Posted: October 01, 2012
Colorado success stories: Vforge
Innovative manufacturing process spurs consistent growthDave Mead
(Editor's note: This is one of a series of Colorado company success stories as told by CEOs and business owners.)
Tucked just off 6th Avenue and Sheridan in Lakewood is an innovative company in the aluminum semi-solid manufacturing business. Vforge uses a process that enables the manufacture of high-precision aluminum parts for a variety of industries. While their products may not be widely known since they are components in other companies’ products, you may have seen their components on popular motorcycles, snowmobiles, wheelchairs, and robotic arms for surgery. Vforge capabilities are in high demand and the company has been growing at 15 percent annually, year after year, with only low-key sales or marketing efforts.
I met recently with Ken Young (CEO) and Jon Young (VP and General Manager), the father and son who own and manage Vforge which has grown to 110 employees.
Mead: What is Viscous Forged Semi Solid Manufacturing (SSM)?
Ken Young: Typically, aluminum parts require significant amounts of machining. Aluminum is forged into billets which then are machined into the end shapes. Semi Solid Manufacturing (SSM) makes parts that are near to the final desired form without machining – resulting in dramatically improved shapes with high precision, high performance, but at lower manufacturing cost.
Mead: How was this process developed?
Ken Young: I worked, along with several others, on the development of the technology at MIT in the 1970’s. MIT owned the patents until the 1990’s and everyone was precluded from entry other than the large companies (mostly in automotive) that had licensed the technology.
When the patents expired we wanted to broaden the applications. We learned how to take existing manufacturing equipment and modify it to run the SSM process and decided in the mid-1990’s to locate in Colorado. We had lived in Colorado in the late 1980’s and so it was an easy choice to start the company here – it was a decision based on life style. We are fortunate that Chris Rice, our VP Engineering and Technology and also an MIT alum, shares our love of Colorado and joined Vforge shortly after we opened.
Mead: How do you compete?
Jon Young: We have the equipment and process know-how that makes SSM viable. SSM makes designs possible that would be impossible or cost prohibitive by other manufacturing processes. Many product designers and engineers are unaware of the capabilities of SSM. So we work to captivate engineers and designers to imagine new ideas and how to use the technology. While the process works well with large volume components, it also makes sense even at some low volumes. Once an engineering or design group has worked with us, they understand the unique capabilities of the technology and continue to design components that require SSM.
Mead: Has the growth always been smooth?
Ken Young: There were two big bumps in the road. We were doing huge business with a mountain bike manufacturer that went through bankruptcy in 2003, sticking us with over $700,000 in receivables. In one day we went from 48 employees to 17. Our bankers at Citywide Bank were extremely helpful in working with us to restructure so that we could survive. Then, during the 2008 downturn, we were dependent on raw materials exclusively from Europe. When the exchange rate for the Euro went from $0.90 to $1.40, our costs went through the roof at a time when we also had just lost approximately 20 percent of our revenue. We launched our own raw material production – again with the help from our bankers. Today we are much more in control of our own destiny.
Mead: How would you describe your culture?
Ken Young: We are a very customer-responsive supplier, very agile. It’s a family-style organization with a commitment to promote from within and develop our team.
Mead: What are the factors influencing your growth?
Jon Young: Most companies grow by succeeding in marketing and sales. We’re very fortunate to be growing with minimal sales effort. Our issue however is meeting our blue-chip client’s expectations to deliver Six Sigma excellence with today’s production staff. We have an ongoing problem maintaining a workforce interested in working in manufacturing as a career. Most of our jobs do not require specialty skills or training, but our wages and benefits are considerably better than industry average. Developing staff remains a continuing challenge – even at today’s unemployment rates.
Other challenges are in managing the growth. This is a capital-intensive business with each SSM workstation costing $1 million to $1.5 Million. So we want to be cautious about how we grow.
We also need to continue to develop a middle management group so that Ken and I can transition out of the day-to-day management of operations. This is an ongoing issue as Colorado is not a center of metal manufacturing and finding the emerging middle managers has been a challenge. We are developing these managers internally and are always looking from a young engineer or person with technical background with a good work ethic who wants to develop a manufacturing career.
Mead: Comment on the climate for business in Colorado. Would you build your business here again?
Ken Young: We love Colorado – the climate, the outdoors, the mountains. Jon just completed the Triple Bypass Bike race last weekend. Even with all of the trials and tribulations, we’re glad we’re here. We would like to see if there are some incremental resources that might help us with some of our staffing issues. Since Colorado is not yet known as a metalworking state, it is a daily challenge!
David Mead is President of The Mead Consulting Group, a consulting and advisory services firm, based in Englewood, that has been helping Colorado companies grow since 1981. The firm's 40+ senior consultants with operating backgrounds assist Colorado-headquartered companies with strategic growth and execution, improving profitability and cash flow and maximizing value at exit. Dave is the past Chairman of ACG Denver and a long-time Board member and is on the Board of Young Americans Bank. Contact Dave at: meaddp@MeadConsultingGroup.com or (303) 660-8135.