Many machine shops never recover after a fire while others, even those that incur significant fire damage, get up and running successfully. What sets these two types of shops apart? Recovery and disaster planning are contributing factors.
Having a fire recovery plan in place is crucial to ensuring the survival of your shop. If fire strikes, damage to equipment and property are not the only losses. You may lose business from longtime customers who simply can’t wait for their parts. Further, you could lose valuable employees if they are not being fully paid during the recovery period and have to find work elsewhere.
When creating a fire recovery plan, start with ways to avoid preventable fires. The two most common causes of workplace fires are candles and overloaded electrical outlets. Always use surge protectors and multiple outlets.
Next, your fire insurance needs to be comprehensive. Your policy should cover the full value of the (regularly appraised) business, and you should independently insure anything the policy does not cover. For example, if you are in an older facility, it may be wise for the rebuilding coverage to meet current codes. You may also want to consider CNC fire suppression if it applies to your machine shop.
Lastly, create a formal disaster recovery plan. It should include a risk assessment that summarizes any disasters which may occur and the likelihood of occurrence. Create policies and procedures to respond to those disaster events, specifying the responsibilities of all personnel after a disaster. Detail contact information for all employees, vendors, and customers, and explore alternative ways of conducting business if the need arises. Explicitly state which mission-critical resources to recover.
After a fire, you must consider how your shop will look and operate when compared to before the fire. The following includes two summaries of machine shops that rebounded after experiencing fires.
Taurus Tool & Engineering was in the process of upgrading its equipment when, in 2014, the company lost most of its CNC machines, fixtures, and tools when the shop burned down. The fire put the company out of production for about three months. During this time, Taurus invested back into the business by acquiring a larger facility to handle the business’s projected growth. Jim Kantak, Taurus president, said, “We made all the physical changes we always wanted in order to make the workflow through the shop more efficient.”
Further, Taurus reduced production costs, upgraded equipment, and created large scale manufacturing changes to promote collaboration and innovation on the shop floor. Richard Thiele, Taurus’s production manager, said, “we knew what we wanted to accomplish…we wanted to remove the old bad habits we thought we had, and we had a plan in place to do just that.”
After experiencing a fire costing $5M in damage, Dotson Iron Castings recovered in just five weeks. Although the company lost three molding lines and all electrical, pneumatic, water-line, and sand-conveyor systems, no employees were laid off.
Dotson Vice President, Liz Ulman, cited transparency and collaboration as the two key factors in returning the company to production so quickly. The leadership team had a recovery plan in place, which they shared with the team. Dotson regularly updated its employees and customers as to the status of the recovery effort and even worked with industry partners and competitors to minimize disruption to customers.
“We looked for opportunities to optimize our operation, even in small ways, to improve our relationships with our customers, to improve our relationships with our employees, and to use this unfortunate situation to better position our operation for the future,” said Ulman.
These two machine shops were able to take a bad situation and turn it around to optimize their operations. While having different experiences and plans in place, they both were able to reinvest in their machine shops to overcome the challenges of downtime created by a fire disaster.
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