Mini Mills vs Many Mills

Part 1 of 4: Come & See Tour Analysis – Wrapping my head around the capacity of our mini mill industry

“Paralysis by Analysis”

Poppa EO, aka the progenitor

Anytime someone gives themselves fully to the analysis of data that they have collected they risk finding themselves stuck in that allegorical “Slough of Despond“, laden with a heavy sack strapped to their back. So why would someone willing thrust himself headlong down this path, is it not seemingly hopeless? We shall soon find out!

I would suggest continuing to watch/read from a distance so as not to find yourself in a similar quagmire, blindly tagging along with this miller turned blog writer… it’s sure to get you stuck in something that will get you nowhere. Also, I must also give you a heads up, before I was a miller I was a pastor for over a decade, and I find my faith more alive today then I did back then. As Nana said so many years ago, “He’s teaching me a new way to worship.” Amen!

So one of the major takeaways from our “come and see” tour was looking at our capacity. Was what we were experiencing at Morning Star Fiber an anomaly or was it common amongst others? And I’m not just talking about the physical numbers of quantity, but the intangible numbers of quality.

Now before we get too far, let me just say that I’ve been traveling for a little over 17,900 miles and visited 21 mills since January. Almost 8,000 of those miles were ridden in my trusty steed “The ‘Burbon”. So prepare yourself for a good bit of metaphorical banter about driving later in this post. I’m sure it has simmered its way down into the sauce. And while there are still four more mills here in the south that I’d like to get to yet, I had to pull up short to take care of some other more pressing business. In just a few short weeks is the Artisan Fiber Mill Network Summit in Lebanon, TN July 17 & 18th, and so I’ve turned my attention to that project. By the way, there is still time to register for the summit. I can honestly say, it will be one of the best $175 investments you will ever make in your mill. Click on the link and at least check it out. And if you’re not already a mini-mill owner and thinking about starting a mill yourself I’ll be presenting on that topic that same weekend at the Natural Fiber Extravaganza called “Launching a mill business successfully”. ††

https://afmn2019.ticketleap.com/afmn-summit-2019/

So let’s take our caps off and scratch our heads together about capacity within the mini-mill industry, and consider how we might wade out into this slough.

When my parents first started researching the mini-mill business back in the fall of 2004 they struggled to find more than 15 mills in the market from which to gather data for thier business plan. Now almost 15 years later there are 150 mills. That’s pretty substantial growth, suggesting that by 2025 there could be as many as 204 mills if we keep at the same pace.

Now I’m not sure what role the advent of the internet played in skewing some of that data. In 2004 I’m assuming that few if any mills had a website, and Facebook didn’t really come onto the public scene until 2006. While today, lots of mills are using Facebook Pages more successfully than their websites at attracting customers and staying in contact with their customers, when we launched “the Belfast Mini-Mill Summit/Network” as a private Facebook group back in 2010 there were only couple dozen members that represented like 14 mills the first year – we now have 250 members and represent 75 mills. All that to ask, “Were there more than 15 mills in 2004?”

It’s hard to say… but there weren’t many.
[7/13/2019 edit – found out that there may have been close to 50 mills in the 90’s through Gail White who ran Ozark Carding Mill. Most of them running Patrick Green or Belfast equipment – which means we have tripled in size in 15 years. Would love to find some history articles from magazines about these things from the 70’s when this all got started. Post links in comments if you know of any.]

But for the sake of talking about capacity, we know that there are roughly 150 mills right now in 2019 here in the US. And we can project that 8-10 new mills will be started each year between now and 2025. And let’s just suppose that all of these are full-line Belfast Mini Mill setups with the equivalent of three full-time employees. Now I understand they aren’t, but for the sake of establishing a benchmark (because it’s really close to the reality of what we saw on our tour), what could our capacity be? What is the realistic scope of our industry, both where we should be now and where we could be in 6 short years?

Sorry if numbers don’t excite you, I’ve been called a bit nerdy more than once. Oh, and last but not least, we’re going to assume that these mills work an 8 hour day and work 250 days a year. If that were the case, we could conservatively make the following statements about the collective capacity of the mini-mill industry. I’ll lay them out in the following format for lack of an easy way to provide you some flashy bar graphs. Maybe by the Summit 🙂

  • [Focal Point: THIS LINE WILL FOCUS ON A PARTICULAR STATEMENT/FACT]
    • [Present Day: WHERE WE SHOULD BE NOW IN 2019]
    • [Future Projection: WHERE WE COULD BE IN 2025]

Hopefully, that’s easy enough to understand… So here’s the scenario:

  • Each mill is capable of processing 24# of raw fiber per day
    • 3,600#/day, 900,000#/year (2019)
    • 4,800#/day, 1.2 million#/year (2025)
  • Each mill is capable of employing three fulltime people
    • Our industry generates 450 jobs (2019)
    • Our industry will generate 600 jobs (2025)
  • Each full line mill roughly costs $175,000
    • Collective assets $26.25 million (2019)
    • Collective future $35 million (2025)
  • If mills made only roving/batting/rug yarn (assuming an average cost of $16.75)
    • $60,300/day or $15.075 million/year (2019)
    • $80,400/day or $20.1 million/year (2025)
  • If mills made only yarn (assuming an average cost of $32.50)
    • $117,000/day or $29.25 million/year (2019)
    • $156,000/day or $39 million/year (2025)

What’s your first gut response to those numbers?

Are you surprised? Not really that impressed? Kind of as expected?

I’d be the first one to say those are “maybe-ever-so-slightly” rose-colored glasses. The simple reality is that there are mini-mills, and there are “many-mills”. It’s true “many-mills” are not anywhere close to processing the six thousand pounds of fiber per year, nor generating the standard 100-195k in income that a mini-mill can, depending on its product mix – but that still doesn’t change the fact that there are 3 mills per state on average. But alas, we’re not talking about the actual reality, we’re talking about the actual capacity – which is, in its own right, also a reality. A reality that when properly consider presents some interesting opportunities for your business.

Because I’m always metaphorical and slightly confusing let me put it another way… I get it we have vehicles that we drive around every day that have a capacity of 100-120 miles per hour, but we often are far more comfortable driving at speeds far less than capacity. And certainly, the life expectancy of the vehicle, and potentially even the driver, are significantly shortened when operating the vehicle at max capacity for extended periods of time. But we’re all thankful for that capacity when we’re stuck behind that Grandpa out for his Sunday afternoon drive through the countryside.

So maybe you see where I’m going with this. The real question becomes is this 24# per day a “full-throttle” number or is that merely a common highway speed and the >12# per day that was most commonly found in our tour representative of the stop and go traffic found in the city? More importantly, what’s causing “many-mills” to be stuck in city traffic and not out on the highway covering some serious ground like a mini-mill should?

To answer that question we simply have to establish the correct unit of measure and then the takt time of the system itself. Takt time is the average time between the start of production of one unit to the start of production of the next unit. Since we’ve been talking about pounds per day up to this point, our measurement is of weight vs. time relationship. Since every product has to travel through the carder in order to be converted into a product in both scenarios listed above (roving/batting/rug yarn or yarn), we are going to measure the takt time at the carder and do that in pounds per day.

In the Belfast Mini-Mill that is determined by the speed of the infeed belt, which delivers a new feed into the machine every 2.66 minutes. [This is also true of any other carder, however, many other machines have a variable infeed belt and no marked lines for individual feeds so it is not straightforward to determine this.] Since each new feed is weighed out by the operator before it’s applied its a pretty simple story problem – don’t worry this will only hurt for a second my non-mathy friends. We have 60 minutes in an hour and so, therefore, we have 22.5 potential feeds of production capacity. In the BMM system, an average feed size is 2.75 ounces. You’ll rarely go below 1 ounce nor over 4.5 ounces. So take your feed size and multiply it by your total feeds in an hour and then divide that by 16 ounces in a pound and you get roughly 3.87 pounds per hour.

Now, while we were doing milling at Morning Star Fiber our averaged run time at the carder was 77.5% of an 8-hour day. This I’m assuming accounted for maintenance, setting up of new runs, lunch and bathroom breaks, and the occasional leprechaun sighting. I hope you haven’t found our wading out into the slouth to laborious. But alas we’ve come to the end of the math that gives us a pretty conservative number of 24 pounds per day. If things are getting to messy for you, just keep reading it gets better (evil villian laughter heard in the background)

From the data that we’ve been able to collect, that average number is closer to about half of that twenty-four pound as an average across the industry. There were a few folks hitting close to 50 pounds per day and a few others who were crawling along averaging a little over 3 pounds a day. So, in the end, it’s not a whole lot different than our average daily driving experience, some of the folks we encounter we’re contemplating honking our horn and politely telling them some version of “move it or lose it buddy”, while others go speeding past us leaving our hair disheveled and we “smile and wave” while saying something smug like “you idiot… stupid jerk”. Kind of like those bikers who sped by me in a traffic jamb, popping wheelies no less, while I was in Columbus, Ohio.

So let me push pause here for a second and potentially poke a bear. We need to acknowledge a topic we don’t often talk about in business, but we should.

For the better part of a century, American culture has blindly subscribed to the “bigger is better” model of doing business. This mentality has built a framework that suggests if your business is small, it’s because you haven’t been very successful yet. The key idea seems to hover around this idea that progress is some mixture of bigger, faster, and stronger. We want our growth to be “organic” and so the experts tell us that 1.) healthy things grow and 2.) the bigger, faster, stronger they grow the healthier they are. And if you go from small to giant “overnight” apparently you’re the “bee’s knees”. Many would argue that it seems almost counterproductive to think any other way in business.

But is there another way to look at it?

Does small mean weak and/or unhealthy?

When you’re small does that mean you’re malnourished and/or immature?

It’s’ sad, yet somewhat comical, how this storyline is so ingrained in our modern business psyche. Consider the conversation I had while at the airport in Salt Lake City. I was trying to describe to a mildly intrigued business guy that while mini-mills are certainly a niche industry, we were attempting to stay small on purpose and we were more focused instead on being really great at craftsmanship & artistry. While he appreciated the concept he was quick to say, “Every business has to know how to scale and to what degree it can scale and how quickly it can scale. If not it’s not very good business.” I think he truly appreciated the noble reasons for being small but great, but he was quick to communicate that the business was never going to be good, let alone great.

That’s a reality that we have to face, isn’t it? We have this mini-mill business and we are wondering, what it’s going to take to make it really work. Sure, we’ll survive but how hard is it going to be? And how much are we going to struggle to keep it going? Those are the fears lurking in the shadows of our minds. And because there aren’t many if any stories of small, rock solid mini-mills out there, it’s easy to be threatened by all the “shark tank” realities in the red ocean of the business world.

So is that the reality we’re faced with – this “go big or you go home” approach to business? For those of us who have decided to start and run our own business instead of work in someone else’s, it’s easy to embrace the mentality that we’ve now got to run with the big dogs, or get back on the porch. And so bigger, faster, stronger it is right? That business landscape is full of stories about large corporate takeovers, mergers, off-shoring, and all sorts of underhanded or slight of hand “business” moves… this is where many of us roll our eyes and throw up our hands.

Let me make this really REAL for a moment…

I live in a small little rural town in the “forgotten West” of North Carolina. Andrews is home to about 2000 people. During the ’70s and ’80s this was a pretty happening little place. Our county was home to several large manufacturers: Lee Jeans, American Thread, and Baker Furniture were a few of the largest. I’m told that a very large percentage of the community was employed by one of these three companies. However, by the ’90s NAFTA had changed all that. NAFTA was originally promoted as a trade bloc – an intergovernmental agreement between the US, Mexico, and Canada, where barriers to trade would be reduced or eliminated between us. Reagan, Bush, and Clinton all worked to accomplish this agreement.

But what was the result of NAFTA?

In the end businesses – not just here in our little rural community but all across the country – were offered yet another way to get bigger, faster and stronger, without much thought given to “at what cost”. Unfortunately, that “B.F.S.” program typically promotes companies finding a way to do it via cheaper labor, cheaper materials, fewer regulations, less accountability, etc. And so you can imagine what happened when the US opened trade negotiations with Mexico and Canada

What was proclaimed by President Clinton, as the bill was being signed was,

“NAFTA means jobs. American jobs, and good-paying American jobs.” If I didn’t believe that, I wouldn’t support this agreement.”

President Bill Clinton

Now when trying to decipher any Bill Clinton comment one must somewhat jokingly determine what the meaning of is is. Thirty years of the historical context in this little rural setting would suggest that Bill Clinton was right, NAFTA did mean jobs. It meant our good-paying American jobs being lured away from our town, never to return. It means now that even the second generation of people since that time are still struggling to find a job and economic development is still struggling to regain the business landscape that was here in the ’70s.

But what if we went back to our old school farm roots and focus on the motto we learned in 4-H, “Good, better, best. Don’t let it rest, until the good is better, and the better is best.” That’s a far cry from the “Big. Bigger. Beast. Just like yeast. Never stop growing, not in the least.” The problem is just that… the least of these gets the shaft. Jesus said, “what you’ve done to the least of these you have done unto me.”

During my decade at the helm of Morning Star Fiber, I was always more focused on getting better – doing things the right way, the first time and understanding the right reasons for why we were going to do it that way. Getting bigger was something I was always trying to reign in. Big in my book was not something any man should aspire to, because God warns us that He opposes the proud but gives grace to the humble. I recently read a great book that really solidified in words my “code of practice”, called “Small Giants“. At the end of the day, I wanted to make the best lopi yarn that I was capable of, establishing a great repeatable process and then making sure that everyone involved in that process was equipped to succeed every time we made lopi yarn.

But enough about me, let’s talk about us… let’s talk about U.S. If there’s anything we’ve learned during this “bigger is better” era it’s the sad reality that it’s been “growth at what cost?”. And this is where the bear wakes up and isn’t happy so be prepared to run… oh wait we’re in the slough – OH BOY!

What’s been the reality of big business throwing caution to the wind and stomping on the gas pedal of progress?

Consider the result of big business investing trillions of dollars in advertising every year to ensure that their consumers buy their latest stuff?

Was this just the natural course of capitalism?

I would argue that when we decided to let loose the ship called “Capitalism” from its Judeo-Christian moorings, we ventured out into reality that is full of dangers that run us aground. If you’re old enough you can have enough context to understand that we’ve (Americans) gone from being known for our quality craftsmanship for goodness sake, out past the buoys to the shoals of perceived obsolescence and now we’ve broken free and drifted all the way out to this modern day, dare I say, volatile planned obsolescence?

And where does that lead us?

I don’t want to get too deep in the weeds here and get lost, but I do want to give voice to something that has to be a key ingredient in the secret sauce for what drives this mini-mill industry. We can’t be focused on getting big, but instead on being great. We have to develop in such a way that we become a renowned industry for our advancement in craftsmanship and artistry. And I can’t think of any way forward to do that than acknowledge that God is a Master Craftsman and we are His workmanship. And as we repent and come back into his workshop and seek to learn from Him we will discover the craftsmanship and artistry that bears His maker’s mark which has been placed on each of us.

So while I’ve been sitting here scratching my head about capacity, I’ve been captivated by two things: 1.) We have the ability to do a lot of making collectively and support a lot of farms, 2.) let’s not think about capacity in the traditional sense and get caught up in the bigger, faster, and stronger verbiage but instead think about our capacity for craftsmanship, the beauty of our workshop both in its layout/design and its intended purpose, and the nature of our posture and ability to serve others. Both of those things have been given to us by God, and it is our joy to discover that and enjoy work with Him forever.

%d bloggers like this: