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Yankee traditions still
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| The current chairman and chief executive officer, Douglas R. Starrett, has been running the company since 1962, when he took over from his father, Arthur H. Starrett, a grandson of the founder, Laroy Starrett. Douglas A. Starrett, son of the current chairman, is president and heir apparent. The company's history points to the fact that all "cut their eye teeth" on Starrett tools and started their careers learning the trade and becoming master toolmakers. Throughout the factory it is not uncommon to find generations of skilled craftsmen with 30 or more years of experience. "The craft of making tools has been in the valley for years," says the elder Starrett. He adds that this is important to the company because in manufacturing precision tools "making quality products has to be seen as more than a job, it has to be a way of life." |
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That "all in the family" philosophy that guides Starrett extends to all its employees. It has since the beginning. The founder, Laroy Starrett, wrote: "To our faithful employees belongs a large share of the credit for our...success." In this era of downsizing and cost cutting, Starrett is still one of the few companies that runs a training program for apprentices in the art of toolmaking.
The company prides itself on not having had a major layoff since the 1950s. "We had to cut back severely on hours from time to time when business slowed down, but one way or the other we always seemed to survive," claims the chairman.
Starrett has some 2800 employees, with about 10% of them having been with the company 25 years or more. Most of its employees have a big stake in its profitability. Many of them are on piece work or some kind of an incentive. About half of the stock is owned by current or former employees. Beyond that, about half participate in one of the company stock purchasing programs, including an employee stock option plan (ESOP).
Starrett's management formula seems to be working. Sales in fiscal 1996, ending June 30, were $235.5 million, up 10% from the year before. Net earnings were $17.3 million, up 29%.
The company was founded on the invention of the combination square. It currently produces more than 5000 items. Most of Starrett's production is concentrated in hand-measuring tools such as micrometers, steel rules, and combination squares, but the company is also a major maker of various types of saw blades. In the last decade, it has moved with the technology into more sophisticated measuring arenas by producing electronic digital readout tools, coordinate measuring machines, and optical measuring projectors for checking for quality and accuracy. Few craftsmen and even do-it-yourselfers will be found without a "Starrett" in their toolbox.
Starrett markets worldwide and has from the beginning. It has manufacturing facilities in Ohio, Pennsylvania, North Carolina, South Carolina, Brazil, Scotland, England, and Puerto Rico. Although it has foreign manufacturing facilities to serve those markets, Starrett claims to be the last remaining full-line precision tool company still manufacturing its products in the USA.
Starrett's growth has come from its own product development work and from acquisitions. In the last 15 years it has set up a coordinate measuring machine division in Mt. Airy, NC, also the site of its granite surface plate operation that it purchased in 1970 in Dayton, OH, and then moved to its current location.
In 1986 it purchased Evans Rule Co., Charleston, SC, to accelerate its move into the consumer market. Its entry into the optical comparator business came with the purchase of' Sigma Optical in the United Kingdom.
Its latest push into the consumer market came with the introduction of the Digitape(R), claimed to be the world's first full-function electronic tape that displays and converts to both English and metric readings.
The developments that make electronic products possible came from Starrett's own "Skunk Works," a 25,000-sq-ft unit employing 25 people in product development. In the past two years it has invested more than 1.5% of sales in product research and development, according to its annual report.
But at first blush its breadth and leadership position in the industry would not be apparent to visitors to its headquarters and manufacturing base. Tucked away in the small town of Athol--population of about 11,000--since its beginning in 1880, Starrett's headquarters and factory base are still housed in multistory, brick edifices built by the founder nearly a century ago, but expanded many times over the years.
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Visitors are greeted in a reception area that could well be used as a setting for a movie about business at the turn of the century. The floor is wood; 4-ft partitions topped with a foot of glass, are too. There is no air-conditioning. But you can still open the windows. In New England, many believe that is all they need. |
Would he ever consider moving from the area to put up a more efficient plant layout? "You never say never, but we have a lot of ties here and a lot of skilled people in the area. In the precision tool business we are in, that is a critical factor. We couldn't just move and start training new people," the elder Starrett says.
What the company lacks in efficient layout and space in its base manufacturing operation in Athol it makes up with its people management philosophy and adoption of advanced manufacturing processes. "The buildings are old, but the equipment is as modern as it gets." claims the younger Starrett. "We have the latest technology here including laser cutters and laser marking systems and palletized machining center cells that can run unattended for hours," he adds. It employs a CAD/CAM system that downloads programs directly to the shop floor. It even programs and controls some CNC screw machines in its North Carolina manufacturing operation directly from Athol.
Walking through the manufacturing maze in Athol - that's what it seems like as a visitor moves from building connected to building, even through a tunnel that runs under the river separating two buildings - provides an interesting contrast in manufacturing technologies.
"As you walk through the shop you’ll see some old equipment that, even today, is very productive. There are some old Acme Gridley six-spindle machines cranking out parts. But, at the same time, you see that old but still useful equipment married in the work flow with the very latest in CNC laser cutting, turning, and machining center equipment." says the junior member of the Starrett duo running the company.
These CNC turning machines are one way Starrett is
assimilating
the latest manufacturing technology to ensure its work flow is as
efficient and productive as it can be.
In fiscal 1996, the company made capital expenditures for plant and equipment of $11.6 million. That is about 5% of sales. Because the company is closely held, it does not "have to dance the tune forced on companies by short-term investors," claims the CEO. He adds that Starrett has always been in a cash position where it could invest in equipment it needs or the training of people.
Eye on the world
Its global approach to manufacturing is another way it overcomes any loss of
efficiency suffered due to the aging physical plant in Athol. While many companies are
only now moving into the international arena, Starrett has been there almost since the
beginning. As early as 1882 the founder traveled to Europe and set up selling connections
in London and Paris. Prior to World War II, exports to Europe accounted for as much as 30%
of sales.
After the war, sales dropped off and in order to re-establish its foothold in Europe, the company opened a manufacturing facility in Scotland to produce hack saw blades. It also exported other products made in Athol to Scotland for assembly there. In the 1950s it set up manufacturing facilities in Brazil for hack saws and blades. Brazil eventually became the prime manufacturing source for Starrett blades. Both foreign operations have been expanded several times.
Its philosophy is to not duplicate manufacturing facilities. It invests in the best equipment to produce parts in one location and then exports to its markets around the world. Total Starrett exports from its manufacturing facilities around the world equal about 40%.
As a global marketer, CEO Starrett still feels the company's best opportunities are in foreign markets. "I don't really know where the international market is going, but we want to be a part of it," claims the elder Starrett. His son explains the firm has "spent the better part of two years exploring possibilities in Asia. That area is volatile, but it is one we are going to continue to keep an eye on." Former Eastern European countries such as Bulgaria are another area of interest to Starrett, but Mr. Starrett says they have no plans to set up manufacturing there as they can service the area from Scotland.
The consumer market is another area that the company expects to grow in. "Our consumer push has gotten the Starrett name recognized in some new areas. The consumer market is so huge that any little piece of it that we can capture permits us to put a lot more volume through our factories. That translates into more production efficiencies and the generation of more cash flow internally that will permit us to do the things we need to do for future growth," Starrett's CEO says.
"It will not be a walk in the park, but I have confidence in our people," he adds. With a product line that stretches from hack saws, a basic tool for emerging manufacturing economies, to the most sophisticated of technologies to gage quality production in advanced factories, his confidence is well placed.
Reprinted from Tooling & Production December 1996 issue
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