Automation, Machining, and a Coal Mine: What Vertical Integration Buys You | Ep. 51

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Most automation conversations stop at the cell. This one keeps going, through a fab shop, a machine shop, a Department of Defense contract, and eventually a coal mine.

Michael McHale runs PSA Systems, an automation integrator in Pennsylvania that also fabricates, machines, and delivers turnkey projects in house. He bought the business in 2016 with four employees and about $900,000 in revenue. Today it’s 100 people, 65 engineers, and over $30 million, split across five verticals that all feed each other. That structure is the whole point of this episode. When PSA chases something that looks like a distraction, like reclaiming and selling coal, it works because they already own every capability that business would otherwise have to outsource.

We also get into the part almost nobody wants to talk about, which is time. Mike runs on a five year plan and makes capital commitments for 2029 and 2030. He bought an $800,000 five axis mill that was closer to a million by the time it was wired and sitting on concrete, and he committed to it six or seven months before he had work to put in it. He’s six figures into an IBM Watson rollout that he openly says won’t show real value for another three to five years. His point is to stop treating technology like a series of purchases and start treating it like a position on where the business is going.

There’s a practical thread for smaller shops too. Mike doesn’t think a 15 or 20 person shop needs an enterprise AI rollout, and he says so. But if you’re holding controlled information or working in regulated industries, he walks through why the guardrails matter, what goes wrong when drawings end up in a public model, and why the CMMC picture is so confusing right now.

Then it gets personal. Broke, rich, double broke, way richer than the first time. We asked how you stay level headed on that ride, and his answer came back to people instead of EBITDA. Can your employees buy a house? Can they send their kids to college? That’s the scorecard.

What’s Covered in this Episode

• (0:00) Broke, rich, double broke: the roller coaster of running an industrial business
• (0:41) Meet Michael McHale of PSA Systems, and what’s driving automation demand in 2026
• (0:41) Where the robots take our jobs argument breaks down, and why skilled headcount grows
• (0:41) Running an automation integrator and a machine shop under one roof, and the retirements pushing work to both
• (7:48) The capital arms race: a million dollars into a five axis mill before it makes a dollar
• (8:56) Hennig
• (10:08) Retrofitting the machines you already have instead of waiting on new iron
• (10:27) Tolerance and quality demands are separating who can serve which customers
• (11:35) Chasing EBITDA now versus building for 2030, and running on a five year plan
• (13:54) Automation assessments: pricing one project versus walking the whole plant
• (14:31) Why the US C-suite wants a two year ROI, and how Europe and Japan think about it
• (17:26) Navu
• (18:42) What actually triggered the IBM Watson rollout, starting with project management
• (20:52) From a static agent to an active one, and moving documentation into Jira
• (24:52) A six figure AI bet that pays off in 36 to 60 months, not 12
• (26:26) Hire MFG Leaders
• (27:54) DIY AI with Claude or Grok versus an enterprise rollout with guardrails
• (27:54) Why a DoD contractor holding customer IP can’t put drawings in a public model
• (31:38) CMMC confusion, the pause, and what smaller regulated shops have to weigh
• (32:51) From four employees and $900K in 2016 to 100 employees and over $30 million
• (35:16) Why PSA built verticals when most integrators still haven’t
• (38:33) Buying a coal mine, and why it fits a vertically integrated industrial
• (40:06) CLA
• (43:28) Hitting the accelerator at the bottom of the dip instead of coasting
• (46:20) The real scorecard: can your people buy a home and send their kids to college

Resources Mentioned

• PSA Systems
• Hennig WorkFlow
• Navu
• Hire MFG Leaders
• CLA
• IBM watson
• Fastems
• Slytek

Connect with Michael McHale

• Michael McHale on LinkedIn
• PSA Systems on LinkedIn
• PSA Systems