To set the stage for future technical posts about machining and castings I thought it worthwhile to take a detour and discuss the transition of our industry into commoditization.
Evaero has never been and will never be about selling things. Instead we will always be about making things. When I was a kid I can remember listening to my father bring precision machined CNC parts to life when speaking to customers.
From the tricks he used, to the challenges encountered, every part was worthy of its own unique (and usually long) story. Although it has been many years since my father gave someone a tour, I can’t help but think of him when I’m immersed in the sights, sounds, and smells of the factory floor. I imagine him standing there, with a part in hand, talking enthusiastically about what it took to bring it to life.
Given our focus on making rather than selling, the transition that started well over 15 years ago to commoditize everything at our level in the aerospace industry was especially difficult. I suspect that more than anything it was this transition that drove both of my parents away from the business.
My father was used to talking with engineers who appreciated his efforts to make their parts better and more manufacture-able and my mother was used to talking with buyers who appreciated Evaero’s efforts to go the extra mile. It was partially this recognition that made the seven-day work week and time away from home and family worth it.
Commoditization, however provides little room for this type of working relationship: As noted by Marx while writing about the economic concept of use-value, “From the taste of wheat it is not possible to tell who produced it, a Russian serf, a French peasant or an English capitalist.”
Part of what made the transition difficult for us is that by definition the products we make are not commodities. Wheat is a commodity. A precision CNC machined titanium investment casting for the CFM LEAP™ Aircraft engine? Not a commodity.
For this reason, bolstered by the belief that “nobody can do what they do” or that “their customers would never go anywhere else,” I meet many in our industry who believe they are immune to the effects of commoditization. The problem is, we the makers do not determine what gets commoditized – the customer does. Furthermore, as noted by Sam Bowers, in moving from an economy where things are bought rather than sold, customers will use all means at their disposal to get what they want at the lowest possible price.
Learning to brave this transition required time, a ton of changes, and a very different way of thinking about our business. On the other hand, it’s hard not to love how commoditization helps us while we’re buying the products and services we need. Reminds me of some lines from Robbie Robertson’s song Somewhere down the Crazy River:
Wait, did you hear that?
Oh, this is sure stirring up some ghosts for me.
She said, “There’s one thing you’ve got to learn is not to be afraid of it”
I said, “No, I like it, I like it, it’s good”
She said,”You like it now but you’ll learn to love it later”
It is a crazy river though isn’t it? I recall a visit with a group of commodity managers who controlled millions of dollars of metal product spend (e.g., CNC precision machining, investment castings, forgings, titanium Ti-6Al-4V, Nickel alloy 718 , etc.), even though not one of them had ever stepped foot in a manufacturing facility and, to no fault of their own, few of them even knew exactly what they were buying. Much in the way I imagine traders at Enron bought and sold commodities to them, we were simply a grouping of part numbers and prices.
Upon hearing a story like this it’s hard not to think wistfully about the past: when commoditization was something that everyone but you had to worry about; when relationships seemed to matter a little more and price a little less; when knowing the difference between chicken shit and chicken salad was presumed to result in not just a more holistic purchasing experience but one with a better outcome.
Commoditization, however, isn’t going away and while one may be forgiven for gazing wistfully upon the closing doors of the past, paraphrasing Alexander Graham Bell, look too long and you won’t see the doors that are opening ahead of you.