SME success stories: A different kind of shop

In Pointe Claire, Quebec, just outside Montreal, Youssef Nakhoul owns a very nice job shop. There are lots of small shops in Canada, but Mitacor Industries takes a slightly different approach to management, one that is paying off for Nakhoul and his 11 employees.

Nakhoul established Mitacor in 2006 by purchasing a business serving the telecom industry. “It was strictly a production shop, running pallet after pallet. A single program would run for four years. But that telecom business was dying down, so I changed it to a precision operation”, he says, adding “the changeover involved replacing the machines, then adding a single pallet changer type production machine for series runs when needed.”

Nakhoul came to Canada in 1982 from Beirut, Lebanon, and studied at Concordia Uni­versity in Montréal, reading physics and then engineering. “The subject was interesting and it came easily to me,” says Nakhoul. After working for a Québec moldmaker, he moved to Nortel Networks, working in research and development, leading to patent work for the telecom giant.

“Nortel gave me a strong background in how to struc­ture a business. When I took over this business there were production runs of 50,000 pieces running 24 hours a day. I didn’t want to do things that anyone can do and with my background in engineering it was an interesting challenge.”

Of Mitacor’s 11 employees, there are three engineers who each have 10 to 15 years of programming experi­ence. “I knew that telecom and military business was out there; I just needed the right equipment. Everybody has “20 by 40” tables, so I went outside of the box and bought “60 by 33” capability that other shops don’t have. Fortunately I was able to work with Megatel, who gave me amazing service. I told them what I was plan­ning to do and we stuck together to make it a reality. They helped me benchmark against my competitors and before selling me a machine let me see it in action. What really counts is the mentality of our people. We don’t take shortcuts. People see it.” Nakhoul is a pro/ ENGINEER/SolidWorks expert, which combined with his design experience, allows him to generate tool paths that optimize workholding, and machine complex parts efficiently. “Planning the job helps them on the shop floor. They learn, and I learn too.”

Nakhoul is adamant about design for machining in a single set-up wherever possible. “Every time you touch the part, you have the potential to make a mistake’, he says, adding, “I spend money on machines to get the ac-curacy and precision I am looking for. If I didn’t, I would be like everybody else. A year ago I bought a five-axis machine, a small one to learn the technology, then a big-ger one; and now we know five-axis like three-axis. It cost money but it was an objective for me. I don’t run a shop just to make money, I want to feel proud of it. I reinvest in my company, 40 per cent of net profit. Reinvestment is key. Even when the economy is not strong it’s important. It’s not about the money, it’s the challenge; that’s the key…if you like what you’re doing it’s like a hobby. You like to spend money on your hobby.”

Mitacor offers a profit-sharing program for staff based on percentages of sales. The firm is also unique in that Nakhoul has written his own ERP software, controlling all aspects of the operation. The custom system inter-faces with the firm’s accounting package and handles everything from job costing to order tracking. Nakhoul’s engineering background gives Mitacor an edge when customers require design support as well as machining services. Quality however, trumps price in every case. Referring to offshore competition, Nakhoul states simply “they drill a hole for 10 cents, and we do it for 50 cents. We need to know that it’s right. Sometimes we lose busi-ness but we maintain our standards.”

Mitacor’s close relationship with their customers allows the firm to push back against low-cost overseas competi-tion by working jointly to use advanced tooling designs and part optimization to reduce cycle time. The firm recently won a major contract against a low-cost Asian supplier despite a slightly higher unit cost, reflecting customer confidence that Mitacor’s quality and delivery will in the end deliver lower overall part cost to the customer.

Youssef Nakhoul, General Manager, Mitacor Industries Inc.

Although Mitacor transitioned from large volume operations, this doesn’t mean that Nakhoul has rejected automated production. “Human beings make mistakes, that’s why I believe in automation”, he says, adding “It was a learning process. I was costing incorrectly. Five-axis is more complicated, and I was costing for a three-axis process. With five-axis, there are many things to consider, but I learned.”

Nakhoul believes one key to winning back offshore business is through faster turnaround. Parts that were once ordered six months in advance are now expected with lead times measured in weeks, making it far easier for local supplier deliver on time then a lower per-part price offshore firm shipping from 10,000 kilometers away. “The secret is to understand the customer’s product very well”, he states, adding “If I’m involved at the development phase, it helps them a lot and it lets me quote the job effectively.”

Besides Mitacor’s function as a job shop, Nakhoul has developed a testing product for the electronics industry for rapid checkout of circuit board assemblies.

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“When you talk about mechanical assemblies, it’s simple”, he declares. “You see if it fits or not. In electron­ics however, a board is assembled on the line, and at the end of that line it must be tested. But when the boards are assembled in Mexico, who will test them? I saw a need for an automated testing device that would let them fully check the board at the end of the line. Assembly lines in India, Asia and Mex­ico buy my test stations.” Engineering test equipment is no simple task. The ability to maintain a solid electrical contact with the board is essential, yet the realities of assembly-line work mean that the system must accommo­date rough or careless board handling, without damage to board or tester. “Electrical signal is often a function of the contact force and it’s an 18 layer board” says Nakhoul.

Nakhoul talks with pride about the technology, but the conversation soon returns to Mitacor people.

“Our people feel that this is their company. The profit-sharing is a part of that; each year we do an individual evaluation, noting pros and cons.” Nakhoul takes an engineering approach to personnel evaluation too, with a highly developed system to determine individual performance weaknesses with an eye toward continuous improve­ment of personal skills as well as shop capability.

Mitacor uses their skill advantage to secure work from a wide range of customers, from Tier 2 aerospace companies to makers of horse racing sulkies. As the firm expands to other markets, Nakhoul expects to add a dedicated salesman soon, and will add aerospace certification to the current ISO9001. As the business grows, Nakhoul expects to maintain direct contact with customers and products. “Every setup on the floor has been touched by me. I quote all the jobs”, says Nakhoul with modest pride, adding simply “I’m having fun.”

Mitacor’s EMCO Linearmill 600 features 5 axis movement by linear motors instead of gears and ball screws. Advantages include mechanical simplicity, little wear, higher speed and accuracy. Youssef Nakhoul notes that the smooth acceleration and deceleration of cutting tools generates no variation in force during movement, useful for thin wall parts.