Bob Kuniega of Lanco shares how the industry’s lean practices wax and wane, and how manufacturers need to improve their recruiting methods.

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Danny:

– Hello and welcome to today’s IndustrialSage Executive Series interview. I am joined by the president and CEO of Lanco Integrated, Bob Kuniega. Bob, thank you so much for joining me today on the Executive Series.

Bob:

– Very welcome, Danny. I’m glad to be here.

Danny:

– Alright, well I’m glad to interview you. We met, we were at the ASSEMBLY Show. We were talking about this before, in Chicago in 2021. My dates are all—with all the Covid stuff, time has just gotten all messed up. But yeah, it was the ASSEMBLY Show in Chicago. I think we met you guys there. You guys have some pretty cool technology and solutions. I think you guys were showcasing a solution with a partnership you had with I think Stäubli at that point. And so anyways, caught our interest, started talking, and here we are. For those who aren’t familiar with Lanco, could you just give me a quick high-level of who you guys are and what you do?

Bob:

– Sure, great. So Lanco, we make custom automated assembly and test machines really for the assembly and the testing of small to medium parts. Been around over 35 years; we have over 8000 machines stationed around the world. What we do is we work typically with an end customer who has a product and wants to get it to market and wants to automate the assembly end or test processes. We’re doing the concept. We’re doing the design. We’re doing the build and then the eventual validation and certification and tests that the product is meeting form, fit, and function. We typically, because of the size of the products we handle and the expense of our solutions, we’re focused in on a couple markets. It’s medical; it’s consumer electronics, automotive, some commercial industrial so a lot of these specialty applications that can warrant the complexity and the cost of these automated systems.

Danny:

– Sure, absolutely, okay. Well I’m sure that you guys have experienced quite of—like a lot of companies in this space, in the automation space, just quite a huge boom relative to Covid. I know there was a lot of, the industries were moving towards a lot of automation anyways, but certainly basically gas got thrown on that fire.

Bob:

– Yeah, absolutely right. Covid, while it was an unfortunate thing for the world, it was a boost and a refocusing, I would say to our business. We were fortunate early on to build a number of very rapid solutions for Covid test card kits, so more the self, home versions. That really shifted our market segmentation and what we’re working on. But as a result of that and as a result of supply chain disruptions and rebalancing, especially in this market in the Americas, you’ve got a lot of manufacturers who have decided they’re not going to go to a low-cost country and then have that disruption, so they’re forced to build local to their customers. But then depending where you’re at, probably now anywhere in the world, it’s tough to get people, and it’s expensive to get people. That whole shift, that was the gasoline that put on the whole industry. And in general our end users have really lost this ability to do the integration themselves, so they’re looking for us and our partners, our manufacturing partners to put it together and give them the solution they want in the end, which is produce their product to serve their customers.

Danny:

– Yeah, totally makes sense. That’s a story that we’ve seen and we’ve heard play out constantly. What’s interesting, too, is as things shift, we’re seeing new trends and different things. I think the labor piece was something that was really interesting. I think that everybody thought coming out of summer, 2021, I know the big thing was, the federal unemployment is helping to keep people out, and as soon as that’s over, we’re going to be back to normal. And then all of a sudden it was just like, wait a minute. People aren’t coming back. Wait, what’s going on? It’s a super interesting thing as we continue to progress. It’s like the story continues to evolve. We’ll circle back on some more of this stuff here in a minute, but what I want to do at this point is just get to know a little bit more about you. We want to know about Bob. Bob, tell me; how did you get into this industry? Take me way back. Did you study this? Did you go to school saying, “Hey, I’m going to go into engineering”? What did that look like?

Bob:

– Well like many people, I guess you take a bunch of turns. It’s never a straight line.

Danny:

– Exactly.

Bob:

– I am a recovering engineer; I will admit that. But really, I first got into it because I wanted to be a pilot in the military. It was circa Top Gun-ish things, and for various reasons I attempted to go in a couple of times. The engineering was a big of a fallback and a level of interest. My degree is actually aeronautical engineering.

Danny:

– Okay, that’s very cool.

Bob:

– I ended up not going into the military. I ended up going to work for Boeing, so I was designing and making airplanes. Had a couple cool jobs there. But the aviation industry is a little bit cyclical. I was living in Seattle; probably more opportunities if I got laid off at Boeing if I was in Southern California, but in Seattle there were some periods when Boeing laid off people, and the lights were out in the city of Seattle. I ended up joining an industrial distributor at the time who was selling PLCs and sensors and VFDs and data acquisition systems. So I was selling back to Boeing, to some of the departments I worked in. That got me into the manufacturing side. I eventually went from a distributor to a manufacturer and then spent a good part of my time on the manufacturer side working for a number of public and private companies, domestic and international experience, things like that. For the bulk of my career I’ve been in and around this manufacturing space. It’s kind of come full circle. As a manufacturer I would sell to some of our customers. I would sell to people like Lanco. And now I’m in a position to take a leadership role within Lanco and building that bridge between the manufacturers I once worked for and the customers I would occasionally service and that bridge and putting a whole solution from various manufacturers together to common customers and markets I’ve had experience with.

Danny:

– Oh, that’s very cool. I have to ask you this follow-up question because you completely piqued my interest on this. Do you have your pilot’s license?

Bob:

– I’ve got hours; I don’t have it yet. That’s a post-retirement thing for various reasons. Quite honestly at my time at Boeing, I would sit up in the cockpit, and it’s kind of boring being a commercial airline pilot. The military route is gone. They’re not recruiting as many pilots anymore. It’s almost more boring now, because it’s so automated, than it is being a bus driver.

Danny:

– That’s very true. So I’m a general aviation pilot, so I have a small 1979 Grumman Tiger. It’s funny when you talk to—you hear some similar things about all the commercial pilots. They like, “You literally take off; you just hit buttons. You’re on autopilot, and we’re just kind of monitoring things and talking to air traffic control.” You get into general aviation, you get to do a lot more things and play around with it. It’s kind of like a glorified bus driver, is what I was told.

Bob:

– What I was always told because I would occasionally go on delivery flights or revenue-generating flights, and the pilots would say it’s 99.5% boredom and 0.5% sheer terror.

Danny:

– Yeah, it can be polar opposites, no in between. That totally makes sense. Well that’s good. I’m glad it’s mainly more boring than terrifying. Okay, well cool. Sorry for that pivot; it just piqued my interest. I was very curious about that. Going back into your career and how you started and progressed and where you are now, throughout that process, can you maybe share with me somebody or something that had just a really big impact in your career? It could be an event; it could be somebody, a mentor. I know normally there’s a lot, but if we could focus on one thing, what would that be for you?

Bob:

– I would say—I had mentioned previously that my first job after Boeing was working for an industrial distributor. One of the vendors that we represented, I went and worked for them, and then we eventually got acquired by Danaher Corporation. We were their first acquisition that became a platform which became their motion group. So I was there in the nucleus of that. I’ve got a lot of respect for Danaher. They’ve got some spin-off businesses as a result of the success they had which was the core Danaher businesses. But immediately when we got acquired, you got immersed in what they call DBS, Danaher business systems, and they had their own educational system. It was a lot about lean, Six Sigma thinking, some concepts of strategy deployment, and so it was about actually putting a fact-based, process-oriented, results-driven type strategies together. In terms of, that was eye-opening for me. And they’ve been wildly successful as a company. I appreciate my time there, and I’ve taken that plus little pieces all around my career and used it as I’ve gone forward. Like anything, when you use it more you get better at it. When you make some mistakes, you learn from that. But I would say that was, Danny, from a professional standpoint, a really pivotal time in my career.

Danny:

– Okay, another follow-up question, that’s great. You mentioned lean, Six Sigma. I’m curious as we pivot a little bit now into current challenges and things that are going on right now, obviously one of the big learnings and things that companies continue to see is this resiliency with supply chain and looking at just how fragmented things are right now. Relative to let’s say lean manufacturing, this is an interesting question I like posing and asking people. Do you think we’ve gone too far in some cases with lean manufacturing? Relative to maybe just-in-time and some of these other elements.

Bob:

– I guess it’s easy to sit in the moment and arm-chair quarterback. Certainly we’re being impacted by it from the supply chain disruptions. I think our customers are thinking about this differently now, so it’s not all just-in-time anymore. The challenge is, you can be very lean as an organization and efficient, but you’re still reliant on outside forces. And unless you can get all those people in the supply chain up and down to be as lean and as efficient as you, the chain breaks, and then you have a problem. That really got exposed during Covid. Stuff was quarantined; you didn’t have people. Stuff was stuck on the water. You couldn’t get it out of ports and things like that. I don’t know that’s—lean has to be in the right balance, I think, and it has to be put in perspective with all the supply chain inputs and outflows that you have to deal with.

Danny:

– Yeah, it totally makes sense. If we were looking at it in a vacuum, certainly hindsight is, well I hate to say this now, 20/20. Overused phrase now. But I just think it’s interesting, is companies rethinking that. You have to, obviously, because it’s like, wow. But almost the unthinkable happened. I believe we were talking a little bit before we started recording here just how companies are now re-shifting, say, “Hey, listen, we’re reshoring. We’re bringing stuff back.” We need to make sure that our suppliers are closer to us so we can reduce a lot of—instead of saying we’re going to have suppliers overseas because we’ve seen what’s happening with shipping and ports and other countries—there’s a lot of dynamics at play that—maybe is there a lean 2.0 emerging from this?

Bob:

– Yeah, I think it’s a—the pendulum shifted as you previously implied, to super-lean, super-efficient. I don’t think it’s going to go back to massive amounts of inventory, but they’re going to have contingency plans. They may make the same product, and we’re seeing it with our customers. They’re making the same product in multiple locations in the off chance that a site has a cyber-attack or a natural disaster happens. They’ve got some abilities to flex and shift how they run their businesses. But I think the next wave, this notion of chasing the low-cost countries, there’s very few places anymore that are left to do that—China, India, some of these places, or the BRIC countries that were in vogue 10 years ago. They’re all seeing labor increases, and then you add to it the cost of transportation and logistics. Where lean worked was, you had low-cost inputs. You had a very stable logistics channel, and Covid blew that all up. Now people are going back, maybe back to where they were 20, 25 years ago before they were chasing all this lean and high-efficiencies. So it’s not going to go back to where it was. I think the pendulum will be somewhere in the middle.

Danny:

– Yeah, and that totally makes sense. What are some of these other principal challenges? Labor and supply chain obviously are the really big ones, but concretely what are you seeing some of these challenges are for your customers right now?

Bob:

– Their challenges—I talked about how they provide us a product, that we have to help them assemble and automate. Engineering is a discipline in demand for us and for them, and so sometimes we see designs coming from our customers that are not really made for manufacturability. And if they are, I guess that’s good for us, but sometimes we lose projects because it’s going to take so much automation to fit their product. Then it becomes something that they can’t tolerate any longer. I think on the one hand it’s good for us because they don’t have the engineering talent, and sometimes they give us a lot of liberty and maybe bring us in early on in the design phase. Sometimes we’re actually not only designing automated equipment, but we’re giving them comments on how these components put together make a product are going to be difficult for us to give them the solution they want, so we help them redesign some things. In most places, universities aren’t producing enough engineers fast enough. It’s one thing to be academically a student and understand the ME side and the electrical side. It’s another thing to put it into a practical sense, and that’s a struggle our customers deal with. It’s a struggle we deal with. One of our challenges, quite honestly, is because we’re so intimate with our customers sometimes, we are an attractive talent pool for our end customers because they work with us for a year, two years on a machine. We go install. We live onsite with them until it gets up and running, and then they put opportunities in front of some of our employees. But it’s a challenge that every business has in terms of keeping your employees engaged and wanting to work for us rather than somewhere else.

Danny:

– I definitely can see that being a very big challenge, certainly, especially in today’s environment. You were mentioning that one of these challenges, that maybe a lot of your customers are losing some of this engineering talent they would have on staff. Is that something that was a result of the pandemic, or was that something that you were seeing beforehand? Or is that new?

Bob:

– Yeah, I think it’s just a slow degrade. Part of it is, they don’t have engineers. Part of it is, their side is leaning and outsourcing it all. They used to have, in many cases, their own automation teams that at the very least serviced the equipment. At the very most they actually designed it. But with few exceptions—Amazon is a company that comes to mind—they have their own robotics division. They do their own skunkworks. They’re taking some off-the-shelf products or designing stuff themselves. I think it’s just that slow degrade and students not knowing when to go into the engineering field, and maybe this automation and manufacturing side isn’t as sexy for them. They’re off doing something else software-related or somewhere else.

Danny:

– That’s something that we hear a lot. You hit the key word I think there. People, oh, it’s not sexy. We want the jobs out in Silicon Valley or the tech startups and the cool—I think personally the reality of it is, I think for a lot of people, there is a tremendous amount of innovation. Personally I feel like there is so much innovation going on that’s happening that’s really exciting, and it’s even more of an exciting time because of that proliferation and acceleration of all these innovative new technologies. Certainly the pandemic again, if you want a little bit of a silver lining, accelerated all this and pushed this to do new things. What I think is fascinating, when we look at the—you were talking about it. I can’t remember now if we were talking about when we were recording before or after, but talking about certainly with the pandemic. We have to focus on these automation initiatives because it’s hard to find labor. If you can find it, then we have the rising costs. I think part of the big challenge is when you mentioned maybe from a lean standpoint, companies going back 25 years from where they were, maybe bringing that pendulum a little bit more towards the middle, that because of these new automation solutions, and because of the labor that is not there, that we can really bring in a little bit more independence and produce domestically. There’s a whole geo-political—if we could look at that right now, energy obviously is a big point of conversation and looking at I guess this question of globalization. It’s naturally, you’re seeing all that come back, and I think because of this technology, that’s eliminating—it’s solving the problem that 25 years ago companies started saying, “Well, we’re going out because of cheaper labor.” That’s a problem they have over there now, so how can we do that here domestically? Well I think technology and using automation—it’s not going to be the end-all, be-all, but it’s certainly filling that gap is what I’m seeing and hearing.

Bob:

– Absolutely. But that’s not just to western countries. We have operations in—I just got back from Malaysia. We have an operation in Malaysia, and that part of the world is booming to service that market, and we’re thriving as a result of it. They want to deal with a company A, that’s global; check, we are that. But they don’t want to deal—we service most of our 8000 units have been made in this facility in Portland, Maine, shipped domestically, shipped around the world, but that’s going away rather quickly. It was interesting; I went to Kuala Lumpur right before I left Malaysia to a company I used to work for, Parker Hannifin. We had sold them several machines, and their first question is, “How is your facility? Is it up and running? Is it functional? Do you have design, manufacturing, and supply chain capabilities in Penang? Because we know you; we’ve dealt with you around the world. We want you to make our next machine here in-country.” So even in those areas we would say they’re maybe not as developed, the mentality is, buy local. Again, they want that interface directly with us. Teams meetings, Zoom calls are great, but they want to see face-to-face. They want to work collaboratively, and we need to be there not in a couple days but in a couple hours. The only way for us to follow these global customers around the world is strategically put our businesses there where we have the capabilities locally to service and support them.

Danny:

– Interesting. That makes a lot of sense, totally makes sense. For a focus for you guys, obviously it sounds to be like that’s on the roadmap for you. Start localizing a little bit where your key customer accounts and whatnot. Totally makes sense. So I’m curious; I’m going to move on to our magic wand question. I like this question because we get a lot of different answers on there. I’m going to give you a magic wand. It’s this pen; I don’t know. It’s a magic wand. You can solve any industry challenge that you see, but it can’t be labor. It can’t be supply chain. I may even add a third one in there; we’ll see. What would you solve?

Bob:

– There’s still a war out there for different proprietary or open networks in the connection of these devices. When I worked for global companies, we would push our one, singular message. But no company, no matter your size in an automation world, has all the products. And so we’re faced with this challenge of taking these disparate products from various manufacturers, all very good on their own, but the connection to one, unified solution, and then the requirement moving forward is you get into industry 4.0 to connect it up to the ERP level to get this full digitized solution is still in its infancy. If we could get customers, suppliers agreeing on some standard protocols because that’s where we get challenged in terms of, the customer sometimes does not have a specification or a requirement for certain products, and then that makes our job a little bit easier. But sometimes they have other lines that our stuff has to hook into, or they’ve got some standards for maintenance reasons. We have this hodgepodge of different protocols and different programming environments which makes it challenging for us. Thankfully we’ve been doing this for 35 years, so we know how to hook this together. But quite honestly it makes it challenging for them and expensive for them. That’s the magic wand. I know coming from the manufacturing side for 25 plus years, they don’t want to do it because they want to keep you into their solution. We’re getting there. There are some open protocols, but I think going down that path I think would speed up the automation, the digitization across the manufacturing platform, make it simpler, make it less expensive for everybody. But right now everybody’s in their camps and trying to proport why theirs is the best solution.

Danny:

– No, it’s great. Interoperability seems to be a big thing. It’s interesting too, with all the continued emergence of new technology that’s coming in, you take robotics for example. I don’t have the updated stats on there, but just the explosion of new technology in robotics companies. Even going to shows, like we were at MODEX in Atlanta here a couple months ago. I think going back to 2018, 2019, probably 2016 certainly and then 2018, you continued to see more and more and more. Then now it’s just like this massive explosion, but then everyone’s running, to your point, on their own protocols, so really tying in all of the stuff together.

Bob:

– And speaking of robotics, I’m sure you saw at MODEX. Now there’s these cottage companies that are growing up around that with a top GUI layer that communicates to multiple robots so that the user has one interface to look at, and they translate everything down to the different protocols.

Danny:

– Yeah, it was actually Mass Robotics, the non-profit in Massachusetts. Last summer they came out with an interoperability standard which I thought was fantastic, and they had several different manufacturers involved with that to be able to do that. Do you think part of solving that challenge, is that going to be really solved eventually through association and standards boards coming in from programming and whatnot? I’m starting to get into areas that I am not as familiar with.

Bob:

– Yeah, and that’s been, I think, the current path. I think quite honestly it’s going to be the end customer pushing. If you’ve got these strict, hidden standards, we’re not going to use it. I think there’s going to be multiple pressure points that are happening. I think manufacturers just have to come to a courage to say, “We shouldn’t have a proprietary protocol” because it doesn’t—in the end if somebody comes up with a better mousetrap, and speaking of robotics you’ve got these guys that are laying over the top of this. Their power in terms of having a solution but it is a proprietary solution, they start losing that power. I think like anything it’ll mature over time, so there’ll be these open standards committees which there have been for PLCs and other software platforms. But I also think there has to be some pressure from above from the customer set saying, “We will not use anything other than something that’s open and standardized.”

Danny:

– Well that makes sense; that makes sense to me. Bob, listen, I’ve really enjoyed our conversation. It’s been fantastic. We’ve covered a large swath of topics over a relatively short time. But I appreciate you just spending some time with me and our audience just getting to know a little bit more about you, a little bit more about Lanco. For those who’d like to learn more about you guys, I’ve got lancointegrated.com. Is that correct, the correct URL there?

Bob:

– Yes.

Danny:

– Perfect; we’ll make sure those are in the show notes and anywhere this goes so that if people want to learn more about you and your company, that’s where they can go.

Bob:

– Well great; thank you for this opportunity, and hopefully we can speak again.

Danny:

– I would enjoy that. I’d like that as well. Thank you again. It was awesome.

Bob:

– Alright.

Danny:

– Alright, well that wraps up today’s IndustrialSage Executive Series interview. Listen, if you liked that, make sure that you subscribe if you are not already. You can go to—if you’re not watching it on the website, you can go to IndustrialSage.com and subscribe there. You don’t want to miss out because there’s a lot of great content like this. You can learn about trends and things that are happening and learn about other executives and have some great takeaways from that. So that’s all I’ve got for you today. Thank you so much for watching. I’ll be back next week with another episode on IndustrialSage.

 

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