Advice needed, from small shop owners

I debated which forum to post this in, and decided since this seems to be the most diverse and active one I put it here. I own a small custom engine shop in NW Montana. Until recently I had only one employee and myself.
A little history first. This bus was started in 1981 by another fellow. I went to work for him in 1991 after graduating from automotive college. Back then things where very different. We had a substantial logging industry then, and a very good market for engine remanufacturing. With the death of the logging industry (thanks green nazis ) things changed. No longer where the loggers rebuilding equipment, trucks ect. We adapted and geared more to the passenger car & light truck market, and managed to make a living until about 3 years ago. When the major auto maufacturers started with the heavy duty incentives to buy new cars, our business dropped off significantly in a big hurry. Now, people who used to fix their older stuff, just bought new, nothing down, low interest bla bla bla. When that died, the rebates started, then "employee discounts" for everyone, now free gas for a year, it just goes on and on, and they have pretty much killed my business.(and themsleves, judging from all the recent plant closures and lay-offs) We went from building 7 -10 engines a month to 1 or 2 every other month. We still have a lot of service work, ie, resurfacing, pressure testing castings and such but, you can't do enough of that in a day to make a living. That stuff used to be "filler" work in between regular jobs.
What it boils down to, I bought this business 4 years ago before things went south. Now I have 4 years of payments left and the last 2 have been near impossible. I need to make some changes. I dont know a thing about how to go about identifying the local market except to say I know it sucks all over around here. The area is fast becoming the "haves, and the have nots" if you know what I mean.(remember Vail CO?) The "haves" just buy new cars, and the "have nots" cant afford to even fix their old cars, much less replace them.
I guess what I am wandering what some of you might do in this situation?
I am very capable in most apects of life but this situation is proving to be dificult for me.

I need to diversify, and add something to the businees, and preferably have it become the mainstay ,and have the engine thing become secondary. Question is , How do I figure out what is lacking in the local market and go about implementing something to fill the void.
I love the engine stuff, just aint enough of it any more. Engine shops across the country are dropping like flies, 30-35% of shops closed in the last 5 years, and the equipment values have dropped thru the floor, pennies on the dollar. Very small chance of selling out.
If I could do what I wanted, I would scale back the engine stuff, and get more into custom fabrication. I love having the ability to take an idea or a rough sketch and make something out of it. I am pretty well equipped, thus far, as far as welding, tubing benders, have a lathe, access to a milling machine ect. I have personally built several race cars that have done very well locally,(for friends) but I dont think there is enough of this kind of work either, Fab shops are popping up around here like mushrooms on horse shi*.
What I see tho, is most of them are doing the fancy railings, gates, and computer plasma cutting / metal art stuff. No body is doing the "I need a machine or a widget to do this" kind of work. Dunno if there is enough market to warrant trying. How would I go about finding out? My current facilty is 3200 sq feet, and the engine shop only occupies about 40% of it. I have about 30'X50' I could move something into.
Sorry for the long winded post, Just looking for advice from anyone who's been there. Thanks for letting me vent
Jim

I sympathise with you- around here we used to not only have logging, but a manufacturing industry supporting logging- Skagit Manufacturing used to build Spar Trees here.
But I dont think you can blame it all on green nazi's and low down payments- I know that in the old days, when my cars were from the 50's and 60's I had to pay for major engine work- and I have not had to on a single car from the mid 80's onward.
I think engines are just a lot better built these days- I routinely get 200k or so from a newer engine, and by then all the plastic parts are rotten, and its not worth rebuilding.
So as far as cars and light trucks go, we are seeing a structural change in the market.
In the 50's it was expected that you would need a major rebuild every 50,000 miles or so. Now, unless someone runs it without oil or water, just about any engine will outlast the car.
So rebuilding passenger car engines is only gonna make money if you are doing specialty hot rod rebuilds, or some vintage thing, in which case you need to advertise and build up a rep nationally. Or internationally, if you are Ross (Alfa GTA- people send him engines worth $200,000 from all over the world- but he is the man)
Even heavy truck engines are much better built now, and run much longer between rebuilding.
Where I live, there is still some logging- but its all mechanized, 3 guys will do what used to take a dozen or two, and they will be using a few big machines that go hundreds of thousands of miles between a rebuild, and then usually are high tech enough that they go to the dealer for repairs.

So the sad fact is, technology has changed, leaving small engine rebuild shops high and dry.

I know several guys in Montana who do high end artistic metal work for rich movie star types, and it is a viable business if you have all the right skills- including the artistic ones, the ability to sell yourself, manage tight budgets and deadlines, and so on.
But as far as I know, Harrison Ford doesnt buy machined widgets- a fence, or a balcony railing, yeah.

So my guess is the way out of your hole is to come up with something you can make, and sell, nationally, rather than depending on part time rich people or the service employees who wait on them.

What do you love? What do you know a lot about?
There are guys (and gals) all over the country in places just as po-dunk as your location, making a living, because they make stuff they know about and care about- be it guns, motorcycles, a certain type of car, tube amps, electric fans, woodworking tools, ATV accessories, horse tack, jewelry working tools, you name it- my waterjet guy does parts for a woman who makes circus high wire equipment- she is really into it, her stuff is the best, and people from all over buy it. It doesnt matter where she is, no walk ins.
You cant expect that somebody will walk in and just pay you to make parts- the chinese can do that- you need to offer a level of knowledge, or passion, or inventiveness, or specialised service, or customisation, that Wally World doesnt.
This is a sad truth, but its the only way to make it in today's "Global Economy".
There are several hundred guys on this forum who make a living making odd stuff- steering wheel hubs for vintage english cars, or gun checkering tools, or portable mills for navy ships.

With the internet, its easy to find a huge group of people interested in any wierd sub category you can think of- so the market is out there.
Have you invented, or thought about, a new engine rebuilding tool, or a tree stand for hunting, or a perfect woodsplitter?

Not much my area of expertise, other than also being in a failing career, and keeping alternatives close at hand for just in case.

I've got friends that run small job shops, and it's interesting what they do and do not find.

It seems some universal keys to sucess these days are things like being very computer literate. The ability to receive electronically formatted drawings. Being QUICK on the computer to respond to inquires, send quotes, etc. People are fast becoming impatient. Used to be pony express was quick enough (ok, so that's been a while!). You get the idea. Lastly, learning how to ship things! No longer can you necessarily get something done locally, so people are willing to pay shipping, as long as it's reasonable. Like airfare, it's a crapshoot. There's some really good deals, and some really bad. Knowing when which service does well and not, seems to help.

There are folks on here all the time looking for a run of this and that. I can only imagine a positive experience from a small transaction like that would only lead to some productive networking. Like always, good help is HARD to find.

My friends who are not doing well, defeat themselves by not being quick to respond, having a poor or no personality, simply bidding themselves out of the market, trying to make a quick buck rather than trying to cultivate a steady relationship. Alternatively, you can't just give away services you plan to use for a living. This isn't a trivial issue.

You don't come across as complaining, but rather someone genuinely looking and asking pertinent questions. Good luck and I feel for you. Saw my dad go through the same thing owning a boat marina in Nebraska (of all places!) in the early 80s.

I guess one more thing is being opportunistic. I really wanted to build furniture when I lost my job most recently. However, I wound up installing hardwood floors, remodeling and building cabinets. Made great money doing that, but wouldn't have ever guessed it. That's the problem with a hobby and work colliding, you do what the customer wants, not what you necessarily want to do. I think eventually you can work back to what you want, vs, what they want, but that takes more time than some of our bank accounts can withstand!

I recently met a fellow who got rich (private jets, filthy rich) having a small plant to make a widget, but they wanted it crated. Now all he does is makes crates and pallets! Whoda thunk?

Cheers,

Tools

I hear everything you say.... been there..dun that gig...

There seems to be only one solition to this mess, and it is a mess... you need better customers, RICH ONES... rich ones that do not "need" your engines or specialized stuff...but they WANT it... The kind of people that buy a Rolex watch... they do not buy it because they need to tell time better...they buy it because it is a ROLEX... Like those guys that build a fancy smancy motorcycle, nobody NEEDS one of them... they WANT one...Now, I dont know your area at all, and maybe there are no people that fit that discription in your area, that case you are in real trouble, or must expand your marketing to other areas.

Best wishes...

If really between a rock and a hard place, go to the local county tax office and plot out on a map those residences that pay high taxes, i.e., house rich folks.

If you can avoid being arrested for "stalking," observe those homes and see if you can determine the owner's varied interests. For example, I know someone that did that with horse tack. They made custom metal fittings with designs, initals, and even inserted photos, for the tack. Well, they did until about 18 months ago.

Anyway, as mention by others, figure out what the folks with lots of disposable income do to waste their money and then go into the "custom waste business."

Good Luck,
Stan Db

All good info so far, thanks guys, We do have amajor influx of the yuppie type population here, unfortunatly they are more interested in trophy houses than anything, The builders are making big money right now. Unfortunate for me, i have some building experience but lack the phsyical ability to do it.
Ase far as targeting the affluante, that is something we are working on, especially in the motorcylce market specifically harley davidsons.
There is a growin interest here and I have been working closely with an independent Harley shop.
We are slowing developing a very good reputation between the 2 of us. He has a good rep for quality work, and we have a good rep for doing quality machine work for him, as well as others.
I have done 4 big bore conversions on twin cam engines in the last 2 months for the HArley dealer here in town, there just isnt enough yet to go for it fuul time. But that is a direction I'd like to persue, cause those guys WANT to spend money and have bragging rights to their buddies. Right now tho, neither I or the guy I do work for are in a position to take the plunge, but we both want to. Need to taget the people with money. thanks for the input!
Jim

Ries, I agree completly, engines do last much longer than they used to. Especially if they are maintained properly. I always said that if people took better care of their cars I woundnt have much to do, Coming true more every day.
Jim

I am thinking you should look into rebuilding engines for old cars, trucks and tractors. Maybe I'm wrong, but within the last 10 years most of the shops around here that did that work closed up, mostly because the owners were so old. So now every Model A engine that needs rebabbiting has to get crated and shipped somewhere. Some large industrial equipment (presses, etc.) still use babbited rods. With your equipment and experience, maybe you can create a niche for yourself in the antique engine market.
The guy that owns the shop next door to me is slowly phasing over from auto repair to antique tractor repair for the same reasons. The auto repair slowed down the past few years, and there was no one left willing to work on old tractors. He makes less money working on the tractors, but still enough to live on and seems happier too.
Another guy near me has a very busy business doing welding and machining of broken, damaged, irreplacable antique engine parts. People send him parts from all over the country. If your 1908 Model T block got a chunk broken out of it when the crank broke, he can fix it. You better be prepared to dip into your bank account to pay him, but he can fix it. Prices haven't affected his workload, it's piled up all over and is time consuming work.

Is there any oilfield business up there? I have been doing repair out here. It is usually 95% labor. I am a one shop guy as well. I think you have to sort through potential stuff pretty quickly. Don't take any losers. I know Wyoming area has some oilfield stuff. I takes a bunch of sales to make decent wages, even with low overhead. Previously, I didn't do much oilfield. I am ramping up on it, I think it might be good for many years. I am not borrowing money though. Pigs get fat, hogs get slaughtered.

If you want to do more fab stuff, how about some really cool and innovative trailer for the posers to use to drag around their really cool and fast and unrideable big-twin custom? If you've got an in with the local HD dealer, he can market them, and he can also tell you what features his cusomers want. I suspect lots of diamond plate, chrome, and probably a few "billets" of aluminum bolted on would do the trick.

Oh yeah, make the trailer out of chrome-moly steel, that should make it a lot more appealing to that crowd.

Same thing with fancy workstands and stuff like that.

cheers,
Michael

Iam not that far from you and have been through the same downturn in industry.
That is the major reason I migrated over to doing motorcycle work.

Custom homes...

Hmmm.... are you into quality welding? I see a possible future, or a side business at least, making WIDE spiral staircases. The "kits" some builders use are too narrow to move anything upstairs after the roof is tacked on.

Give 'er some thought. Make one up, perhaps outside a school or retirement home as an extra fire escape and demo your skills.

Anticipate, innovate, over come!

Stan Db

Have you considered expanding your market area for your engine rebuiding business? How about selling rebuilts online? Advertise on some internet Harley sites about your rebuilding / big bore upgrades etc. A V-twin is still something you can ship pretty easily.

Stan db, there are already at least three shops in town doing this kind of thing already, we only have about 40,000 people in the town proper.
One of the discouraging factors of this local, is people from all over the country move here bringing talents with them. I have watched repeatedly over the years, someone starts a small business, does very well, and then 5 other people say, Hey, I can do that, then do, now we're saturated with everything again. I dont want to throw negative attitude towards any of the replies thus far, the advice has all been good.So plesae dont take anything I say that way.

The custom motorcylce trailer is something I had not thought of, that might be a good idea. We have about 3 trailer dealers here,dont remember seeing any bike trailers at all.

I already do a lot of older antique stuff, have a Model A in right now, and a 1936 Wakeshau engine from a Mineappolis Moline tractor. They are good jobs, just isnt enough of em'. I am considering trying the net thing, especially for the MC engines, pretty easy to ship them. T

Honestly, the biggest problem right now is cash flow is horrible and I cant afford to try anything at the moment. The fab stuff is something I could add the easiest as I already have most of what I could need. SO, once again, the MC trailer gig might be worth some effort.
Just off the cuff my imagination sees:
a small enclosed front cabinent for small stuff storage ,and provide rock chip bug protection for the bike, then room for 2 bikes on the bed, all fancied up and functional? Any more ideas?
thanks again for all the replies, it is encouraging.
Jim

Think a little outside the box, check the internet, find out what the "kids" in the big
city are buying. Maybe you can fabricate your
own automotive product and sell over the internet. If your shop was down here and catered
to youth (putting noisy mufflers on Hondas)
you would be very busy. Teenagers in Southern Cal
are spending tons of money having shops soup up
their Honda Civics. Anyway sorry to hear your
plight, keep your eyes open and your chin up.

to youth (putting noisy mufflers on Hondas)
you would be very busy. Teenagers in Southern Cal
are spending tons of money having shops soup up
their Honda Civics

Click to expand...

is it legal to make RPG's to shoot at them?

enginebuilder,

Some would say this is a Willie Sutton type of problem.

Bike engines are definitely an opportunity. How's the marine industry in your area, either for boat fittings, engine work or pump work? Scout marinas for rust, corrosion or damage on people's babies and consider the possibilities for replacement parts in brass, bronze or stainless. Anybody up your way specialize in pumps or pump repairs?

Small engine work i.e. mowers, snowblowers, chainsaws might also be a possibility, if you haven't already sought it out. I'm thinking of recent stuff, other than antiques. Who do your tree men go to for repairs? How about local farmers or ranchers, for ag repairs (welding)? I know of one fellow who makes custom farm machinery for local citrus growers. Machine tool repair for local fab shops might be another possibility, depending on their experience level. Is there any defense work in your area?

There are other possibilities like clock, watch or jewelry repair, though I hesitate to suggest them because it seems out of line with what you want. Depends on how you feel about fine, delicate work. Computer skills are a definite plus, especially in advertising via the Internet.

Hope some of this helps. It's a matter of finding opportunity. You'll find it, though.

Cash flow being a problem, perhaps your lender will work with you a bit and lower payments, since the downturn is not your fault.

"the MC trailer gig"

I'm half-ass shopping for a gooseneck trailer right now.

I'm amazed at the number of shops doing this, seemingly in every state (although most in Texas), but there appears to be some profit in that with relatively low investment...welders and bandsaws, drill presses, possibly some paint equipment or woodwhacking stuff for the decking.

If there are yuppies coming in, they need landscapers because you know they're not going to get their hands dirty.

Landscapers need trailers (although probably not as fancy as goosenecks). Farmers need trailers.

Landscapers need small engines repaired (granted this might not be as lucrative as the larger multi-cylinder jobs) but it might be a source of work that's not too far from your expertise.

-Matt

I'd agree with M.Moore on this one. I wonder how hard it would be to create a craze for the custom bike crowd. A class in shows that is a combo of best bike and trailer. A trailer with big fat custom rims that match the bike. custom tool drawers. Hand shaped fenders painted to match the bike. custom machined and/or welded swing arms so the precious junk aboard gets a cushy ride.Maybe hydraulics to lower the whole rig to the ground. show mirrors mounted in the trailer floor ( a bike is probably viewed better at this height anyway). If this is not already being done it will be. Most of the custom stuff is so far over the top a fresh canvas would be a welcome thing. You already have some good connections maybe talk out a project that is a bike/trailer combo?

hope you do well in the re-inventing process.

Ted