Background

Embodying the American dream

06/01/2001

The Fadal family business is the perfect manifestation of the entrepreneurial spirit: vision + ambition = success.

When Dave de Caussin took a trip to IMTS in 1974 to show off Fadal's new tool-changer, he had no idea that in five short years the company would be revolutionizing the machining-center market with its VMC45. Looking back, he said the trip was a pivotal event for the California machine tool builder. But, at the time, things didn't go all that smoothly.

 
"We put the milling machine with the toolchanger in the back of a rental truck, which had a top speed of 55 mph. Leaving from California, my wife and I made it to Bickerville, Calif., filled the truck's 25-gallon tank, giving us a traveling range of about 90 miles. We ran out of gas about 40 miles out-side of Las Vegas at 5 am. While sitting alongside the road, freezing, a guy comes by in an off-roading jeep. He drives me to a Stucky's to get five gallons of gas and I paid him and tossed in a fifth of scotch. When we finally got to Chicago, it was at 5:30 pm and the height of rush hour traffic. As if that wasn't enough, I made a turn onto a street with an 8-ft bridge that the truck wouldn't fit under. My wife is in tears at this point, and it took me an hour to back the truck up. But we did finally make it to the show, and we met a lot of important people."

This story is just one example of the many ups and downs Fadal has experienced throughout its 40-year history. But the founding family members --Francis, Adrian, Dave, and Larry de Caussin -- attribute their company's success to constantly staying on the cutting edge of machine tool technology. As Larry de Caussin says, "We started in pioneering times, and pioneers take some arrows."

The foundation of what would become Fadal got its start in 1955 by Francis de Caussin, who was a toolmaker trained in the automotive industry with a dream to own his own machine shop. He purchased some equipment on time payments and his sons Larry and Dave, still in school and living at home, worked with him at the garage operation. The brothers learned a basic but important lesson in those early shop years. They realized that the faster they could remove metal, the more money they could make.

In order to keep the chips and the money flowing, the family made a lot of modifications to the machines they used to cut metal. Francis added a riser block to a small mill so that they could do bigger jobs. Larry added a temporary second motor to a main spindle of a lathe, and Dave made the handles longer so they could push harder. The family says this motivation to make better and faster machines was the beginning of a trend that would carry Fadal to prominence in the machine tool industry.

In 1961, after all the part-time experience in the garage shop, the family decided to work full time for themselves. They needed a little capital to get started and everyone turned to Larry for funding.

Dave says, "Larry was always the penny-pincher. He saved all his money. He had $2,500 in the bank. And his $2,500 financed a multi-million dollar company."

They rented an 800 ft ² industrial unit in N. Hollywood, Calif., and bought a Siamp metal cutting lathe on Francis' good credit. Then in 1965 the shop fell on hard times when one of its largest customers, Summers Gyroscope, went into chapter 11 owing Fadal $17,000. But the shop soon recovered and started doing a lot of contracts for the "space race," including work for the Surveyor, Voyager, various satellites, aircraft landing gear, and eventually the space shuttle fuel systems.

But business really picked up for Fadal in 1969. That was the year they bought their first NC machine for $25,000 -- a Bridgeport mill with a Superior Electric control and a Spindle Wizard third axis. The machine did not, however, have an automatic toolchanger, and all the tools had to be changed using a wrench. Fadal, in accordance with their desire to do everything as quickly as possible, started designing better methods for changing tools on the new machine.

They started out designing a power draw bar and then began brainstorming on how to automate the entire toolchanging process. An aftermarket toolchanger, they believed, would be quite valuable to small machine tool builders and their customers. So Fadal set out with a new goal for the mass market -- manufacture an affordable toolchanger that could be attached to a mill.

Dave became consumed with the design and manufacture of a prototype, while Adrian designed the electrical work on the system. Due in part to Fadal's booth at IMTS in 1974, the toolchanger was a wild success. So successful, in fact, that there was a shortage of toolchangers to sell.

"The problem we had with the toolchanger is that we over marketed and then couldn't meet the demand," says Dave. "Be-cause of that, the guy in England that we were marketing too, Matchmaker, copied our toolchanger. They apologized for doing it, but did it because we couldn't deliver to them."

That toolchanger also caught the eye of a company out of Bozeman, Montana, Summit Engineering, a division of Dana Corp. That firm offered to buy the toolchanger design and patents so they could package it with an inexpensive control. Summit paid Fadal $75,000 for the toolchanger, which was renamed the Bandit Quick Draw. Summit also gave Fadal the rights to manufacture the mechanical assemblies for the changer. That $75,000, plus the profits from manufacturing over 2,000 mechanical assemblies, made it possible for Fadal to start their biggest project ever -- the design of a complete CNC machining center.

Larry tells the story of what inspired the family to build their first machine.

"Being machinists and having some experience with controls, we realized there was a lot of fat in the Japanese equipment that was selling for up around $160,000. Our first machine was a geared head 45 taper, with a 4-speed gearbox. It was a high-end machine we were selling for $110,000. But in 1980, right when we came out with our first model, the Japanese dropped the prices on their $160,000 machines down to $90,000.

To counter this, Fadal decided to pursue a simpler design to appeal to a broader market. Dave sold Fadal's first redesigned machine to Columbia Machine, which was where Francis, Dave, and Larry had all worked before starting Fadal. As much of an accomplishment as that was, confidence was not always high. "We used to say, 'We'll have a nice auction someday when we go bankrupt,'" says Dave.

However, people loved the speed and the price of the simpler system, and each year the company sold more and more machines. By the 80s and 90s, Fadal's manufacturing plant was at peak efficiency -- building 10 machining centers per employee each year. By 1995, Fadal had sold 10,000 machining centers.

With success came a lot of important decisions, one of which was changing the machine's control. The company was being pressured to use a different control on the machine. Dave says the family decided against it to keep cost down.

"We stayed with our control because we could see that the competition, especially the American industry, had made a mistake by catering to special requests. They had too many special orders. 'I want my machine pink, I want it with this control, and I want it with this and that.' So you ended up not having a production line. We refused to do that."

Larry adds, "In addition, custom machines are a nightmare for service. Other builder's servicemen would have to go out and review the situation before they could fix the machine. With our machine, the servicemen were able to go out ready to do the job, get it done, and then get out of there."

This was the kind of common-sense customer service that helped drive Fadal to the top of its industry. And that success caught the attention of Giddings & Lewis when it came time for Fadal to sell its family business to the corporate giant. But selling the company was not an easy decision. Originally the brothers had planned on passing it down to the next generation of de Caussins, but there were some problems.

Fadal's cash was tied up in property, equipment, inventory, and accounts receivable, and the company was going to have to dip into profits to pay the 55% gift tax. That was an issue because profits were also being taxed 50%. Financial advisors told the brothers that $1 earned was going to be about $.25 cents in pocket once the transfer was complete.

So, fearing the company's demise in a forced "fire sale" if the succession was unsuccessful, Larry and Dave decided it was best to sell the business outright. Fadal sold to G&L in April of 1995, and the brothers are pleased with the new ownership.