By: David Gaines and Mark Shortt, D2P Magazine
A combination of engineering excellence and relentless customer service earns a San Francisco Bay area company a two-and-a-half year contract to assemble battery enclosures for Tesla Motors
A provider of precision metal fabricated parts and assemblies since 1964, Inland Metal Technologies has served clients in many emerging and high-growth industries over the years. One of Inland Metal’s notable clients in recent years has been Tesla Motors, the builder of innovative electric vehicles. The manufacturing partnership was launched when Inland Metal won a project to build the Tesla Roadster (Sportster) battery enclosures, which had previously been manufactured offshore.
“They kept having quality and delivery issues, and Inland Metal was given an opportunity to compete for the business,” said Connie Bates, director of sales for Inland Metal Technologies, in an email response. “Inland thoroughly analyzed the assembly at all levels—components, assembly plan, and fixturing systems—and presented a plan which modified how assembly was done and utilized a redesigned fixture system. We won the job on the basis of our engineering expertise, ability to deliver a quality product that met all print specifications, and superior customer care. We kept the project (we are still building them) based on our ability to deliver a quality product on time and per specifications.”
Inland Metal Technologies provides a variety of quick-turn services at its 92,000-square-foot facility in Hayward, California, where it has produced and tested more than 2,200 battery enclosures for Tesla. Among the processes provided are quick-turn prototyping; laser and water jet cutting; metal stamping; bending and forming; CNC machining; MIG, TIG, and spot welding; electro-mechanical assembly; ESD assembly; and testing. Inland also has an AWS-certified welding inspector (CWI) on staff.
Stan Sutton, president and CEO of Inland Metal Technologies, and Connie Bates talked with D2P recently about the company’s capabilities, including its “think outside the box” approach to working with customers to accomplish their projects quickly and efficiently.
D2P: When competing for Tesla’s battery enclosure manufacturing program, Inland Metal presented a plan that “modified how assembly was done and utilized a redesigned fixture system.” In what ways was the assembly modified, and how was the fixture system redesigned?
Stan Sutton: The Tesla people contracted with a company in Thailand to do the basic assembly of the parts. Their processes involved mating up the component parts by cross drilling and using custom assembly techniques. What we did is redefine the precision levels of the component parts, so we could manufacture the parts precisely enough to assemble them without cross drilling. Thus, getting the kind of precision out of the machines we have and incorporating that into the product.
That was only part of the advantage that Tesla saw in us, though. Not only was the part delivered to Tesla in a better quality condition, but we also had the advantage of being immediately adjacent to Tesla—only about 15 miles away. So their engineers had a hands-on coordination and communication with us throughout the entire process. By the way, that was a competition we won with local sheet metal shops. So when Tesla awarded us the project, their engineers came over here and went over the whole project with us. We were involved intimately with some of the decisions of how to put it together.
In addition, we listened to their advice and tried to incorporate things they were concerned about. The end result was a very close communication between us and Tesla. They got a delivered product that was better quality than what they had before, and on-time, which was another issue they were having with a long supply chain that went all the way to the other side of the Earth.
When things don’t go well, let’s say a small feature isn’t exactly the way it should be, it becomes a rejectable box that can affect the supply chain for a whole month. But right here, we’re a day away from any situation that might occur. It’s the difference between being part of their team and being in some different, unrelated culture and far-off time zone.
D2P: Why do you think you were able to win the competition between all the local sheet metal fabrication companies?
SS: I think they liked the whole package we offered. It wasn’t just the dollars; it was being able to convince them that we had the ability to do the part to the high quality level that they wanted. We had to produce a Process Control Sheet, and they looked at the thoroughness with which we approached the project. They moved forward with the idea that we seemed to have the right capabilities and were sufficiently competitive; so they went with us. Right now we’re at the tail end of this project, the end of life for the Tesla Roadster. We will also have components on their new S Sedan.
Connie Bates: As Stan mentioned, this was a competition with other local companies. On paper, they all had the same capabilities as Inland Metals. The question became ‘Why does Inland Metals get the bid, and why do they want to bring the work back to the U.S.?’ I think it comes down to the fact that our company is passionate about our work. Stan is very passionate about the business and extremely hands-on, and everyone at every level really cares about our projects.
The other thing that’s key is innovation. When we looked at this Tesla project, everyone involved pretty much set aside their preconceived notions, and said ‘OK, we need to think outside the box. How are we going to do this differently?’ We’ve done that with many other projects with similar success.
SS: We take advantage of the brainstorming process, and get all of the key people in the company involved. We literally wipe the slate clean and start thinking about the quickest and easiest and most efficient way to accomplish a project. What is it the customer wants us to do, and how are we going to be able to do it?
D2P: Inland Metal’s core competency is precision metal fabrication, but the company also provides metal stamping, CNC machining, assembly, and testing, among other processes. Can you talk about the value that offering all of these services provides to clients?
SS: We’re very diverse in our ability to serve our customers. We’ve found over the years that as customers became more dependent on moving their required contracting to sub-tier suppliers, we had to be more competent in various levels of performance. Included in that are such varied processes as supply chain management, where we take on the entire project for a customer. This is where they want us to buy, develop, look for better sources, and then put all of the parts together in an assembly project. In fact, what we try to do is find out what a customer’s sweet spot might be.
If that customer decides that all they want is a metal bracket, we will provide exactly that. On the other hand, a customer might want an additional assembly part made; we can provide that, too. In some cases, a customer wishes us to offshore some of the work because there’s still an economic advantage to be found. But that means that we have to find component parts, where some of the parts might be moved offshore, but the final assembly and true value that’s added to the whole project has to be done onshore. And we’re always ready to adjust and scale as they make changes.
D2P: Can you talk about Inland’s engineering and mechanical design team, and the importance of the technical support role that they provide?
SS: Engineers are part of this whole scope. We have engineers on staff that have education that goes back 20 and 30 years, and who have a long history of developing their skills. The emphasis from our engineering staff has to do with the fact that we have a good mix of fresh, recently-educated young people and older, highly-skilled engineers. The older engineers that have been here for a long time mentor the younger engineers.
What we try to do is support an OEM’s engineering staff. It’s more like design assistance. Their products are often complex electronic components, so our capabilities are best served to help a customer squeeze costs, and refine the efficiency of the processes to save time and money.
Many times an OEM’s engineers will design a box, but they may not realize that certain subtleties might be making it too expensive. So we can help their engineers choose different processes, maybe refine what they have done, and make suggestions about how to do things differently.
Without good, skilled, qualified people, the company wouldn’t be able to produce the kind of technical products that we provide. One of the problems that we’ve suffered from here in the U.S. is the lack of educational skill sets that blue collar workers need to possess. The blue collar skills that used to be part of a high school education, like wood shop and metal shop, are virtually gone.
CB: Our engineers do a lot of design review and DFM (design for manufacturability). We really focus on early involvement with a company’s engineers. We’ve found that the sooner we engage with their engineers, the better. Because a lot of times, these highly educated engineers know exactly what they want to design, but they don’t understand the manufacturing oddities that are going to add cost or make it more difficult to produce. So by hooking up with them early on, it’s a win-win situation. We get a product that’s easier to build and they end up having less defects and issues, and a faster time to market.
D2P: Does your company use any manufacturing processes or technologies that you would say are unique, innovative, or cutting-edge?
SS: Well, it depends on the customer. We had a customer that we were doing soldering for. We wanted to find a way to solder the materials at a faster pace to reduce costs. This is radio frequency soldering, not the continuity soldering you would see in a standard PC board. We had to have soldering qualities that wouldn’t create any kind of RF issues during the manufacture of the product.
There have been processes in the past that the industry used, but they often abandoned them because they weren’t needed. We found that there was an induction process that was attempted years ago. They eventually dropped it because they acquired flow ovens and laser heating systems that are still used today.
This induction system was unique because it provided the kind of soldering that the RF industry still needs. So we ended up doing induction soldering for this customer. We were able to cut costs and increase quality for them, and by the way, we took this work away from China.
D2P: For quick turn manufacturing, Inland has developed and implemented a fast-track manufacturing cell. How does the fast track cell work, and how is it advantageous for maintaining quick turnarounds?
SS: One of the challenges of operating a job shop that makes multiple, high-mix, low-volume parts is processing the initial planning paperwork in a way that allows people on the floor to understand how to get the job done correctly. Those travelers, or production documents, should give a person on the floor all the needed steps to manufacture a particular part.
One of the problems with traveler paperwork is that it’s too time consuming for making prototypes. We sometimes spend a lot of time producing paperwork for a prototype, only to find out after we’ve made it that it’s going to be changed or modified, which is wasted effort. So, what we did, in parallel with our standard production processes, is create a fast turn prototype process.
We use a person called a mechanic, who has all of the necessary skill sets to produce a part from beginning to end. The prototype goes out to the floor with minimal documentation, and we can often get a prototype done in hours instead of days or weeks, since time to market is very critical for our clients. We’ve got to be able to turn engineering models into products as fast as possible because competition is so great. When the part comes back for full production, we go back and create the full amount of documentation. So the cost value that we’ve added up to that point comes back to us.
CB: We also have a dedicated cell of equipment for the mechanic, so they don’t have to wait in a queue for the equipment or tools that they need. The cell is kind of laid out in a U-shape with all of the equipment and tools, and they go from one piece of equipment to another to make the part. It’s really hard to find these specialized people because they need engineering, technical, and manufacturing knowledge that is very extensive. They have the same skill sets as a tool and die maker would have.
D2P: Inland Metal services a variety of high-tech industries, including aerospace, military, semiconductor, medical, and telecom. What are some examples of the more interesting or challenging parts or assemblies that you’ve made for these industries, including the 4G telecom network antennae parts?
SS: We are a partner, through contract, with a company called Swedcom. We make the antenna section for them that sits on top of the pole for mobile phone reception and transmission. They are the RF engineers, and they often use our services to help them with the mechanical components. They have about 20% of the U.S. market share in mobile phone base station antennas. They also have international sales, where some of the components we make are also used. In this case, it’s a blend of skill sets to produce their parts.
In one case, we had a telecom company in Arizona that wanted us to make a very specialized mounting system for a Swedcom antenna. It had to look like a cactus, but be made out of metal and painted to blend into the terrain so it wouldn’t look like an antenna. These antennas can be made to look like any kind of a tree.
One part that had critical end uses was a filter system for a stationary jet engine turbine that was designed to test fuels for use in commercial aircraft. The engineers wanted a special filter designed, a one-off for the test unit. The particular difficulties when building it are hard to describe. They had to rotate the fuel through vortexes, and, by virtue of centrifugal force, remove particulates in the fuel system.
Their engineers had the concept down, but they had a hard time getting it translated into a component. So we worked with them and finally got the part made. The part, which was all sheet metal fabrication work, was very complicated and we probably didn’t make a penny on it, but in the end they got what they wanted and it’s still in use. The part was complicated because of what it had to do, and the part’s geometry was very complex and had to be very precise.
D2P: Do you think that the new Tesla plant in Fremont will bring a lot of work into the area?
SS: I think so. You know, if nothing else, it’s going to be a badge of honor for California and the San Francisco Bay Area that shows we can still manufacture automotive components. The S Sedan has so many advantages; it’s beautiful, it’s quiet, it’s fast, and it uses clean energy. The Toyota Rav4 drive train and battery system will also be made by Tesla at the Fremont plant.
CB: We were just awarded a two-and-a-half year contract to make the battery enclosures for the Toyota Rav4 electric vehicles, which will be made by Tesla at the same plant. We’ve also begun working with a customer that provides seats for the S Sedan, a company out of Australia that just established their first North American presence in the Bay Area. The seat frames are currently being made in China, but we’re trying to get the work so we can feed their assembly line at the NUMMI plant.
SS: The workers in China want the same things we want, and demand a better life. So what’s happening in China is the standard of living is increasing to the point, notwithstanding the change in the yuan, where there will be higher costs going forward. And there will be a crossover point sometime in the near future, between now and 2015, where the cost of producing goods in China will match what it takes here. The minimum wage in China [was] supposed to go up 20% on January 1st.
CB: And it’s supposed to go up 20% every year for the next four years after that. One of our large customers makes medical equipment; we provide them carts on a Kanban basis. I spoke with their director of purchasing about two weeks ago. Right now they have an offshore model of 70% to 80% of their parts, components, and assemblies. He told me that based on the conditions in China that Stan was discussing, they’re re-evaluating their offshoring of parts based on changes in the next two to three years.
D2P: What types of robotic machinery and other automated equipment does Inland use?
SS: We have robotic welding here, and we just purchased a new robot for the Tesla/Rav4 assembly line for an automated riveting process. And we have the standard CNC systems that virtually every metal shop possesses today. Much of our assembly is still done manually, but that’s only because the volumes are low. The automation is perfect for high-volume work. Automation has its place, but it’s not the cure-all for everything.
We will be making the battery enclosures for the Rav4, which is actually the entire underbody of the car. One of the features of the battery enclosure is that it’s not just going to enclose the batteries. It’s also part of the collision prevention equipment, so it is an actual structural component of the car. There are a lot of stringent requirements in automotive work. This work is overviewed by Tesla; therefore, we must produce very stringent quality control plans and control systems all the way back to manufacturing processes. We will be making battery lugs for the new S Sedan, and we are still in line for some other parts for the Sedan. They don’t want a long supply chain, so we won’t stock any parts; we’ll take them right to their assembly line.
CB: The parts are huge for the Rav4 enclosures, about 7 feet by 5 feet. We’re creating a new 5,000-square-foot dedicated cell for the enclosure parts.
D2P: The company has purchased a new SG-U44 Mazak, five-axis, 3D, robotic laser cutting machine. How is this machine well-suited for specialized or complex cutting requirements? How does it make your operations more cost effective or efficient?
SS: We purchased the machine last year, about mid-year. This is a tube laser, which is a little different from a standard laser cutting device. It has a five-axis cutting head so it can wrap itself around a tube to cut whatever holes or features are necessary. It can be square, rectangular, or round tubing. We are also in the frame building business. These are frames that are used in the semiconductor, large server, or flat panel testing systems markets. These tubes are welded into a framework that has to have a lot of precision.
This precision is very difficult to obtain unless you start with accurately-machined components. So what the laser allows us to do is design in features that allow the assembly and welding to be very precise for the various frame components. Ordinarily, this laser cutting would have to come from a much slower machining process. Now, we can do it much faster on the laser with a fully-articulated robot that moves around to cut these features. Even a one-off part will be a very precision part.
One thing that happens in small shops, like ourselves, is if we see an opportunity that we can develop, we can look at what we have to do to get there. In this case, we were making frames for years, but we were losing jobs that were going offshore because it was too expensive to make them here. But we found a way to reduce the costs here, so that brought the work back. It’s not always automation; sometimes, it’s just pure innovation.
CB: We also try to segue this into our marketing strategy as well, since this is really an advantage over another fabrication company that builds frames. So we target the industries that need precision frames, like the semiconductor, flat screen, medical device, and other industries.
D2P: Stan, in an article written last year by Bridget Riley for the San Francisco Business Times (February 2011), you were quoted as saying, “The key to customer satisfaction is relentless service. Delivery on time and competitiveness are a given. But what is different is the level of commitment.” Talk about this level of commitment that Inland prides itself on. How is it different from other companies’ commitment to customer service?
SS: I can only go back to what customers tell us at this point, which is that we stand out in our ability to serve. So customer service is one of the things that makes us different from everyone else. In my opinion, to be in our business or any business, you have to be competitive. You have to produce quality parts, the best quality possible. Simultaneously, you must have them shipped on time. All these are givens, so what could possibly make us different from other manufacturers? If we can get into our DNA, the idea that everybody here has to relentlessly serve the needs of the customer, they will notice us as being different.
D2P: The article also mentioned that Inland “aggressively pursues new clients,” including “green startups that Inland invests in and even rents space to inside its Hayward headquarters.” Can you tell us more about this strategy of investing in and incubating green startups?
SS: Over the years, I’ve found that some of our longest lasting relationships with customers were when they were startups. As part of that, it became evident to me that in order to get into a customer’s supply chain, we had to be there when they really needed us, and quite often that’s in the very beginning. That’s when they have the least amount of money, the least amount of time, and the least amount of talent.
As a matter of fact, there are two customers that are here because they can’t afford to be anywhere else. One is a company, a solar panel provider, has a product that’s still in the early startup stages. They are quite unique, and so I’m an investor in their company. We not only put in money and make prototypes for them, but also time, effort, and sweat. Everybody on our team gets involved in trying to help them survive.
Part of this is being a responsible part of our world. If we can give green energy a chance, there’s no reason, in my opinion, that it can’t take the place of more toxic processes. We have a long list of green companies that we work with. We’re involved with a lot of solar companies.