A Technology Solution In Tough Economic Times Leading on the cutting edge

A local engineering company invests in technology,
Increases productivity and avoids layoffs.

Roger Guillemette, a small-business owner in West Warwick, says it may take more than a spiking unemployment rate or a housing crisis to convince him that the economy won’t eventually come back.

Business ebbs and flows, he says. There are busts and booms. It comes in cycles.

Guillemette would know. He has run Guill Tool & Engineering on Pike Street in West Warwick for nearly a half century. But with manufacturing jobs steadily declining in Rhode Island, the 75-year-old businessman says he knows when it’s time to take out a loan or two to stay competitive.

“We’ve heard enough down talk,” he said. “You have to be on the cutting edge. We [manufacturing] are the backbone of the country. Everything is started in a machine shop — everything that is made. Rhode Island is suffering from the loss of manufacturing jobs. We are losing our tax base.”

The manufacturing industry, the state’s fifth largest in a ranking that includes health care, government, professional and business services and retail, has taken a beating in Rhode Island.

Since December 2007, Rhode Island has lost 3,800 manufacturing jobs. Nationally, manufacturing jobs are slowly shrinking. In 2006 there were roughly 14.1 million jobs in manufacturing, but according to the U.S. Bureau of Labor Statistics, by 2016, the country will lose 1.5 million more manufacturing jobs, which include tool and die makers and machinists.

In a sickly economy, many small businesses are trying to stay afloat by trimming expenses, freezing new hires or laying off legions of employees. The principals at Guill took a different approach. They say the way to nurse a company in an ailing economy is to invest back into the business, particularly with high-tech equipment.

To that end, management at Guill — which designs and manufactures the tools that make everyday consumer goods — used the 2008 federal stimulus package as a springboard, and invested $800,000 to purchase four major pieces of equipment. The stimulus package, under the Internal Revenue Code 179, raised the schedule deduction for the 2008 tax year from $128,000 to $250,000, allowing the company to write off more of the equipment’s cost.

Glen Guillemette is Roger’s nephew and the company president. He runs the company along with his cousin and Roger’s son, Richard Guillemette, who is the engineering manager.

Glen Guillemette said that company principals for years had talked about purchasing CNC and EDM equipment that could increase production. With the stimulus package, the wish became a reality.

“It was somewhat cost prohibitive. [The stimulus] was the driving force,” he said. “We have to find better ways of doing things to remain competitive. It enables us to eliminate setups, cut down on labor and reassign labor, and increase our accuracy. We are trying to move people around and move them up the ladder, get them more technology training. People who were running manual machines are learning how to run more high-tech machinery. It’s a gamble. It’s something we felt we needed to do.”

So far, the gamble has paid off. Guillemette announced last month that productivity is up by 20 percent. The company has not laid off anyone.

“We weren’t afraid to pull the trigger. We went after the equipment we felt we needed to be competitive,” said Glen Guillemette.

Roger Guillemette began the company in 1962 with a handful of employees. It now has 65, who work in the 33,000-square-foot two-building facility and headquarters. They are engineers and sales representatives, machinists and toolmakers, computer programmers and clerical workers.

Officials say the company’s growth has been about 10 percent annually, with some fluctuations — 11 percent in 2004, 9 percent in 2006 and 7.89 percent last year. In the last couple of years, roughly 18 percent of the business has come from international accounts.

“We did notice a slowdown at the end of 2008. We started off the first couple of weeks [of this year] better. We have been ‘cautiously optimistic’ as they say,” Glen Guillemette said.

Glen Guillemette said growth hasn’t always been this steady. Prior to the late 1980s, the company struggled and was doing more machine shop work. By the end of that decade, he said the company began to redefine itself and started doing more in the plastic and rubber extrusion dies. It’s only recently that results have improved.

According to MarketResearch.com, there are about 7,000 companies in the U.S. machine-tool manufacturing industry, with combined annual revenue of $25 billion.

However, the 50 largest companies hold less than 30 percent of the market. That means that even if large companies such as Thermadyne [makers of welding products] and Hardinge [which makes machine tools and grinding and milling equipment] have annual revenues of more than $100 million, the bulk of manufacturing business comes from small shops such as Guill.

Guill, which ranks about fifth in the state among machine tool manufacturers, produces the tools that other companies use to make everyday items — pens, plastic tubing, ribbed vacuum cleaner hoses, or the strips on disposable razors. “We make the tools that make these type of products,” said Glen Guillemette.

© 2009 The Providence Journal

To learn move, visit us at www.guill.com.

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