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During the late 1960s Bill Hockenberger asked a friend if he could use his basement to launch a tool-and-die shop. Even then he had a vision, one he felt so strongly about that he left a good, stable job at a larger manufacturer to pursue it.
"He saw a need for a shop that could provide outstanding quality through a solid engineering approach to problem solving," says his son, Todd Hockenberger, vice president of what is today PGM Corp., a Rochester, N.Y.-based contract manufacturer.
That "engineering approach," Todd Hockenberger says, involves two primary paths to growth. First, the company relies on its strength in design-for-manufacturability engineering. Second, the company pursues diversity, both in its customer base and, almost by default, its processes on the shop floor.
AN ENGINEERING HYBRID
Throughout its history, PGM hasn't followed the traditional job-shop path. Even in the 1960s, Bill Hockenberger foresaw increased need for design and engineering services at the contract-shop level.
Knowing this, the company launched its Engineering Development Program. "The program was my dad's vision," Hockenberger says. "The reason we're in business is to solve our customers' problems in many ways."
To that end, the company hires and trains people who could be called engineering hybrids—those with both practical shop-floor experience and engineering expertise. The company brings on people fresh out of a college engineering program who work on the shop floor several years to gain practical manufacturing experience before starting full-time as engineers. Conversely, the program has trained the company's engineering principles to those with shop-floor experience but with no engineering degree.
Nine have gone through this program, and the company has retained four. The rest have moved on, with several launching their own businesses—a natural progression for a program fostering ambitious individuals. Yet, says Hockenberger, "the ones we've kept have been absolutely fabulous."
Case in point: One medical customer came to PGM with a complex component involving 60 pieces. PGM engineers collaborated with the customer and, working under design-for-manufacturability principles, reduced the component count to 30. "We ended up saving the customer several million dollars through reducing the component structure," Hockenberger says.
KEEPING DIVERSE AND FOCUSED ALL AT ONCE
Early on the shop expanded its tool-and-die work—which was, not surprisingly, susceptible to hot and cold periods—to broaden contract manufacturing. By the 1980s, the company had caught the new wave in computer technology, landing big contracts with IBM and other major players. The wave rode high, but when it came down, so did PGM.
"Up to 60 percent of our business was in the computer industry," Hockenberger explains. "When the computer industry got hurt, so did we. After that, we put strategies in place to make sure we wouldn't get hurt like that again."
The company's goal was to have no more than 25 percent of revenue coming from one customer and no more than 30 percent in one industry. "These are guidelines," explains Hockenberger. "Do we meet them always? No, but it does keep us focused on preventing us from having 60 percent of work coming from one customer or one industry."
Today the company serves the full palette of American industry, from military, aerospace, energy and telecommunications to R&D, automotive and—one market that has been the most stable by far—medical.
Regarding its manufacturing processes, the shop has been careful not to dilute its strengths. PGM was and will remain a shop focused on metal cutting: grinding, milling, EDM and turning (PGM stands for "Precision Grinding and Manufacturing.") But it does offer other services, including sheet-metal stamping. The company's business strategy keeps focused by treating these additional processes as value-adds for the business' key driver: problem-solving.
A surgical instrument PGM produces illustrates this. One part may have several machined components along with one seemingly simple stamping. But, explains Hockenberger, "when you really analyze it, you find you have to stamp it and perhaps machine and grind a dimension afterward.
"Dad would always refer to this as a 'machine-to-print' stamping," he adds.
For these critical components, PGM brings stamping in-house, solving a manufacturability issue that would be tough to send out to others, considering the part-spec requirements.
This also illustrates PGM's common-sense philosophy of technological expansion. Bringing additional processes in-house must solve a manufacturability problem. If outsourcing a particular process does a better job, then the company keeps that technology off the shop floor.
Consider creep-feed grinding, a technology PGM has become well-known for in its core markets. In the 1980s the shop landed a contract with IBM and, as a result, introduced creep-feed grinding to parts manufacturing.
"Up until this point creep-feed grinding had only been used for the aircraft engine groups—the GEs and Pratt and Whitneys," Hockenberger explains, adding that PGM became one of the few shops in the country outside those groups to offer the process. "It's a very competitive process, and it really gave us an edge," he says. "So we brought it in-house."
An acquisition in 2000 also brought additional processes under the PGM umbrella. The company purchased a shop from Lockheed Martin. The Manchester, N.H., facility (PGMNE) specialized in precision machining, sheet-metal welding and painting for the military. This did two things: It expanded PGM's process capability and opened the door to Lockheed Martin. Since then, Lockheed sold these divisions to BAE North America.
True, about 70 percent of PGMNE's work still comes from BAE, and PGM is looking to change that. But, it still serves a wide variety of divisions within BAE, and that by itself creates considerable diversity.
Hockenberger emphasizes two sides to the company's thinking behind diversification. On the one hand, be cautious about bringing more capabilities in-house. But on the other hand, don't write-off a new metal-manufacturing technology just because the company has never tackled it before.
Editor's Note: For more, visit www.pgmcorp.com. Photos courtesy of PGM Corp.
author: By Tim Heston