Precision parts maker makes foray into aircraft market

MANILA, Philippines - Famous Secret Precision Machining Inc. is living up to its name as the country’s leading subcontractor for agricultural engine, industrial, motorcycle, automotive and aircraft parts. Thanks to the value-than-profit business philosophy of its president, Dennis Y. Chan and the strong belief in the company’s potential by small-and medium-scale enterprise (SME) supporter Plantersbank.

Since setting up shop in 1994 to make bicycle parts using only two machines, Famous Secret has since grown so big that it now has over 100 computerized machining tools. The company has also just finished constructing a third building at its factory complex in Silang, Cavite.

The new building in Daiichi Industrial Park Special Economic Zone will house the production line for parts of small planes called RVs. Famous Secret is the first and only local subcontractor of US-based Van’s Aircraft for such planes. It produces an average of 80 parts every month good for up to 25 units of RVs models 6 to 10 and 12. The plant also produces more than one million parts for Honda motorcycles, Toyota cars, industrial and agricultural engines as well as many other types of machine each month.

Indeed, today’s Famous Secret is a far cry from the small Tayuman, Manila shop it used to be.

“I started from a small enterprise. I am proud to say that we are now the biggest subcontractor in this type of industry,” Chan says.

There are many similar subcontractors but they are far smaller in terms of production volume, and facility size compared to Famous Secret. “One reason for that is you have to be crazy to get into this type of business,” Chan quips. “If anybody wants to come into this business, you need a lot of money to put it up.”

An early start in the field and Chan’s all-around training were advantages that enabled the business to grow exponentially. After finishing Electronic Engineering from De La Salle University, Chan worked as a salesman at Mesco, the country’s pioneer in machine tools trading.

The job saw him going to various countries to train in all aspects of machine tool operation, including cutting, measuring and cooling. He learned how to install, move, deliver and repair the machines. The foreign training and marketing missions also exposed Chan to Japan and Taiwan’s industrialization formula, the horizontal integration management strategy.

Chan admits that he had a hard time selling machine tools because it was too expensive, the return on investment was long, and nobody seems to appreciate it. Feeling that he needed to use the machine to serve as its model and easily convince more people to buy it, he then put up Famous Secret.

Chan recalls that he had only a small capital back then but managed to obtain a bank loan to start the business. From making bicycle parts, Famous Secret turned to making motorcycle parts, LPG tanks and even faucet parts. By 1996, Famous Secret has nine machines in a 180 square meter shop in Caloocan City.

The Asian financial crisis in 1997 nearly caused the business to fold up due to the credit crunch and loss of one big customer. With banks denying him funds, Chan was forced to sell his other businesses and even his car just to pay the workers. The company struggled to survive by serving a few small customers.

From then on, Chan had a hard time getting credit to buy machines to expand the business. His loan applications were rejected because banks didn’t understand his business well and doubted their ability to earn by getting foreign customers and competing against foreign subcontractors.

“I did not want to come up with a business to make money. Sometimes, we have to look at the value,” Chan says referring to Famous Secret’s potential to compete with foreign counterparts. “I was selling this (philosophy) to the bank and the banks were saying, ‘That is of no value to us. If you don’t have money, there’s no value.’”

Plantersbank then came into the picture by referral. The pro-SME bank believed in the value of Famous Secret that Chan is espousing. “Plantersbank is one of the two banks that first helped me even if they did not know me well,” Chan recalls. “They tried me.” Of course, Famous Secret delivered, and the rest was history.

One by one, Chan bought machining tools known as CNC on an installment basis. In 2000, Famous Secret expanded by renting a 1,300-square meter building in 6th Avenue, Caloocan and manufactured air-condition and automotive parts using just 30 CNC machines. In 2004, the plant was able to acquire 500 square meters of extra space. Fifteen more CNC machines were also added, so they were able to make more industrial parts.

In 2006, the company transferred its production facility to an 8,000-square meter land in Daiichi Industrial Park and built a 2,000 square meter building there. The following year, 35 more CNCs were acquired. In 2008, the building was expanded by 1,000 square meters and the number of workers reached 200. In 2008, Famous Secret passed the audit and became ISO 9001 certified. 

Chan did not only struggle for credit. He had to contend with the lack of engineers, who were going abroad for higher-paying jobs. So he hired farmers from Mindanao and trained them how to run the machines.

In his jet-setting days for overseas marketing and training stints, Chan vowed to someday put even just one part of the planes he was riding. A breakthrough came when he was invited by a friend to visit him in the US. The friend’s uncle, who happened to work for a Boeing parts subcontractor, showed him their plant and suggested that Chan put up his business there. But it was cheaper to serve the aircraft maker by being in the Philippines. After beating Chinese competitors with lower price for parts, Famous Secret got the contracts from Boeing, Airbus and Van’s Aircraft.

Chan also clinched the Toyota contract by beating a Thai subcontractor in pricing. While Toyota’s plant in Southeast Asia is based in Thailand, it was not viable for any Thai parts subcontractor of Toyota at the price offered by Famous Secret, Chan explains.

“We make your life easy,” is the business slogan of Famous Secret. According to Chan, the company’s slogan only means it wants to take away a customer’s problems in their business.

“I tell customers that subcontracting is not their core business, so I urge them to give the job to us to make their life easy,” explains Chan. “We have to take care of our customers because our customers will take care of us in the future.”

This slogan has been the basis of Famous Secret employees’ work ethics, which has continued to satisfy customers up to this day.