CEO Mike Abdella sees automation as a must-have for customers struggling with the labor market.
With a background in manufacturing automation for the automotive industry, Abdella co-founded Adaptive Innovations Corp. with COO Scott Robinson and another partner with a focus on automated testing equipment.
“I designed a lot of different automation cells and lines in Germany when I lived there, then launched a relatively big robotic weld line for a Tier 1 company that I worked for named Benteler that was a just-in-time facility [in Alabama] for Mercedes,” he says.
Abdella pushed Adaptive Innovations into automation projects soon after its founding. The company also builds control panels and test equipment for the aerospace industry, but automation now represents about 80 percent of sales.
“We consider ourselves industry-agnostic,” says Abdella. “Instead of focusing on an industry, we try to focus on the types of innovation we’re good at.”
A FANUC Authorized System Integrator and Silver OEM Partner of Rockwell Automation, Adaptive Innovations rarely gets reorders for the same machine, he adds. “We do a lot of single-piece flow type of automation, minimizing variability, then really looking upstream and downstream. I think there’s value in doing that.”
The rationalization for automation has changed over the course of Adaptive Innovations’ 20-year existence. “Initially, it was all labor offset, almost 100 percent,” Abdella notes. “They’re analyzing make versus buy, for example: Do I buy it in China or do I make it here and control my own destiny?”
As of 2022, demand for automation, reframed by a labor shortage, has emerged as a necessity for many clients, he continues. “Especially post-pandemic, factories can’t get people. Nobody’s aspiring to be a blue-collar laborer. Even though they might be decent-paying jobs and good work, it doesn’t matter what industry, it doesn’t matter what town or what plant I go to — and I go to a lot of plants — they just can’t get people.”
Such customers are often looking at “low-hanging fruit” of palletization and case-filling to reduce their labor needs, says Abdella. “They’re trying to take the people they have and reallocate them to jobs that can’t be automated.”
albeAdaptive Innovations has also delivered numerous cutting-edge systems as well. “We’ve deployed systems that use deep-learning vision inspection,” says Abdella. “Essentially, you teach the vision system what a defect is. The best analogy is you can teach a child what a house is, and even though not all houses look the same, they can still tell you if it’s a house or not. . . . The more you teach it, the better it gets.”
From its 23,000-square-foot facility west of Denver in Lakewood, Adaptive Innovations serves customers all over North America. “We deliver machines to Canada, Mexico, and the U.S.,” says Abdella. “Mexico’s ramping up. We’ve got several machines down there and I’ve got two or three more projects quoted that would be a pretty big chunk of our sales.”
Adaptive Innovations’ key differentiators are quality and performance, says Abdella. “We’ve never had a machine that we delivered that didn’t meet all the requirements,” he notes. “When I go out to factories, a lot of times I’m looking at equipment other people have integrated that doesn’t work or meet the requirements.”
He adds, “We really analyze the process as well. We’re not just looking at the very specific process that they want to automate, but a lot of times we’re looking at what happens upstream, what happens downstream, why you’re touching again without adding value, looking at Lean manufacturing and really taking that to heart and bringing that to life for our customers.”
Testing equipment is still a pillar of the business. “We do a lot of environmental test equipment, so that’s thermal cycling and vibration,” says Abdella. “100 percent of any electronics that go into any commercial airline have to go through shake and bake, they have to go through environmental testing. It’s a pretty big bottleneck in the manufacturing process. Each test is three to five hours, and they can only get so many units in a chamber.”
Adaptive Innovations “came out with a niche way of handling it and reducing chamber downtime, improving changeover, and getting more dense populations in the chambers,” he continues. “We do the design and build and the install, and they run the test at the end of their line.”
Adaptive Innovations has seen “relatively flat” growth in recent years,” says Abdella. “We had some really nice medical projects that carried us through the pandemic. We got some decent business last year that kept us right where we were at, and then this year hasn’t been largely different from last year.”
Projects have moved along slower than usual in recent years, but the size of the jobs in the pipeline could make for significant growth. “You win one of those, your sales look a lot better. You win two or three of those and you’re like, ‘Holy crap, we can’t even get it all done.’ I don’t need to win 50 projects for us to grow — I need to win three or four more than the year before.”
Abdella’s 2023 forecast? “We’re playing our cards conservatively, but we expect we’ll see some growth in the next year,” he says. “I think we’ve got a lot of things in place right now and we’re really poised for a big future.”
Challenges: “Closing the deals is the hardest part,” says Abdella. “When I was in the automotive industry, it was not a matter of if we’re going to automate. It was: Who is going to automate this before us?”
But most industries are more reluctant to automate. “We see a lot of projects being kicked down the road, and it’s a huge sales effort to try to reel those in,” he adds. “Especially being in Colorado, there’s a lot of different industries out here, and a lot of them haven’t automated. We’re not in the Rust Belt where it’s been so heavily automated.”
Opportunities: “Growing with our customers,” says Abdella. “We’re in it for the long haul. We’re not really looking to make our money on one machine, but more on a partnership where we build equipment together to support their business.”
He adds, “For a lot of our customers, we’re seeing the project size and the number of projects growing.”
There’s potential for “a more standard product or a more standard platform for automation. One, shorten time to market, and two, reduce engineering costs.”
Abdella also sees increased demand from the aerospace industry for test equipment after several down years. “I’m getting tons of requests for this type of equipment,” he says.
And the company is also pursuing UL 508A certification to boost its panel shop. “We do all of our own panels in-house, but we’ve only done a handful of panels that were sourced externally,” says Abdella, targeting mid-2023 for an audit. “I think [UL 508A certification] could open some doors for us to get more. We design to that standard already, but we’re not third-party certified to stamp a panel UL.”
Needs: Adaptive Innovations lost about a half-dozen employees as part of the so-called Great Resignation in early 2022. “In reality, where we probably want to be is about five to six more people than we are,” says Abdella. “We’re going to rehire as demand ramps back up.”