Buy the Numbers

Defense manufacturing is supposed to be a massive opportunity for American machine shops. The government needs more domestic suppliers, existing weapons systems need replacement parts, and emerging defense companies are looking for manufacturers who can scale production. So why aren't more shops jumping in? For me, the answer comes down to a question we ask all the time on Buy the Numbers: Does the opportunity actually make financial sense? In this episode, Jason Davis joins me as co-host for a conversation with Lana Smith, founder of The Oakley Office. Lana spent much of her career supporting the Army's industrial operations, from rebuilding M1 Abrams tanks at Anniston Army Depot to working at Army Materiel Command.  Today, she helps manufacturers navigate the defense industrial base, identify opportunities, and understand what it actually takes to compete for government business. And as someone who's been hesitant to pursue much defense work myself, I had plenty of questions. We dig into the financial realities that don't always make it into the conversation about strengthening American manufacturing. Between CMMC certification, ITAR requirements, cybersecurity investments, administrative overhead, and unpredictable order volumes, the cost of entry can be substantial.  If compliance costs your shop $100,000 or more, how much defense revenue do you need just to justify the investment? And do you spend that money before the work exists, or wait until you have enough business to support it? But Lana also opened my eyes to opportunities I hadn't fully considered. From supplying replacement parts for existing weapons systems to helping newer defense technology companies move from prototypes into production, there's more than one way into this market.  We also discuss programs designed to expand domestic manufacturing capacity, the value of having someone help navigate the process, and what government incentives could make participation more realistic for smaller shops. I'm not against defense manufacturing. I'd love to support our country's national security and help strengthen our industrial base. But patriotism doesn't pay the bills.  The question isn't whether defense manufacturing is important. It's whether your shop can participate profitably, and what needs to change to make that possible. What's Covered in this Episode (0:00) The growing opportunity for machine shops in defense manufacturing (1:03) Welcoming Jason Davis back as co-host (2:00) Lana Smith's background and the mission of The Oakley Office (3:48) Rebuilding military equipment and the challenges of aging supply chains (5:54) How disappearing small manufacturers threaten the defense industrial base (7:07) Jason's experience supplying the defense industry (8:55) Why defense contracts aren't always as profitable as they appear (9:22) Navu can help answer your customer's questions clearly and quickly  (10:43) Identify government contracting opportunities (and the challenges that arise) (13:36) The true financial cost of CMMC, ITAR, and other compliance requirements (15:56) When does investing in defense certification make financial sense? (17:50) Finding additional customers for parts you're already manufacturing (19:57) The Civil Reserve Manufacturing Network and opportunities for domestic shops (22:01) Finding the right military customers, funding, and contracting channels (24:35) Technology readiness levels and SBIR funding opportunities (26:27) How government contracts can create serious cash flow challenges (27:54) The opportunity to help defense startups scale from prototypes to production (29:21) Increase your spindle uptime with the Hennig WorkFlow Automation system (30:12) Why navigating defense manufacturing may require outside expertise (34:46) How to determine whether your shop is ready for defense work (36:26) How military working capital funds operate (37:41) Kennametal tooling helps manufacturers cut faster and run longer (38:30) What government could do to reduce barriers for smaller manufacturers (40:49) Could tax credits make defense manufacturing more accessible? Resources Mentioned The Manufacturing Blueprint The Civil Reserve Manufacturing Network Defense Logistics Agency (DLA) DLA Internet Bid Board System (DIBBS) SAM.gov Cybersecurity Maturity Model Certification (CMMC) Small Business Innovation Research (SBIR) How to Connect with Lana Smith Connect with Lana on LinkedIn The Oakley Office

Nobody outworks me. If that's part of how you see yourself, this episode is going to sting a little. Greg Harrod's spent 30 plus years in and around manufacturing, and he coaches leaders who feel like everything still runs through them. His point is that the grit that built your shop is the same grit that eventually caps it. We spent a good chunk of this one on a distinction I hadn't thought about carefully enough. What someone is good at and what someone enjoys are not the same thing. You get rewarded for what you're good at, so you get handed more of it, and you can be sliding toward burnout in plain sight while everyone around you says you're doing great work. I told Greg about Miguel, who came to us pushing a broom, became an average machinist, and kept quietly fixing processes nobody asked him to fix. He's on our management team now as our lean champion. He hasn't touched a machine in a year, he's making more money, and our operations run better for it. That only happened because we paid attention and then had the conversation. If you've been sitting between a million and a half and two and a half million in revenue for a few years, Greg's first question isn't what to hire. It's whether you've actually optimized the people already on your payroll, and what you're optimizing for in the first place. Growth isn't automatically the right answer. Staying where you are is a legitimate choice, as long as you make it on purpose. We also get into org charts, why job descriptions go obsolete, how I've been mapping responsibility across our entire value chain, and the question Greg closed with that I'm still chewing on. How long should a dropped ball stay dropped before somebody picks it up? What's Covered in this Episode (0:00) How long should a dropped ball stay dropped before somebody picks it up (2:05) Greg's focus: helping leaders stop doing the work their team is ready to own (2:48) The grit that got you here is the same thing that turns you into the ceiling (4:31) Some of the work you do energizes you and some of it quietly drains you (5:56) You can stay on the shop floor and hire the business functions you don't enjoy (7:11) Separate what someone is good at from what they enjoy, before you lose them to burnout (12:13) Repeatability, accessibility, scalability and the rest of RASRAM work holding from SMW Autoblock (12:56) The best leaders are the most self aware leaders (14:28) The WIDGET framework: wonder, invention, discernment, galvanizing, enablement, tenacity (18:06) Don't tell me no, tell me how, and tell me what it costs to say yes (20:17) Get specific with your verbs, because own it can mean six different jobs (22:56) The simple signs that you have become the bottleneck (25:35) Lead with curiosity: have you actually optimized the people already on your team (29:34) Verdant Commercial Capital fits equipment financing to your goals and your cashflow at verdantcc.com/numbers (30:06) Give yourself permission to do the things that you enjoy (and delegate when you can) (32:33) Miguel went from saw operator to lean champion because somebody paid attention (40:12) Hire MFG Leaders is built by current and former shop owners at makingchips.com/hire (40:42) Job descriptions go obsolete—a shared language about how your team is wired doesn't (47:37) Mapping responsibility across the value chain from quote request to invoice (54:26) The person who brings the right answer instead of the first answer Resources Mentioned SMW Autoblok Verdant Commercial Capital Hire people who have actually run a shop with Hire MFG Leaders Find your own gap in about five minutes with the Leadership Clarity Scorecard The 6 Types of Working Genius by Patrick Lencioni The Five Dysfunctions of a Team by Patrick Lencioni Connect with Greg Harrod Greg's website Leadership Clarity Scorecard Connect on LinkedIn

Replacing an employee can cost anywhere from $10,000 to $40,000. But the real risk isn't just recruiting and training their replacement. It's everything that walks out the door with them. Jess Bird supports CAM software across the Midwest and hosts CNC Underground After Hours, giving her a firsthand look inside a lot of shops. Her test for whether a company has real systems is simple: Can it survive a vacation? If your best employee takes a week off and everything slows down, you don't have a system. You have a hero. We dig into the costs most shops never measure—not machine downtime, but the time spent waiting for answers, searching for information, and repeatedly solving the same problems. I share the simple math we use internally: one minute equals one dollar. Five people standing in a hallway for ten minutes just cost the company $50, even if that expense never appears on a report. That lack of documentation also affects what your business is worth. If the company can't operate without its owner or a few key employees, a buyer isn't acquiring a self-sustaining business. Every process you document and every piece of knowledge you make accessible reduces that dependency—and builds enterprise value. We also discuss why technology implementations fail, why support can matter more than the product itself, and how shops should approach AI without trying to transform everything overnight. As Jess puts it, start with the simpler applications and build from there. You're not training for the Olympics right out of the gate. What's Covered in this Episode (0:00) Replacing one employee runs $10,000 to $40,000, and tribal knowledge is what makes it expensive (1:02) Learn more about Jess Bird, CNC Underground, and the manufacturing community (6:36) Enter the MakingChips + DN Solutions + Kennametal machine giveaway (7:21) Overcoming hero culture and building systems instead of placing bandaids (10:16) If the business can't survive you, it isn't worth much when you go to sell (11:31) Calm versus chaos: Stop chasing the wrong solutions (14:35) Are you misdiagnosing the bottleneck(s) in your shop? Are you just fighting fires? (20:21) What can we automate or systemetize to free up machinists? (22:02) What is it costing you to avoid embracing AI? (24:44) How CLA helps manufacturers tap into millions in revenue and cost savings (26:16) How to get implementation right: leverage support and move slowly (32:33) Take your shop to the next level with DN Solutions (33:42) How to handle resistance to change in your shop (37:37) Machine monitoring looked like big brother until it turned into a coaching tool (39:37) Technology doesn't make you replaceable—It makes you more likely to get promoted (41:28) Building a culture around documenting and sharing tribal knowledge (43:33) It's called continuous improvement for a reason (46:09) Companies that outperform aren't okay with stagnancy, because a flatline eventually fails Resources Mentioned Enter to win a fully tooled SVM4100 from MakingChips, DN Solutions, and Kennametal at makingchips.com/giveaway Find out what your biggest headache is costing you with CLA Take your shop to the next level with DN Solutions Find the MakingChips recording studio in the South Hall Hennig booth at IMTS GibbsCAM CNC Underground CNC Underground After Hours Podcast ProShop ERP Connect with Jess Bird Midwest Cam Solutions Jess Bird on LinkedIn CNC Underground After Hours on Spotify, Apple, YouTube, and Amazon Music, new episodes every other week

IMTS is about a week and a half out. Most people heading to Chicago are showing up with a shopping list, and the ones who aren't will still find something on the floor that makes them start one. Either way, there's a question worth answering before you get there. What can you actually pay for? We've been trained to do this everywhere else in our lives. You don't tour houses without a pre-approval. A lot of us call our banker before we buy a car. Then we walk into a hall full of quarter million dollar machines and figure out the money on the drive home. Ty has been my equipment finance guy for about eight years, and he's the first call I make on any capital expansion. In this one, we walk through what the process actually looks like. The 15 minute screen. The application only path up to a million dollars. What comparable credit history really means. How soft costs, deposits, and long lead times get handled. And what a lender asks of you after the deal closes, which in his case is close to nothing. We also get into the part that matters more than the rate. A good finance partner tells you when you shouldn't buy the machine, or when someone else's captive group has a better number than his does. Ty does both, and that's why he sits on my trusted advisor list. What's Covered in this Episode (0:00) Don't underestimate your ability to negotiate when you already know how the machine gets paid for (3:00) Most people walk the IMTS floor with a shopping list—but could they buy that list? (4:20) What a pre-screen covers (and how a bank with no brick and mortar prices sharper) (6:29) You get pre-approved for a half million dollar house. Why not for a half million dollar machine? (8:03) Verdant Commercial Capital tailors equipment financing to your business, goals, and cash flow (8:34) Dealer and OEM finance options vs your own approval gives you something to compare against (12:11) The affordability gut check: do you need another spindle? (16:40) The application process: A one page app and a one to two hour turnaround (20:21) The Job Shops Workshop and networking reception is Tuesday, September 15th during IMTS week (21:59) What written assurance will you get back during the application process? (25:02) Don't underestimate the ability to negotiate when you know how you're paying (26:19) What gets required after the deal closes, and why most customers never talk finance again (29:37) Diversified lending power: Why Ty pushes it even when it costs him the deal (33:32) Soft costs financed at 10 to 20% above equipment cost: tooling, rigging, shipping, software, groundwork (36:41) Interim Funding Agreements bridge 8 to 12 month lead times so your cash isn't parked for a year (38:07) MakingChips, DN Solutions, and Kennametal are giving away a fully tooled SVM4100 (38:53) (40:08) IMTS main stage (Monday at 2:30 with CLA) + a happy hour in the MakingChips studio (41:21) What should you do right now to get pre-approved?  (45:12) The bass boat problem: machines advertised as a monthly payment instead of a total cost Resources Mentioned Equipment financing built around your business, your goals, and your cash flow with Verdant Commercial Capital Get in the room at the Job Shops Workshop and networking reception during IMTS week, Tuesday, September 15th Enter to win a fully tooled SVM4100 from MakingChips, DN Solutions, and Kennametal at makingchips.com/giveaway CLA joining Mike and Ty on the IMTS main stage Monday at 2:30 Connect with Ty Connect on LinkedIn Verdant Commercial Capital

There's $35.8 million sitting in a federal fund built to pay manufacturers for hiring and training apprentices, and most shop owners have never heard of it. It pays $3,500 per apprentice. It's first come, first served. And when the money runs out, it's gone. That's the American Manufacturing Apprenticeship Incentive Fund, or AMAIF, and it's what we dug into on this episode. Phil Hanke is back in the co-host seat and he brought Abby Mataya, who leads CLA's state and local business incentives team, to walk through exactly how it works. Here's the part I want you to hear. This is not a tax credit you'll see on a form next April. It's a pay for performance incentive payment. You hire an apprentice into a registered apprenticeship program in a qualifying advanced manufacturing occupation, you keep them 90 days, you do some light compliance reporting, and the money gets wired to you. It covers more than 120 occupations, it works for new hires and for incumbent employees you're upskilling, and there's no company too small. One apprentice qualifies. Phil ran the numbers, and at $30 an hour you're recovering roughly 5% of a year's compensation for a 90 day commitment. Ten apprentices is $35,000 straight to your bottom line, and if you're trading at a four times multiple, that's $140,000 of enterprise value you just created out of money you were spending anyway. A lot of these programs go unclaimed because nobody applies. If your tax provider isn't bringing incentives like this to you, that's a signal. Phil was polite about it. I wasn't. Go find a provider who will. What's Covered in this Episode (0:00) $3,500 per eligible apprentice, and why it's an incentive payment rather than a tax credit (1:25) Get to know Abby Mataya from CLA's state and local business incentives team (4:35) AMAIF explained: the American Manufacturing Apprenticeship Incentive Fund, backed by $35.8 million in federal funds (5:45) Registered apprenticeship programs: Build one in house or partner with a sponsor? (6:55) Why we created Hire MFG Leaders (and why you should use it) (7:24) More than 120 advanced manufacturing occupations qualify for the AMAIF (8:06) What do you get through AMAIF? How does the program work? (10:17) What recapturing $3,500 per hire does to your enterprise value (14:05) How to apply for the AMAIF and what you have to report (16:58) State workforce training grants and state run apprenticeship incentives (18:22) Why you should head to Elevate powered by AMT and WIM at IMTS (19:17) Stacking incentives: a state internship credit, a local workforce grant, and this federal fund on top (22:57) The "I'm too small for that" myth, and why some of this money never gets claimed at all (26:09) If your tax provider isn't bringing these opportunities to you, go find one who will (27:53) You've hit your 90 days with your apprentice: now what?  (29:54) Learn how Navu delivers reliable, accurate answers in real time (31:07) What turnover actually costs, from lost capacity to recruiting spend Resources Mentioned The American Manufacturing Apprenticeship Incentive Fund (AMAIF) State Apprenticeship System List Check out the Elevate conference powered by AMT and Women in Manufacturing Hire MFG Leaders Navu.co/MakingChips Explore CLA's incentives and tax credit resources at CLAConnect.com Connect with Abby Mataya and Phil Hanke Connect with Abby Mataya on LinkedIn Connect with Phil Hanke on LinkedIn Browse the CLA resources page for articles spanning incentives, tax, and manufacturing at CLAConnect.com