Picture this: electronic circuit boards being soldered together in a manufacturing plant, their shiny green surfaces zipping past by the hundreds, next to the clanging of sheet metal being formed into housings for sophisticated electronic components, which then will be powder coated. Think you’re in Shanghai or Singapore? Think again. You’re actually in the desert of the southwest U.S.
What may be a common sight in Asia also has been happening for decades on the outskirts of Phoenix, Ariz., at APSM Systems, a manufacturer and powder coater that seems to be competing just fine with its overseas counterparts when it comes to fabrication, electronics and finishing.
It takes discipline, efficiency and quality products to compete with electronics manufacturers overseas, and APSM Senior Vice President Mike Thul says APSM can compete on all levels with any business, anywhere.
“We are very unique,” Thul says. His father started the company in 1966 as Arizona Precision Sheet Metal, and it has morphed into one of the premier vertical integration operations in the country. In addition to gaming products, the company also manufactures and finishes equipment for the health care industry, among others.
EFFICIENCY UNDER ONE ROOF
“Our competition is the very large guys, but they don’t do it all under one roof, even down to the electronic board assemblies,” he says. “We’re also up against the board house, the metal house, the finishing house and anything else needed to complete the manufacturing process. But I think that’s what is so attractive about us. We do it all, and we do it well.”
They do it efficiently, too, especially when it comes to surface finishing operations. Being able to compete in such a cutthroat industrial environment means lean operations, just-in-time manufacturing and looking for cost-savings at every opportunity without sacrificing the quality the customer demands.
This is what Thul and his plant manager, Dennis Benjamin, look for every day in their walk through the large manufacturing operation. They don’t go cheap—new equipment and machinery are all over the plant floor—but they look for ways to do it better to stay competitive on costs.
This drive for efficiency led APSM to call in one of its suppliers, Coral Chemical, to help it better automate its powder coating line to help generate cost savings, improve throughput and increase quality control, all without missing a beat on providing customers a great product.
APSM’s finishing department has a chromate line, and liquid paint and powder coating operations. Coral supplies all the chemistries for these systems, as well as for the APSM plants in Las Vegas and Guaymas, Mexico, on the outskirts of Hermosillo. This 62,000-sq-ft Mexican plant specializes in cable and harness production, and also includes metal fabrication, powder coating and integration.
Coral’s Sercy Spears worked with Benjamin at APSM’s main facility to install a Guardian Series analytical process controller system that monitors multiple chemical process stages, including cleaning, pretreatment and sealing, rinse and wastewater streams.
“It will monitor and control based on conductivity, pH and ORP sensor inputs, as well as measurement inputs from other devices such as level, temperature, pressure and flow devices,” says Spears, a veteran sales consultant with Coral. “It can work 24 hours a day, 365 days a year if they need it to.”
The system keeps on-site personnel informed of powder coating system performance, while providing accurate process control and records in case customers need them, Benjamin says.
“It’s a system that improves what we had, which was pretty good to start with,” he says. “But we are always looking for ways to get the most out of what we have. This system doesn’t tie us down in constant monitoring.”
Efficiency is top of mind for Benjamin. He knows that having employees spend extra time deburring or sanding parts to be powder coated, or touching up parts means additional costs. That’s why he and Thul worked with their in-house engineers to design a stamping and cutting system for slot machine housings that leaves some metal behind in knock-out holes to work as masks as the products go through the coating operation. When the housings come out of the coating process, it takes just a tap to remove the metal from the holes without the need to retouch, debur or otherwise spend additional labor to prep the pieces before the gaming mechanisms are installed and configured.
LABOR, COST SAVINGS
Benjamin also designed large metal and magnet shields to mask parts of the slot machine housings so that powder is not applied to those areas, saving time on labor and re-use costs.
“The less we can have our employees work on parts before and after they go through the finishing process is critical for us to remain competitive,” Benjamin says. “Every time we can automate that process is additional cost savings, and that is what we are known for.”
“Resourceful” is one word to describe the way Thul runs the APSM operation. If you walk through the administrative, engineering and sales departments at his sprawling plant north of Phoenix, you might decide “ingenious” is another.
For one, Thul and his staff designed and built all their own furniture and fixtures. Tables, shelving and desks were all engineered and fabricated in the APSM shop and finished on site. Need a new table for an office? Wait 30 minutes and they’ll build one from scratch.
Walk through the APSM technology wing that houses its IT systems and equipment, and you’ll notice the company also has built all the mainframe housing, cabinets and fixtures, and finished them with matte black powder coating.
“Why not build the tables, desks and mainframes ourselves?” Thul asks. “Building things is what we do best.”
And it looks like they will continue to build and finish gaming devices.
APSM has also become an electronics expert, actually building circuit boards for gaming devices, a true rarity in U.S. manufacturing these days. According to industry trade group IPC, less than 8 percent of circuit boards are produced in the U.S.—a 30 percent drop in the last decade—and more than 80 percent are now made in Asia.
GAMING INDUSTRY GROWTH
According to industry researcher ReportLink, the global casino and gaming sector grew by 7.5 percent in 2010 to almost $382 billion. Its best estimate is that by 2015, the sector will have a value of $513 billion, an increase of 34.3 percent.
In the U.S., ReportLink says the casino and gaming industry generated almost $89 billion in 2010, with yearly growth of almost 1 percent in the four preceding years. However, the group expects market growth to jump to a yearly rate of 5 percent to exceed $111 billion in 2015.
Thul says the biggest demand in casinos is for slot machines, and the gaming industry is constantly designing new machines that make more sounds, have more electronics and draw in more gamblers than ever before.
“We make daily deliveries from Phoenix and Mexico to our operations in Las Vegas because the casinos are always changing out the machines and wanting new features,” Thul says. “It’s almost non-stop.”
While there are almost 200,000 slot machines in operation in Las Vegas, the number of casinos on American Indian reservations and those being built in typical U.S. cities is growing each year. In fact, the American Gaming Association says there are more than 830,000 slot machines in use across the U.S., and their share of the casino floor has grown from 40 percent in the 1970s to about 70 percent today. Now that many horse racing tracks are able to add slot machines, this number will likely continue to grow.
“Nearly 60 percent of gamblers consider slot machines the most entertaining games available at casinos,” Frank Fahrenkopf Jr., president and CEO of the American Gaming Association, says in an industry report. “The popularity of slot machines has helped drive the expansion of commercial gaming—a vibrant industry that contributes jobs, economic development and tax revenues to hundreds of communities across the country.”
Thul and APSM know that all too well, but they also realize that the gaming industry will seek the best costs on equipment. That means maintaining an efficient manufacturing operation, value-added services like circuit board making, and first-class finishing operations like paint and powder coating.
“There’s a risk in everything that you do,” Thul says. “But we know what we do is very unique, and we do it well, so in the end it’s a big payoff.”