scratched or poor-looking material can get a fine finish. We can also PVC coat the finish for greater protection. When the customer finishes the part, it looks beautiful,” Dix says.

The shop has five rotary disc grinders (also called Blanchard grinders), two 84-inch tables, plus five double-disc grinders to 42 inches, and 10 duplex mills, five of them equipped with Mitsubishi CNC controls.

Apart from its shop floor upgrades, Dix Metals modernized its computer systems. Bob Dix credits Vice President of Operations Pablo Garza with automating the company. “Pablo was a lucky find. We hired him in 1996. His background was as a machinist with a large corporation. He was computer literate. His having no metals background was in our favor,” he remarks.

Garza was instrumental in the company’s relocation and designed the new facility so every machine bolted down precisely where it needed to be. He also directed the engineering required for power sources. “Everything was structured for throughput and time management,” Dix says.

Before Garza arrived, only the accounting department used computers. “He computerized our company from one end to the other.”

Dix Metals uses Epicor Software’s Vantage package, an enterprise resource planning solution designed for companies that make parts to order. “We take metal out of inventory, gather cost information, track it through the floor. Everything about the software is very friendly to value-added operations,” Dix explains. “When they enter orders, the inside salespeople are able to [automatically] take stock out of inventory, issue materials and lots against the order.”

When the order reaches the shop floor, he says, the system collects data by operator. “We know exactly what each person is producing every day on every job. All the inside salespeople can go into the system and find the order at all times.”

This close tracking offers “a lot of control, and helps manage costs,” he says. Since streamlining in this fashion, the company saw its productivity improve by 25 percent.

“I can click in and find out everything that’s going on in this company in a matter of seconds. I can look at backlogs, shipments, sales, the history of every customer, all the contacts, instantly.” Based on this immediate data collection ability, the accounting department can put together a financial picture of the company at a moment’s notice.

The company also implemented TraceAbility, a software tool that allows the quality assurance team to quickly assemble a document package (especially material test reports) for customers. With the new system, the company trimmed its document pull process from three hours a day to one hour.

Heavy investments
Equipping a service center and training a workforce for machining aluminum parts takes a large capital investment. “We have spent millions of dollars over 18 years, and we built a facility just to be able to do this. It wasn’t easy. That’s why several other companies that tried this are no longer in this [specialty area].”

In the last five years, the company has spent about $3 million on improvements to accommodate manned equipment, racking, etc. “This year, I’ve scheduled approximately $150,000 for a vacuum system in our sawing department to lift chips out. We’re about to install it,” Dix says. “We don’t see a lot of other capital expenditures for the next couple years, because we still need a 20 to 25 percent [increase in orders] to get back to capacity. We are set to get back up to full utilization.”

The pricing environment for Dix Metals’ products and value-added services is good right now. “Since Jan. 1, we’ve been very busy. The emphasis is more on delivery now than on price. People are more interested in getting material and being able to ship it out the door. Some customers are definitely getting busy, so our margins are starting to improve, especially on the value-added side.”

After coming off two flat years, he says, “we see only good things on the horizon for us, and I hope for the industry. The cycle has to kick up again soon.”

Questions or comments about Metal Center News. E-mail feedback@metalcenternews.com