The Value of a Niche Market CNC Machine Shop

CNC Shop’s marketing approaches tend to revolve around three things: quality, price, or speed. What about the value of a niche market CNC Machine shop? Competing on price is one of the toughest markets because it’s the easiest one to enter. 

To save costs quality may have to suffer, and for a professional machinist, that is typically not an easy choice to make. A garage shop with no overhead or a fully automated operation can compete on the same proposal, and the winning price is often determined by who needs the business more. 

Further, CNC machining offers functionality through intelligent systems to shave production time down. But everyone has access to it. Only measures like lean manufacturing will give you an edge when competing for speed of production. 

On the other end of the spectrum producing high-quality parts is every machinist’s dream, but quality takes time and those clients will start to demand faster delivery and lower prices, too. There is competition in every market, but a niche offers a better chance at providing what you do best for the best profit.

Aside from the obvious competition, let’s review some strategic benefits of niche marketing, and then look at a few theories for developing your niche.

Overhead – You may focus on only one or two raw materials in your niche or work on only one type of machine. This reduces the inventory of raw materials, cutting tools, and replacement parts. The investment in machinery may also be considerably less meaning you don’t carry as much debt drawing on your profits.

Production – Production planning without a high degree of variables on different machines and processes streamlines operations. This provides client satisfaction with consistent lead times and minimizes conflicts on the floor.

Labour – Running similar parts means less diversification is required in employee skill sets. Niche markets often rework the same type of part with adjustments to the size, finish, or small details for a variety of clients. Operators need only be trained on one machine with minor variables in their work.

Marketing and Sales – Working in a niche makes marketing and sales simpler. Your focus may be local or global, but you are only selling to clients in a particular market. Sales efforts will be based on establishing relationships with supply partners, referral partners, and clients in the space.

Now that niche markets are looking attractive to your bottom line, here is a review of some ideas to capitalize on your expertise to find your niche and do it better than anyone else.

Define Your Industry – Take a look at what you do well. Review the services and parts you provide. Stay within one industry to provide focus and expertise in that one area.

Geography – Do some research and check out the competition in your area. Perhaps you have the only 5-axis capability, or a large warehouse to offer storage. A niche can be as simple as the only local choice for raw material, machine capability, or level of quality.

Alternative markets – Aerospace and medical are big markets in CNC machining but that makes them crowded and competitive, and, perhaps, even too big of a market for you to service. Think outside the box. Make parts for farmers, or big machines like printing presses. Can you customize parts for police cars or taxi cabs, or make parts for movie sets? Look for the underserved market and make that your specialty.

New Markets – Explore new markets also. The emerging focus on electric cars, solar panels, and alternative energy may provide a place where you can offer replacement parts, or service manufacturers directly. Look at the future of both machining and other industries to see what trends you could capitalize on now and ride into the future with ease.

Machine Capability – With a review of competition, can you process large parts or extremely small parts others can’t? If you are setting up a new shop this preliminary research could determine the equipment you buy. Or do you have skill in processing a particularly difficult material with consistency? With newer equipment, you can also niche into complex shapes that competition can’t easily provide.

When looking at the value of a niche market CNC shop, always start with your area of excellence. You want to have the right equipment for the job. When you can provide consistent quality and become the expert this benefits your client. Keeping a client service and industry-specific focus on your niche will dictate the success of your machine shop. Once a primary market is established you can look at secondary processing that is complementary to continue to grow your business.