Episode #18 – Space, Mars, And Contracts with Brian Mooney

 

Being in the business of going to space is a big deal, and so are the contracts that go with it. Brian Mooney, President of Mooney Industries Precision Machining, Inc., has negotiated with all of the space industry’s major players for decades. Knowledge, process, and details matter. Join Christine McKay and Brian and learn more about how he has successfully built long-lasting relationships with behemoth companies and kept his company profitable. 

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Space, Mars, And Contracts with Brian Mooney

We help you, the small and mid-sized businesses, elevate your negotiations. We help you by bringing you amazing stories, tactics, information, ideas, methodologies, and all sorts of goodies to help you figure out how to negotiate more effectively and more profitably so that you are wildly successful in achieving your objectives. I know all of you have been an amazing audience, and I’m glad and grateful that you have subscribed to this show. I appreciate you. All of you hear me say this every time. Now, it’s become a joke, and I might make it a thing where I say, “I’ve got an amazing guest for you.” I work hard to try to find the best people to bring on the show. 

Now is no exception. Brian Mooney is one of my dearest friends. I have known him for over a decade and he is remarkable. I have been excited about having him on the show. Let me tell you why. Brian is in charge of Mooney Industries Precision Machining. You’ve heard of some of the major projects that he and his father who started the company have worked on. You might have heard of the Space Shuttle Program or maybe the Mars Rover Program, even the International Space Station. What Brian does is he and his team have sixteen people manufacture small parts for the aerospace defense industry. He is amazing at what he does. I talk all the time about David and Goliath negotiations because I love doing these negotiations. Brian lives David and Goliath negotiations every single day that he is at the office and probably some days when he’s not. Brian, welcome. I’m grateful to have you here on the show. Thank you for joining us.

Thank you for inviting me.

Tell us a little bit about your story and how you got to where you’re at now. 

When I was eleven years old, my father bought a machine shop. He’d been doing stuff work for a lot of the primes back then with a fair-sized shop in the valley. That shop was sold. Once it’s sold, he wasn’t happy with the new leadership. He went out and bought his own shop. I and all of my siblings started working. I started machining at eleven years old. Back then we did a lot of Navy radar and pieces like that for the defense industry, but different than what we do now. Many years ago, we transitioned over to doing almost all space. We got in with a few local people who that’s what they build and started building little parts form. They liked what we did, and they started giving us more work and responsibility.

They’re listening to us a little bit more about what we do and how we do it. We’re fortunate that we’re close to a couple of them. Engineers can spin in, talk to us, and talk about what their project is and what they’re trying to build. I get in the backend of what they’re going to do quite often. That has helped keep work here because a lot of them don’t want to work with a little guy. When you’ve solved problems for them that they had an issue, they didn’t know how to fix it, and they said, “We need something. We need it in a week.” You’re small enough to say, “I can do that in a week.” We jumped in, drop everything, and fixed their problem. It gets you in a different spot. That’s how we got to where we’re at. It is being able to respond to those things and to design fixtures, tooling, and things to build stuff that a lot of people don’t do.

This is the benefit of being a small business because a big company can’t drop everything and they can’t make massive changes in their manufacturing lines at a drop of a hat to solve a problem. A smaller organization can do that. That’s one of the ways that you start adding more value. When you are developing pricing, it’s not just about the price, it’s about the value. A lot of times, as a smaller organization, we may be a lot more expensive because you don’t have the same contracts for shipping. You don’t have access to a larger workforce to ramp up or ramp down the manufacturing line, etc. I love that because you get in with them, you help them solve problems, and you do fix them. That adds more value and makes you more important to them. 

Your dad’s still involved in the business, but you’re managing it on a regular basis. He’s there seven days a week and I can attest to that, except for the days that Brian and I are at Burning Man because we are Burners. If there are any Burners reading, shout-out to you. That’s the first time I’ve talked about Burning Man. We’ll have to bring that up in the show more often. Tell us about your operation. How big is it, and how do you organize and work? 

 

We have two 5,000 square-foot buildings. They’re right next to each other separated by a driveway. We have a small office staff. There are only sixteen people total and that includes a few part-timers. The oldest guy is now 85 and still works three days a week because he likes it here. It’s pretty much a family-run business. Mom is the major owner. Dad is now in the rest of the buildings, the business. It’s the woman on small business, which helps with some of the contracts with the primes also because they need those things. It’s not why we get most of our business, but it helps them check a box that helps them keep some of their business. As dad has retired, he called it incremental retirement, he’d taken off an hour earlier for about five years until he stopped working at noon.

He started taking off days, and now he only works two half days. He comes in and handles insurance, some of the tax stuff, and some of the HR things. We bring somebody new in. I interviewed them, hire them, give them to the dad to do the HR, fill out all the paperwork, make sure that they’ve got the manual and done that stuff, and get them up to speed on what’s going to happen and who’s in charge. It’s really me. We’re now at the point that I run the entire office and shop, which has been an advantage. One of the things is I’ve been on with a supplier advisory council for prime. We have discussions and they go, “You’re the only one who understands the whole process.” I said, “It’s because I’m the only one that walks it from quote to contract review, to manufacturing, to inspection and shipping because I’m involved with all of those.”

I follow a lot of those things that get lost in some companies. How I maintain quality is that I’m on top of every job because I see them every day. My office is in the middle of the building. Most of the offices are either at the front or the back of the building. Shipping is at the back. All the contract offices are at the front. I purposely left mine in the middle of the manufacturing plant so that I see and hear everything that’s happening. You hear a thump that doesn’t sound right, you get up and go find out what happened. I don’t get that report four days later after somebody says, “I broke a tool. I did this.” I went around and had to chase it down. Somebody else had to order a new tool. We’re back up and running. I walked out, saw that it had happened. I walked in and ordered a new tool, and have the guy back up and running, which also saves some time on things like that. At our size, there’s not a purchasing guy who gets a request for something, and then goes out, buys it, and then supplies it to the guy who puts it in the tool room, who then checks it out to the guy who needs it. Ours walks in and sits down there.

As we have grown with the space stuff, I’ve done a lot of concurrent engineering. Engineers come in and we sit down and talk about the project, what they’re going to do, and how to give them the part they need, regardless of whether it’s on a piece of paper or not. If we look at contracts that I get to negotiate around the edges are those, and I’m not doing it. It’s the engineer walking into the buyer and saying, “Yes, he’s more expensive, but he knows what we need.” Everybody else sends a piece of paper too, and they read the piece of paper. They didn’t discuss, “This is what it says, but this is what it’s going to do.” We get some value-added stuff on maybe 5% to 10% of our contracts because of that. It’s because of being involved in the backend.

For those of you who are reading who are not familiar with how the government contracting process works, Brian’s used the term prime a few times. For those people who are not familiar with that term, can you explain that to them? 

The prime contractors are the ones that have the contract directly with the government. They use sub-tiers to build most of their stuff. Regardless of what you’re building, an airplane, a rocket, or a washing machine, you have a contract with somebody to build it. You’re not going to build every piece of it. All of those big contracts, which are multimillion-dollar contracts get broken down into smaller contracts that go out to a bunch of small vendors like I am. After that, I ended up with contracts to sub-tiers for me because I don’t do plating, I don’t do heat treating, and I don’t do what they call special processing because each of those requires a whole other bit of oversight that usually the prime oversees them, but I’m the one that writes them the contract.

I’m the one that has to make sure that all the flow-downs from the initial contract flowed through me all the way to them. We have a whole system in place on how that works. We’ve designed what we want, how flow-downs go in, and how they flow down to our bottom contracts in our sub-tiers. All of that gets flowed back to the prime, and all of that information has to be tracked. The prime is the person who has it with NASA or whoever the main government entity that it’s eventually going to go to. Most of ours would either be NASA, the Navy, or the Air Force.

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What’s interesting about that is because you sit in that central part below the prime, but you have subs underneath you, your negotiation for the work that you do, and for what you’re selling up to the prime becomes very complex. It’s a multi-party component to it. You have these subprimes that are doing things to the product that you are delivering to the prime. What has worked in managing that level of complexity in your relationships with the prime contractor? What has been challenging for you in managing those subprimes as you’re creating your notion and your idea of price, and how you’re going to deliver product and all of those things? 

This has all evolved. We did a three-year project of digitizing everything we did back in the ‘70s. I went back there and looked at what we used to do, and we did much the same thing we do now, but the documentation has gotten more strict. It used to be that I would tell somebody, “Do it to this standard.” They will do it to that standard and give it back to me.” If it was fine, I tell the prime. This is who I used and we were all good.” Now the flow-downs have gotten so heavy. All of that is in their contract and they give me 30 different quality codes. Half of which apply to me, and half of which are on their contract that may not apply to me at all, but because they’re on the contract, they put them on and send them to me. We take the time to pull out those that don’t apply to the sub-tier. We read all those and decide what to do to them.

We have a chart inside our MRP system or our shop operating system. If it has a note on it or a little arrow that says, “Flow it down,” it flows down to all my sub-tiers. I can review that. I can give that to my inspectors that come in from the prime and say, “This is what I’m flowing down. Do you agree with it?” I make sure that I’m not overloading somebody that often is larger than I am, but maybe not as adept at going through all of the extra codes and knowing what doesn’t apply to them. If you send them the 30 codes, they start making phone calls, “What about this code? What about that code? Can you cross that off the list? Can you do this?”

If you do all that work upfront, it gets rid of those phonecalls and gives me that communication back and forth where I’m redlining a purchase order, which in this case is your contract to say, “You’re plating house electrostatic discharge doesn’t apply,” but ESD is a flow down to almost everything I do. Almost nothing I do has electrostatic issues because I build metal parts. I don’t build parts with electronics in them. Because they’re going to go in a missile that has electronics in it, ESD is part of the flow down from the government. The prime should have never flowed it to me.

You’re adding value, even going downstream by taking and doing that work upfront. There’s value to you because one of the things that we’ve talked about many times is it sounds great to get a huge enterprise customer. You can name any aerospace defense company and Brian has worked with them in the past. You think about those companies and some people get super excited, “That company is my client.” They think that’s the greatest thing, but they don’t understand the cost associated with servicing that client. What you described is something that goes into that cost assessment that you have. You’re having to take this product, this flow–down from the prime that isn’t clean essentially. It’s not cleaned up. 

You’re having to siphon through it to figure out what you’re going to flow down to the companies that are sometimes bigger than he is. He’s got big companies on both ends of the supply chain. The customer is a big company, and the supplier is a big company, and then there’s Brian who’s got 12 to 16 people who work for him. He’s still figuring out ways to add value through the chain because that also is beneficial for him. You’ve been able to bring that into how you think about pricing. We had talked a while ago that you had a situation where one of your bigger primes had sent you a contract. I’ve stolen this story and I’ve spoken about it because I think it highlights it. I have negotiated with this particular company myself and they have some very interesting contracts. They had put some things in the contract that you saw. Tell us a little bit about those because you saw them and you knew, and it was like, “Holy crap. There’s no way that I can do this.” Tell us about them, then I want to say why it’s important to have a conversation about this type of stuff. 

This particular contract was supposed to be for the long term. It was sixteen different parts and they wanted quantity breaks at 50, 100, 200, and 1,000. We got all those, got them their quote, and sent it in. They’d sent over the preparation for the contract that said, “This is what we’re going to buy. We’re going to buy 250. We’re going to buy them for over four years.” We have the right to only buy 10% of them at any time. We have the right to cancel it any time, but they wanted the 250 piece price. You’re reading through a 40 to 50-page contract and you come across that. Normally at least two of us read them. You read the 40 or 50 pages multiple times during the week, and you come across something that you go, “This doesn’t sound right. You’re going to buy this widget from me at this cost. I’m going to go out and buy material for 250 pieces. I’m going to start processing 250 pieces. You run ten different than you run 250. It’s not just the fact that you bought more material. The setups are different. You might be doing a much more elaborate setup to do 250 pieces.” I had to push back and say, “I will not accept this. You can have a plus or minus 10% of the 250, but you can exercise me for the first year and cut off the next three years.”

We went back and forth on that quite a bit. They finally lined out that portion of the contract. They said, “We will drop that section.” There were a couple of other sections that were about as onerous in there. I complained about each of them and they took it out of the contract. They said, “A manager thought that was a good idea to have in there.” I was like, “You can and you have something that says you can terminate the contract.” There’s a termination clause which is what we ended up on the next revision of that contract. It says that they had the right to cancel it at any time but we had to fill it out. After 30 days, we will have spent 30% of the dollars. After 45 or 50 days, we will be at 40%.

 

It then goes a lot slower because, in the beginning, you buy all the material, you get all the stuff in. Once it’s in, over the next year or two, it’s another 10% and another 10%. If they canceled and I get near three, they would have given us 90% of the contract. Even though they’d only received 50% of the product. That was what I had to get put back in there. Once they got that in there, we had to give them a cancellation charge, which was by month, by day, and what’s it going to cost. That’s weird because it’s in flux. They haven’t told you exactly when you’re going to ship them every part. How do I tell you in month twelve this is what it’s going to cost when I don’t know if you’d let me ship a single part?

Some of that you have to go by the seat of your pants and go, “This is about what it is.” We got done with that contract and that one ended up in a place with only a few of those parts. They went through with the contract, bought all the parts, and none of the what-ifs happened. They bought all their parts. They got all their pieces. It was good to catch it. Had I not caught it, it probably wouldn’t have bitten me, but I did have one a few years back doing the same thing that did bite me. It was how I knew to look for this. It said, “The company has the right to change quantities.” It was another large thing they bought. They quoted 100 of this one part that I had to buy an entire sheet of fiberglass for. I’m talking about a 3-inch sheet, 4 x 12-foot fiberglass. I’m making a part this big and it was going to be 100.

For those who are reading, this big is what? 

It’s 3 inches X 3 inches X 2 inches thick. They ordered four pieces and we said, “No, this isn’t for four pieces.” That buyer said, “We have the right to change quantities. That’s the quantity I’m going to buy and we’re not buying any others. If you don’t do them, we will turn you off.” I had to eat that one, which is one of the ones that make me watch for these. That’s been many years ago.

The reason why this is important is that company who sent that contract to Brian originally, there are companies similar to Brian’s that have signed that contract, but didn’t have the positive outcome that he had. They did get a haircut in the amount that was ordered and they did eat costs. The reason why these big companies do that is they are banking on the fact that the majority of you are not sitting and reading your contracts, and are not going to push back because you’re afraid of losing the revenue. The problem with that is that even if you get the revenue, that doesn’t mean that revenue is profitable. It doesn’t mean that it’s a good revenue because you’re taking on so much risk.

When I do presentations, I talk about contractors and other five different types of risks. Only one of them is legal, so 4 out of 5 or 80% of the risk in the contract is business-related. It’s cashflow related and profitability related. It’s operational or it’s strategic. This example that Brian is talking about is a classic example of operational risk that a company that isn’t paying as much attention as Brian does. It isn’t into the details of those contracts, and that those companies are taking on that unnecessary operational risk, it can bite them in the backside coming down the road and could cost you not just on that deal. In some cases, I’ve seen it costs people and their entire company. You want to make sure that you’re paying close attention to that. 

That was that contract. The same company on a different contract has been trying to put a long-term in place. It’s usually fighting costs. They’re looking at, “How do we get a better cost? How do we get a better price? If we give you this over this many years, will you do it for this price?” This particular part is extremely difficult. I can only run about 40 of them at a time. They’re looking at like, “We’re going to give you a contract for 300. We need this break because we’re giving you a contract for 300.” I have had to go through it like a spreadsheet with them over and over again, and I have to break every 30 or 40 pieces to do machine maintenance, tear things down, rebuild fixtures, and put things back together.

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“It doesn’t matter if you give it to me for five years, I still have to do this work. I can’t give you the savings you’re looking for. This is what it costs.” They spent four years only ordering the amount they needed for that year. This year, we did a whole new contract on it. They made us go back through all of the proposals, insisting on giving them our close sheets for the year so they knew how much we make. They are now requiring to look at our close sheets every three months to know if we are still solvent. They wanted all of our timecards. They want our traveler, which is non-negotiable. You cannot have it. I will not tell you how I make your part. You may come in and watch. You can read the traveler while you’re here.

We had one company years ago, our traveler ended up at somebody else’s place and they built some parts for a few years. They eventually failed and they came back because not everything is written in the document. There is tribal knowledge that no matter how much I write in a document, I can’t explain everything about the part. That part, I got paid to fix and made more money fixing the other guy’s part than I did building them by myself. It taught me that nobody gets a run sheet and all ask for all of the contracts. They want your traveler, “We get your travel. We get to know how you do this job.” It’s, “No, you can’t have it.” Will you send them back every time? That’s one of the things we learned out of contracts the most is you can’t have my traveler. It’s my intellectual knowledge written on a piece of paper that I’m not giving away.

Finally, we’ve done this same negotiation three years in a row. They’ve never bought the bigger batch. They came back with it again. We said, “You don’t want to do this.” They’ve run us through all the TINA stuff, which is the Truth In Negotiations Act, and it was anything over $500,000 up until a few years ago that they get all the information so that they know that you’re charging them a fair price. Even though TINA has now changed to $2 million, and this contract is under that, they still insisted on all of this stuff because they said, “Our contract is more than that.” We have to give all this information to the government.

It took a long time to go through that and deciding, “We’re going to do what you’re asking.” We gave them information that they said, “It’s not good enough. We need more.” I had to ask them, “What more and how do you want to see it?” They gave me their spreadsheet, and we worked through their spreadsheet. We put in our hours in that. They came back and said, “You can’t have advertising.” Advertising has to come out of profit. They said, “This is a government thing. Advertising is not a profit. You can’t charge that as part of the cost.” I said, “Fine, take my profit margin. I only had 4% and make it 13%.” They said, “8% to 20% is the norm.” I said, “I’ll hit it right in the middle. You give me 13%.” It raised the price of my product about 20% when we got all done with the negotiation, because I filled out their form their way and wrote it all down, and said, “This is what it takes to build your part.”

They didn’t like it necessarily, but they also didn’t argue with it. It was like, “This is our form. This is how it works.” They sent an auditor and the auditor went through our books and everything else here, and wrote the things down and said, “Yes, you’re right. You can put this on here too.” The stuff we do for most of my advertising. I don’t advertise. My advertising is the shirt that I’m wearing and supporting some robotics kids. I’m like, “I can’t give local school money and have them come here and charge that time? It’s what I do to make sure that we have people coming up.” They said, “Nope, you can’t do that, but you can put it in your profit.” If you raise your profit and say, “This is my bottom line of what it costs to build this product, and this is the profit I expect to get, you can mess with that in their tool and be okay.” They’ll read their tool and say, “It all matches up.” We now got that contract. We’ve started on it a few months ago, which is four years of the same part that I’ve only known I was going to you run for a year for thirteen years. We’ve been running the same product for thirteen years for different companies because it moved from one company to another.

What I love about what you were talking about that is so important in any good negotiation or any effective negotiation is that sometimes we are constrained by what our counterpart needs. That doesn’t mean our counterpart is unwilling to negotiate with us. It means sometimes that we have to adapt to negotiate in a language that is consistent for them so that they can negotiate with whomever they’re having to negotiate. In Brian’s case, what he’s talking about in terms of using his customer’s tool to develop his pricing proposal, and to get the marketing component as part of the percentage of profit improved the profitability of the entire project. Part of it is making sure that you understand how they want things communicated, then how you can adjust, and what that means for you. 

A number of years ago, I was working on contract renegotiation. A client of mine owed a massive liability to a vendor and it was a legitimate liability. They could not get this liability to go away. I got on the phone and they were like, “They owed over $1 million and couldn’t afford to pay it.” I was like, “We’ll pay you $300,000 or something like that.“ They got fixated on the dollar number. I changed the conversation and I started talking in terms of percentages. We ended up settling that account and I saved my client 73%. They accepted 27% instead of 30% just by changing it to talk about percentages instead of dollars.

Sometimes it’s about figuring out what is the language that works, that triggers a different reaction in your counterpart, or that aligns with an expectation that they have, that you can be flexible in so that you can get to an agreement on that. Sometimes I’ll say no, except when it comes to facts. When it comes to facts, no is no. In everything else, no is an invitation to ask a different question. That’s exactly what Brian did. He figured out how to ask a different question, and then to respond to a question in a slightly different way. Try that next time when you’re in a negotiation.

 

One of the other things that you do. You’ve got all these relationships with these huge prime, government contractors and you have all the supplier relationship. You do a lot of metal parts, and I’m curious because the price of steel now is the highest it’s been in years. How are you seeing the things in the supply chain affecting you in your business? How are you negotiating around that stuff, whether it’s the tariffs, steel prices, or other commodity pricing that’s affecting you? 

Being small, I usually don’t end up buying huge batches of stuff, except for one contract. If I do, I buy it upfront. When I got this new four-year contract, all the material was bought now. That protects me for that. One of my neighbors has had to do the same thing and buying a container full of the specific material that he has to have in order to keep it at the right price. He has a long-term contract also. For me, it all gets built into the cost at the quote. I quote every piece of metal. Every time I quote a job, quotes are only good for 60 to 90 days. It has only bit me a couple of times that I quoted something and when I went to buy it, it was substantially more. By substantially, I’m talking 4 or 5 times as much. Normally, it’s 10% to 20% and I’ve already built 30% into the cost of my materials. My standard markup is 30%.

I have a few customers who argue with me about that. That’s why I get to write a purchase order, get the material in, check the material, and make sure it’s okay. It covers me in case there is a fluctuation after a quote and before purchase. Some of that had to get written in over the years and say, “This is my percentage. This is what it is.” It’s not one of those I negotiate on. My customers will come in and say, “We think you should do it this way.” I said, “You can,” and except for this contract that needed the TINA project. For that, I had to put in the actual material costs, but then I got to put in a handling charge and overhead. It gave me the way to put it back in where my preference to give it to them would have been, “This is what the material costs me,” which would’ve been the material cost plus 30%. They weren’t taking that, but they would take this plus handling, plus delivery, plus storage. It can work out better that way because it can be way more than 30% by the time you get done with it.

You are very well-versed on the number side of your business. We’ve talked about this a lot of times. You know the numbers. You know how much the product costs. You know what the cost is that’s going into producing that part. A lot of times, I’ve had a number of clients that don’t know their numbers. To develop a good negotiation strategy, especially when you’re negotiating with these larger companies where everyone in them is a specialist on something, whatever it is that they’re doing, they’re a specialist at it. They have all of this body of knowledge around, from their financials, their accountants, their lawyers, and everybody in between. When you don’t know your numbers, you lose credibility in your ability to negotiate, especially when you’re negotiating with enterprise accounts.

They will ask you the most bizarre questions in the process, and you’ve got to be able to have an answer for them. They will also redirect. They’ll try to get you to agree to things that if you don’t have knowledge and details about your numbers, then you’re going to do things that you are going to wake up and you’re going to have absolute contract remorse and go, “What the hell was I thinking?” You’ll get into the contract and you’ll be completely blindsided by additional costs that you weren’t anticipating. The two things that you do well, Brian, are one is knowing your numbers and two, you know the contracts. You live in the contracts. Those are two things that a lot of small businesses and entrepreneurs work hard to avoid. You’ve taken those and it benefits you in your business. 

I like to say I read. If something comes in, I read it. Another one I did a few years ago with a new customer, they sent me over an RFQ, a request for quote, and it had a bunch of specs in it. I had to go through all their specs. I read 300 pages in two days of technical specifications. I had seventeen questions that I sent back to them before I’d quote their job. They held from my quote because of that, because nobody had ever asked them the seventeen questions before. They had to go look and people had to go say, “Why did we write this? What is this here?” Knowing to ask them also made me know that my competition wasn’t doing that. It changed the way I deal with that company, and it changed the way they deal with me.

I was negotiating with a very large telecommunication company, and they had an operating manual that they incorporated into the contract. For those of you who are not well-versed in contracts, it’s embedded in the language of the contract, we were agreeing to adhere to the contents, to the procedures that were outlined in the operating manual. I read the operating manual and they’re like, “What?” I’m like, “I can’t sign up for this.” A lot of times with what these bigger companies will do is they’ll come in and the first thing they go after is the price, “How much are you going to charge us for this?” That big contract with the operating manual minus the operating manual was a 110-page contract.

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Let me tell you, the amount of cost is embedded in that contract was extensive. It’s like, “I’m not telling you what price we’re talking about. We’re not talking about price until we get through the rest of this stuff. I want to know how much cost I have to incur in order to even have you as a customer. The more cost I have to incur, you want a deep discount, and the more cost I have to incur, that hurts my margin. We had to make that equation work in order for this deal to work.” We figured it out. This is one of the reasons why you need to read your contracts and know your numbers. If you don’t, then something like an operating manual, that’s referenced in the contract that you signed up to adhere to could destroy you in the future if you do something out of line with it. 

The new thing which has been around for a while is flowing down on all the contracts and is raising costs. The new thing is cybersecurity. It says you will be cyber secure. There are all kinds of work that everybody my size and bigger, anybody who gets any of this information has to do, and it’s embedded in the contract. It’s a far clause. It’s embedded in a clause. You have to go back and start reading all of those. It is one of those that’s going to get people a lot in the next few years is cybersecurity. How do you become cyber secure? If you’re not watching for that, you either have to be doing it now or figure out how to say, “I’ll do this in four years, but the government’s flowing it down.” Most of us won’t have that choice.

For those who don’t know a far clause is very specific to government contracts. If you’re not servicing government contracts, you’re probably not familiar with that. You probably don’t need to be. There are a lot of businesses your size and in your industry that has gone out of business. I’m not sure if they’ve been impacted by COVID, but there’s a high turnover rate. What are some of the big mistakes that people make when it comes to negotiating in your industry? 

Some of it would be taking on work you’re not capable of. You see a project that looks like a good idea, but you haven’t done anything like it. Some of it is going after the wrong portion of the industry. There are people who do a lot of aircraft work and they do normally 2, 3, 500, 1,000 parts. I built 10, the parts look the same, but aircraft people quite often give away the setup. The time it takes to get the part right before you build them. They figure this part is going to take this long to run. With the downturn, with the aircraft problem, and the fact that people aren’t flying, not as many of those parts are being built. Those people go after my work. Even though the part looks the same, they’re going after it. What they understand is, “This how we build a part and this is what it costs,” and they’re missing a lot of costs. They’re missing the costs that the defense portion of it takes, which is cybersecurity.

Some of it is ISO that a lot of the aircraft people have to do that also. There’s another level of ISO that gets buried and gets piled on top of what happens for commercial products. You end up with all of these other requirements that you weren’t ready for. Some of it is with the downturn. There’s not been enough work. Getting things back in this country and getting them working is a long-term thing. It’s not something that happens overnight because there’s not a factory sitting there ready to make something. It got scuttled many years ago. Now that you need something made you can’t say, “Turn that one back on.” All of that stuff went away. All the knowledge went away. The knowledge of the people. Everything that was in that building is gone. A lot of the smaller startups got started at a bad time in the last few years. Though there was an uptick going, it turned down. COVID is a big part of it. Election years are a big part of it.

It doesn’t matter who’s coming into office, things change. If you don’t watch to see what’s going to change or don’t have enough work to get you through that, then you’re going out of business because you don’t have enough work. I had an interview with a guy who had owned a machine shop for 30 years. His work dried up and he decided to give up and go home. He was saying that he’s not old enough to retire. He has a few more years and he wants to work. He’s owned a machine shop and he’s had all this stuff. He’s got all the experience, but work dried up and wasn’t worth trying to keep going.

One of the things I talked about is that negotiation is a hopeful path. We’re entering into an agreement because we hope that the outcome will put both of us in a better place than we are now when we enter into it. If you think about negotiation as a hopeful act, what are some of the things that you hope for your industry in the coming years as you move forward and continue to grow Mooney Industries? 

You hope to grow your business and to get it bigger than it is now. I know several other shops that have grown exponentially, and that’s not something I’ve ever looked for. I want to grow a little bit every year because I want to keep control over what I have, but keeping enough work that you can grow a little bit without trying to add a whole another division or a whole another group of things doing something for me is outside my comfort zone. I want more of what I have, but a little bit more. To get a little bigger every year where I can still control it, and not lose the personal portion that I still have, even though a lot of my stuff is very technical. You would think there are no personal relationships with it.

 

I still end up talking to engineers, designers and get to talk about the product, what it’s going to do, and what’s going to happen with it later. I enjoyed that portion of the industry. They keep coming back around. People I’ve worked with for 30 years, I’m still working with. We’ve grown up in the industry together. One of my best friends from high school, I reconnected with about five years ago because he’s working for one of my biggest customers. He showed up one day and it’s like, “You’d never built a part for my projects before.” I want to work those into it and keep those. For one, it keeps us both profitable and in people’s minds. I’m not looking for giant growth, but I am looking for a small steady growth over the years. It’s what we’ve had for the last number of years, except for a couple of downturns.

The thing I admire about you and your negotiation style, and I’m going to assume that you learned a lot of this too from your dad so hats off to him. He’s a remarkable guy as well. A lot of people think about negotiation is a win-win or win-loose. I wrote an article for the LA Business Journal called Stop trying to win your negotiation because negotiation is about a relationship, and you cannot win a relationship. I see what you have done and what your dad has built. You guys have embodied that. Everything you talked about in terms of how you create value through the depth of your relationships that you have with your customers and with your suppliers. You create that relationship aspect. Overarching in everything that you’ve talked about here, relationship keeps coming into it. 

For those of you who are reading, think about that and how you are managing your relationships in your business. How are you guarding those relationships in your negotiation? What are you doing to elevate them? What are you doing to create mutual benefit for them, whether it’s communicating to them in a way that they need to be communicated to make them seem better to their customers or whatever it is? Making sure that you’re focusing on that relationship aspect, especially as a smaller organization where you have the opportunity to be personable, to roll up your sleeves, problem-solve with your customers and with your suppliers, to fix problems, and to add value in that way. Those are things that from a negotiation perspective will endear you to your counterparts and make you more and more valuable to them. Brian, this has been great. I appreciate you being here. I have one last question for you. You are the first guests that I’m asking this question. I’m trying to figure out a question to ask everybody that has absolutely nothing to do with negotiation. What is your favorite thing to do in your downtime? 

It used to be working out. It used to be getting into the gym with a bunch of friends and playing a game that I played for many years. As that has waned because we’ve all gotten older and half the guys can’t do it anymore. It’s now getting out of town, which has not been something that has been my thing for most of my career. For most of my career, I probably didn’t get 1 or 2-week vacation a year. I decided that that’s what I’m going to do. I was saying six weeks, sometimes it’s 4, sometimes it’s 8. I get out of town even if it’s just through a weekend to go visit somebody, go say hi, and come back, or Burning Man. Get out of town and be gone for a week and totally disconnect. What getting out of town is about is to disconnect because I can’t disconnect while I’m here. My brain doesn’t work that way. It says, ”I’m here. I’m focused. I’ve got things to do.” I can show back up on a Saturday morning and there are these 4 or 5 things I could finish, or come back in the afternoon, some other weekend, and finish up some quotes that didn’t get done during the day. If I can get out of town, I can disconnect. It’s getting out or maybe even turn off the cell phone. I normally don’t turn it off. I try to get someplace where it doesn’t work.

That’s okay because that’s not your fault. You didn’t shut somebody up. 

I’m out in the middle of Mojave Desert and nothing works out here. The camera still works so you can take pretty pictures.

Brian, thank you so much. It’s such an honor to have you. I’ve looked forward to having you on the show. To the audience, thank you for spending time with us. I appreciate the time. It is our most valuable resource. I am honored that you have spent time with me and Brian. Thank you, Brian.

Thank you.

Thank you, everyone. Have a great day and happy negotiations.

Important Links:

• Mooney Industries Precision Machining – LinkedIn
• Stop trying to win your negotiation – LA Business Journal
• Linkedin.com/in/brian-mooney-aa52951a

About Brian Mooney