140. Buying a Machine Shop: Due Diligence, Systems, and the First Four Years with Fairchild Parts

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Buying a machine shop looks simple on a spreadsheet. Leland Licciardi and Kirsten Failing share what it looks like once you own it. They took over a shop founded in 1944 four years ago, and I wanted to walk through how they got there: the two years of deciding, the due diligence, the SBA loans and seller financing, and what they’d do differently if they bought another one.

The first four years were about systems. They rebuilt the QMS, moved to a new ERP, fixed scheduling, and built accountability around the metrics. The results are real numbers. First pass yield went from about 85% to 96%, on-time delivery has been around 97% for the last three months, and their rejection rate is 0.05%. Kirsten explains the change that got them there, moving in-process inspection onto the operators and turning QA into roaming auditors, and why the shop pushed back before it worked.

We also talk about earning trust from a veteran team that knew more about machining than the new owners did. Small fixes came first, then whole processes, then the ERP. They credit rolling out ProShop with pulling the floor and the office into one company, and with getting knowledge out of people’s heads. After thousands of customers over 80 years, they also explain how they narrowed in on a niche.

And there’s the side of ownership nobody puts in the forecast: a fire sprinkler line that burst in January, an ERP reporting failure on the morning of their first AS9100 audit, and projections that were, in their words, optimistic. If you’re thinking about buying a shop, their advice is to learn the industry first, be honest about your risk tolerance, and remember you’re a manager too. It lines up closely with what I wrote in Precision Manufacturing, Precision Business.

What’s Covered in this Episode

• (0:00) Hear Leland and Kirsten’s story and learn what Fairchild Precision Parts does
• (4:53) From Lockheed Martin and consulting to buying a shop and moving to Connecticut
• (8:15) Hennig Workflow: automated pallet delivery for more spindle uptime without adding headcount
• (9:06) Shop size today: about 20 people, seven Swiss machines, and two recent Citizen additions
• (10:11) Kirsten’s path from industrial engineering to consulting, and wanting to own the impact
• (14:50) CLA: helping manufacturers grow revenue and cut costs
• (16:00) Leland’s college job at the shop, and finding his old KPIs during due diligence
• (17:28) Due diligence: LOI, SBA loans, seller financing, and what they’d do differently
• (22:39) The first six months on the floor, and a customer base that was 75 to 80% recurring
• (26:53) Working together as a couple and building credibility with a veteran team
• (28:42) Kennametal: tooling built for the real demands of the shop floor
• (29:30) Defining the niche: aerospace, defense, and industrial Swiss and turned parts
• (31:52) Earning trust through small fixes, owning the QMS, and the AS9100 push
• (36:28) How ProShop gave the floor the information to make decisions without the office
• (38:47) Current challenges: finishing the ERP move, accountability, and OEE
• (43:48) Navu: AI chat for your website, trained on your own content
• (45:00) The fire sprinkler pipe that burst over the warehouse in January
• (49:30) The morning of the first AS9100 audit when custom ERP reporting broke
• (50:15) Biggest win: moving in-process inspection to operators and lifting first pass yield
• (55:17) Advice for would-be buyers: learn the industry, accept risk, and manage people
• (59:27) Forecasts vs. reality, and why the first four years were about foundation building

Resources Mentioned

• Hennig Workflow
• CLA
• Kennametal
• Navu
• ProShop ERP
• Precision Manufacturing, Precision Business by Paul Van Metre

Connect with Leland and Kirsten

• Fairchild Precision Parts
• Leland on LinkedIn
• Kirsten on LinkedIn