136. Building a Precision Business, Not Just a Precision Shop with M3 Aerospace

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Plenty of shops machine parts to a tenth and then run the business on guesswork. Sebastian Montalvo is building M3 Aerospace the other way, with the same precision behind the desk as on the floor, and three years in, that’s exactly why they’re growing as fast as they are.

I’ll be honest, this one got to me. He’s running a shop that behaves like it’s been around for twenty years with a hundred people on the floor, and there are thirteen of them. Every step of the workflow went up on a whiteboard with one question attached to it: where can this go wrong, and what do we put in place so it doesn’t? People told him he was exaggerating. He kept going anyway.

We got into the practical side of it too. How he used Xometry to buy himself immediate demand while he learned the market, then deliberately diversified off it. Why he made compliance the North Star instead of an afterthought, and what it took to earn AS9100, ISO, ITAR, and CMMC without hiring a consultant to do it for him. How he’s hiring in a city most people overlook, and why paying above the local average is a strategy and not a cost.

The cash flow conversation is worth the listen on its own. He’s turned down large RFQs, not because the shop couldn’t make the parts, but because he couldn’t float a bill of materials that size and then wait months to get paid. If you’ve ever had to say no to work you were fully capable of doing, you already know how that feels.

And then there’s the part I didn’t expect. His mom opens the door to every new unit they take on. His dad is there at five in the morning, after three years without a day off. When I asked Sebastian what keeps him going, he didn’t say revenue or contracts. He said his parents. I’ve talked to a lot of shop owners on this show. This one I’ll be thinking about for a while.

What’s Covered in this Episode

• (0:00) Sebastian on tracking the reshoring shift and getting certified before the demand arrived
• (1:03) Why this conversation with Sebastian Montalvo of M3 Aerospace has me choked up
• (3:09) Going all in with his father while starting a part time MBA at Berkeley
• (5:17) Two CNCs under a tent to 10,000 square feet, 15 machines, and AS9100, ISO, ITAR, and CMMC
• (5:49) Immigrating from Ciudad Juarez at 10, and a father who ran side businesses after teaching all day
• (8:16) Grow your top and bottom line with CliftonLarsonAllen (CLA)
• (9:07) Why he never claims to be a machinist, and who gives a brand new shop work
• (10:15) Buying immediate demand through Xometry, then deliberately diversifying off it
• (12:53) Why aerospace and defense (and making compliance the North Star from day one)
• (14:27) Earning AS9100 and ISO without a consultant and mapping every workflow risk on a whiteboard
• (18:00) Why running the business deserves the same precision as running the parts
• (19:24) Why you need to talk to Verdant Commercial Capital to finance your equipment
• (21:48) The banks that said no, and the $90,000 job that tied up machines for eight weeks
• (23:08) Growing the team: maquiladora experience, trade schools, and paying above the local average
• (27:42) UTEP, the technical colleges, and the 250 acre advanced manufacturing district breaking ground
• (32:56) Getting a cage code, bidding through DLA, and the city consultants who scrape opportunities for free
• (38:35) Navu: Get reliable and accurate answers in real time
• (39:47) Set aside invitations from primes (and the first bid he and his dad built over Christmas)
• (42:04) Why cash flow, not capability, caps growth, and what supplier net terms changed
• (45:37) How Sebastian learned estimating and pricing for profitability
• (48:40) Moving his desk onto the shop floor and telling the team why he wants the data
• (51:13) Machine sensors, the spindle time gap, and discovering what packaging actually costs
• (55:47) Sebastian’s most memorable experience building M3 with his parents
• (59:44) The real story behind the name M3 Aerospace

Resources Mentioned

• CLA
• Verdant Commercial Capital
• Navu
• Xometry
• SAM.gov
• Precision Manufacturing, Precision Business by Paul Van Metre

Connect with Sebastian Montalvo

• M3 Aerospace
• Sebastian Montalvo on X
• Sebastian Montalvo on LinkedIn
• sebastian@m3-aerospace.com