By Eric Peterson | Oct 15, 2021
Frederick, Colorado / Hutchinson and Mankato, Minnesota
Contract CNC machining and manufacturing services
"I worked for my uncle for 10 years prior to starting this," says Stilson, noting that CNC programming came naturally to him. "Pretty early in my career, I seemed to pick up on everything relatively quickly. I was pretty comfortable in the shop generating code and writing programs -- my brain kind of works that way."
Stilson says he decided he wanted to start his own machine shop about 15 years ago, in part to avoid the 35-mile commute to Englewood. "I felt like I wanted to be the captain of my own ship," he says. "I knew that starting my own shop would mean more hours, but I would be closer to home."
The fact that Reata was outsourcing $30,000 to $40,000 of work to other shops every month helped get Operose -- meaning "involving or displaying much industry or effort" -- off the ground. "We agreed that I could become the primary shop those outsourced parts went to," says Stilson. "That gave me the opportunity to start without having to go find new work right out of the gate, so that was helpful."
The first contract directly with a customer -- a Colorado-based fluid-metering company -- catalyzed growth. "That was the turning point at the very beginning," says Stilson. "We had the ability to turn around parts very quickly -- within a week -- and they had that kind of a requirement all the time: one or two parts they needed as soon as possible. There were times when we would deliver same-day."
Today, turnaround time remains a calling card (standard lead time is three weeks) as Operose manufactures parts for a host of different industries, with aerospace, medical, and communications equipment being the top three verticals. "It's very diversified," says Stilson. "We've got a couple of them that are pretty big global companies."
While the shop has largely focused on prototyping and low-volume jobs to date, Stilson says that's changing: "What's really started to differentiate us is we've been putting a lot of investments into automation."
Operose has installed three robotic production cells and pallet-changing technology at its shop in Frederick. "Our goal is to pay all of our employees higher than the competition, but to also be very competitive in low-volume and high-volume," says Stilson. "Our highly paid, highly skilled labor can manage the automation and then they can work on low-volume while the automation is running the high-volume."
The move has led to higher volumes -- "not millions of parts, but thousands of parts" -- and higher margins. "It's more than doubled our capacity and we haven't had to double our labor," says Stilson.
Stilson moved from Colorado to Mankato, Minnesota, to open a second Operose facility in 2017. He left GM Adam Loomis in charge of day-to-day operations in Frederick.
He got a tip at the gym that 3-D CNC in Hutchinson, Minnesota, about 60 miles north of Mankato, was for sale and opted to buy the company in 2019. Since he'd already established a small shop in Mankato, 3D CNC currently has two facilities. "I realized there were a lot of synergies," says Stilson. "They had different capabilities than we had, but similar target customers and markets."
The combined operation now has 34 employees, with nine in Colorado and the remainder in Minnesota. Jobs can be shared between the facilities, and Operose can now outsource wire EDM and other work to 3-D CNC. "We've doubled in size the last two years," says Stilson. "I would say automation is probably 30 percent of it."
"This year is going to be similar [to 2020], but up a little bit from last year," he says of 2021. "We're seeing a little bit more volume than we used to."
And Operose has capacity to spare: Stilson estimates that production could increase by another 50 percent with the existing equipment and staff running two shifts in both states. "It's not 24/7 yet," he says. "The capacity's there to go 24/7, but I feel it's not quite realistic yet."
Challenges: "Right now, it's adding customers," says Stilson. "We can't justify hiring a full-time salesperson, because if they're good, we need them one month out of the year. But I don't know how to find good contract salespeople."
"That's the biggest challenge. We've added 500 hours of capacity, but can't just turn that on. Our biggest challenge is going to be finding the right work to fill that capacity."
Supply chain disruptions have also trickled down from Operose's customers. "When you have complex assemblies like a lot of our customers have, they're all running into supply chain issues," says Stilson.
Opportunities: Reshoring. "Right now, I think the opportunities are going to come when we can figure out a way to explain and get in front of our potential customers that we can be competitive with parts that went overseas," says Stilson. "This morning, we brought back a huge contract that had gone overseas, and we were able to cut our costs by 50 percent and still generate a profit because of the automation that we've added. So we're bringing that work back. It's a huge win. That was the goal when we got into automation: being able to be competitive globally."
Needs: "It's going to be skilled labor," says Stilson. "Labor's incredibly hard to find these days."
Automation can help in this regard, he adds, and not just by boosting productivity: "When you have a college student or high-school student walk into a machine shop and they have robots loading parts, you can see their eyes light up," says Stilson. "It makes it a little bit sexy as far as an industry that offers some potential for a career. It's not dark and dirty and dangerous anymore. It's cool, it's clean, it's bright, it's high technology."