Cracking the Code: Identifying Challenges and Solutions in the CAD/CAM Industry

On March 31, 2008, at the WESTEC show in Los Angeles, CA, Aerospace Manufacturing and Design's Editorial Director/Associate Publisher Tom Grasson held a CAD/CAM Roundtable with industry leaders. The discussion was intense, with varying opinions on how best to identify challenges and solutions within the software market. Sponsored by GBI Cincinnati, the Roundtable brought forth numerous personalities and ideas that form the CAD/CAM industry as it is seen today.

AMD: How has the CAD/CAM industry changed over the past five years?

Bill Gibbs: On the CAM side, we view the market as maturing in classic marketing senses. There are trends of consolidation going on, products are more capable, and fewer purchase decisions are made on whether or not products have discreet feature capabilities. There are so many features in a CAM product today that it's virtually impossible for a prospect to literally become expert in the systems he's deciding between, so the decisions are more and more being made by other factors: recommendations, referrals, branding, or marketing. The reason consolidation occurs in a maturing market is that larger companies find themselves more capable of competing. If you're not already as big as, for example, CNC Software, you begin to get nervous about what size is going to be survivable, what size is going to be able to provide stability and future profitability, which provides stability for your employees, your customers, and your resellers. I had the opportunity to face this consolidation option very personal ly, and it made a lot of sense to become part of a larger organization, driven by changes in the CAD/CAM market over the last five years.

Greg Milliken: There have been some established forces - vendors and technologies - that have been very hard to overcome. And as a result, the industry has become somewhat stagnant, we believe. We relate it to the approaches that the businesses take to the industry, and how they're structured. We see that the CAD industry is in the mainframe stage. If you think of the days when the mainframes and minicomputers were available, the company owned them, and they were expensive, they were accessible by a relatively small number of people, and this elite group had access to this technology. Today, CAD is still owned that way. The company owns it, controls it, there's a small number of people in the company who use it relative to the large body of potential users, and those walls have kept the industry stagnant and has not advanced. And we want to see some changes there.

WESTEC Roundtable participants engage in conversation prior to the event.

Vynce Paradise: To differentiate between CAD and CAM, I think there's been perhaps more change in the CAD industry in terms of technology, particularly in advances in modeling technology, some of which really changed the industry in the early '90s, and I don't think we've really seen that in CAM. I think CAM technology, the concepts behind CAM, and the way we go from geometry definition to the CNC controller is very much the same, is very stagnant, as a concept and as a process, and that hasn't changed.

Raf Lobato: Is that the customers' wish that the business model hasn't changed, or is that the suppliers', i.e. us? Because I know that whenever we've considered changes in this area, really we've felt very, very uncomfortable that our customers don't want to change. They want their little bit of ownership. Engineers are not on the forefront of business dynamics, and therefore, our products have to fit in with their demands. Do you think that's fair?

Suchit Jain: It also depends on the size of the company you're dealing with. A sevenman machine shop company is actually much further ahead, whereas, a larger company has the issues of more departments, a compartmentalized sort of situation; smaller guys are more ready to move on. On their side they face a worse problem, where they don't want to spend the implementation time. They want the benefits of it, yet they don't want to spend the time implementing it. The smaller guys are moving faster on the CAD side of things and the technology and tools, but yet when it comes to implementation of PDM type of things, they don't like to do that. At Solid-Works, we feel that customers never tell you directly. A lot of times you have to just sort of be in their shoes and understand a lot of the things. As companies, we go and look at these customers, understand their pinpoints, and then we may come up with solutions to that.

David Schultz: As far as users being resistant to change, a CAM system inherently has that problem, because you have an installed customer base that is used to using a product a certain way. When you introduce change to your existing customer base, you often get resistance because there's a learning curve that has evolved in learning these new technologies. A CAM system is something that companies invest in over a long period of time through personnel training, actual cost of the CAM system, and so forth. So when you come and say, ‘OK here's a brand new version of it,' that's completely different than what you had before, customers don't like that. We're kind of in a mode where we have to take care of our existing clients as well as look for new markets.

AMD: What's the most important isue you see facing the CAD/CAM industry today?

Chuck Mathews: The key issue in the CAM business has nothing to do with product at all right now. The key issue is about critical mass. We're at a stage where the companies that want to survive in the industry need to obtain a certain size. This is due to the fact that the markets have gone international. It used to be that you could have 80% to 90% of your business in the United States, and you're happy and you're making money. Today, you need to have 60% to 70% of your business international if you want to survive. The internationalization of the business, especially with the emerging markets of China, Brazil and India, is what's affecting the CAM business. That's the number one driver in the business. One of the strategies against that driver is the consolidation effect that you're seeing. Companies are either acquiring or being acquired in order to obtain that size that you need in order to sustain the business over a medium term. This is why you're going to see more consolidation in the future.

Gene Granata: As a CAD/CAM company trying to sell software into a user base, you're going to find that the market's already saturated. Everybody's got one or more CAD/CAM system already. So if you're going to try to get a foothold in the business, you're either going to have to outperform or displace an existing product that's in there. So that's a very competitive position to be in. It seems that everywhere you go, somebody's already been told something is going to work and it's failed, and they say, ‘You guys need to prove to me that you can deal with my data on my terms in my environment and it's all going to be for me.' That's a very costly effect for a company to try to deal with that sort of attitude from a customer. You end up doing a lot of highly customized work, but that's also a good thing because you get to learn your customer very quickly. You learn what it is that they need to do, what their unique problems are. It makes it a much faster avenue to come up with unique solutions for them internally, for a company like CG Tech, the secondary problem is that it's really hard to find qualified people to do the kind of work that we do. There are not a lot of people coming out of the educational system with the sort of background that we need. There's a much smaller pool of personnel to draw from.

Larry Pendleton: I have more of a unique user base; I generally deal more so with the job shops. I agree that the overlap of technology is there, but there is a saturation point, and we're all dealing with the same kind of problem. It's really the international thing that's going to change everything. If we're able to cross the line and expand our market internationally, then we'll all do that. Localization, for me, is one of my biggest hurdles I have to deal with daily to keep on top of the market. For us to grow in the CAD/CAM industry, the real expansion will be if we can expand internationally and tie that together as manufacturing does.

Mathews: The problem in the CAD/CAM industry for all of us, and even extending it to the high-tech industry, is the workforce. I can't find skilled people. I have more jobs available than I have qualified people to perform the jobs. And what's happened, as a demonstration of that, is that five years ago, 100% of my research and development was done in the United States. And I'm sure like many of you U.S.-based companies now, I've got 40% of my development being done outside of the United States because I can't hire the people inside the United States. It's a failure in the education system and it's a failure in the immigration strategies that the government has taken. I can't bring the qualified candidates in - they'd love to live here and work here - but I can't bring them in. I've got to hire them in a foreign country and put hem to work there, which is fine with me, but it's not good for the U.S. economy.

Vynce Paradise shares his views on the CAD/CAM industry.

Lobato: Going into the international perspective of that, we have exactly the same thing in the UK, except that when the EU opened its doors, we were allowed to bring in a lot more foreign people from what would traditionally be central European and Eastern European countries. And that problem for us has alleviated, although we do have development offices elsewhere in the world. But it's very interesting that you commented on the American immigration policy, because we did have those problems, and through the EU, that was alleviated some.

Brian Summers: For us, I think, it's a little different. We have people almost exclusively from the United States. We actually haven't outsourced anything overseas. Few of the developers we have are from around the States, they aren't necessarily right at our home base, but some of that may have to do with the talent pool we have to choose from. We have a number of high-tech companies right in our back yard and some universities close by. We might be fortunate in that realm. We hire mostly from locally.

AMD: What do you see as the solution?

Mathews: Changing the immigration policy, because inside the United States, if I could find one valid candidate amongst doing an extensive search, I'm lucky, and that's not enough. The combination I need is just not being trained for. I need science and engineering combined together into at least a masters level of degree, and it doesn't really exist here.

Tom Grasson listens as Bill Gibbs explains the difficulty of finding skilled workers with the United States' current immigration policies and education systems.

Gibbs: I have had several opportunities to attend programs put on by master's degree manufacturing programs at various places in the country. When you see these programs, and they bring in their class, there are no Americans in the class. Our immigration is totally out of whack with our education. We bring in these people, teach them all they need to know, give them the best education and send them home. It's very generous of us. It's not helping our country.

Glenn McMinn: We're not allowed to hire them. At Delcam, we are fortunate enough to have development offices around the world. We are in a better position to deal with that. But, in our U.S. development needs, it doesn't make it easy.

AMD: It's been said that customers don't fully understand the capabilities of the system they have purchased. Do you see this as a major problem, and if so, what is being done to improve the situation?

Jain: A lot of the CAD systems are very mature, which means they are very feature rich. A guy who's been using our software for about seven years can find out about 10 different things during five or six hours of observational visits. With that said, I think a lot of software companies can do a whole lot to make it easier, defining ease-of-use. How to solve the problem, I think the software has to meet the habits of the user and then present itself in a smarter way, with the right options.

Lobato: A major customer of ours had to produce a component within a couple of weeks, and was told that he couldn't do it with Edge- CAM. So, they sub-contracted it out and the guy says he's absolutely capable of doing it, and they'll have it done and they'll have the part back. The first question I had to find an answer to was what system was the subcontractor using? He was also using EdgeCam. The difference was that he had bought it recently and was using it with all the modern techniques, and modern cycles. The original customer was using his in the same way he was 10 years ago. So he paid for all the maintenance and developments and improvements to the software, but had not utilized any of the benefits. How do you overcome these things? Upgrade training, user date, and user meetings. The reality is the customer must invest in not only the maintenance updates, but also in technology that's provided in the updates. And, the user has to want to change.

Milliken: Software vendors have to drive revenue with repeatable upgrades and new versions. Sometimes, it's the things that are appealing to market that are driving the visibility and the things that make the product easier to use. There's only so much anybody is going to use. It's too easy to get sucked into the competitive battles; it happens in every industry. Suddenly, the money is going into things that appeal to less and less people, making it more complicated for the very people who are the broad users.

Paradise: People only need to use a certain range of the functionality. The everyday user is never going to use all the functions. We all have systems today that have expanded with a wide range of capabilities that someone may need to use to change a particular setting or machining strategy. We invested a lot in the last five years and continue to do so in terms of ease-of-use, making those everyday functions more accessible through wizards, through changing menu structures, reconciling the menu structures, so the functions people use consistently on a day-to-day basis are at hand, and the other switches that are available are not even seen by them, they're hidden in the software, only available to the expert user under an expert mode. Training is also a major issue; no one can afford the time or the cost of classical training courses. The only other alternative is to provide more online training.

David Schultz discusses issues with changing or updating CAM systems.

McMinn: In regards to the idea that the customers don't understand the capabilities of the system, I'm still constantly amazed at all the different creative ways that people are using all of the various tools that we have. I don't think there's any customer of ours that has not benefitted from going to a training class and knowing what's current in there. We have four different CAM systems under the Delcam umbrella, and we have more challenges in understanding the various solutions that we have through the consolidation. But I don't think we have much of a problem with people not understanding the various capabilities that we have.

Summers: We've seen exactly the same thing in terms of training - we're seeing that that's helped. With CAM vs CAD there is still room for growth, and there are new technologies. There's still a good value to use these new technologies. We had a customer that totally understood the benefit of it. He took his shop of about 10 guys and kind of forced them to use the new version one hour per day. As they learned it, they'd all began to compare notes and at the end of two weeks, they were all up to date on the new software, finding great benefits. So, the efficiency of the new software greatly outweighs the old, even though there is a certain comfort zone. But, there's a lot to gain by using the latest software.

AMD: Would you say the CAD/CAM endusers are experiencing a shortage of talent, why/why not?

Schultz: Yes, because there are not enough young people that are interested in the manufacturing industry in this country. When I went to school we had metal shop and wood shop and knew how to work with our hands and knew what a mill was and what a lathe was, and when my children went through middle school, they didn't have that. A lot of people are driven toward academia - toward university and four-year degrees and so on - and they don't see a career path in NC programming or going out in the shop and getting dirty. The schools either don't introduce this type of career or make it seem like it's a nice career for people to get involved in. And this might be a regional thing, too, because I know in some regions of the country you do find where they have really good trade schools and their local education system is focused more on manufacturing. We can't find enough skilled people at the high end, and there's certainly no one coming up on the low end positions that have the skill level that these shops need.