In Jingletown, Diamond Tool & Die is a survivor from Oakland’s industrial past

On the Oakland waterfront, in a historic area called“Jingletown” that recalls the sound of full-pockets and big paydays from years ago, an American manufacturing survival story lives on amid big box stores and artists’ residences.

Inside the near-windowless gray building, 35 skilled machinists work to fill a multitude of orders for companies around the world.  On a recent weekday morning, Michael Shultz, a 24-year-old parts inspector at the Diamond Tool & Die shop, is working in a brightly lit inspection room, looking over one of the myriad parts the shop makes every day for industries ranging from energy to electronics, medicine and the military.  The part is a square, casted block of inconel—a hard metal used in high-temperature situations—which Shultz is examining before it’s boxed and shipped to a sub-contractor of General Electric Energy’s nuclear division for installation at a North Carolina power plant.

“The holes there,” Shultz says, pointing to an array of cylindrical spaces inside.  “That’s where they’ll put the plutonium rods.”

In the scope of manufacturing in the Bay Area, Diamond stands out as an exception to otherwise widespread deindustrialization—a company which still makes things standing at the center of an area and an economy which, over they years, has largely shifted towards retail.  But while the Jingletown neighborhood is mostly full of artists and retail outlets today, the area of Oakland where the Diamond machine shop currently stands once was the center of an industrial corridor stretching from Richmond to Fremont.  Starting in the late nineteenth century, the area (at that time called Brooklyn) claimed a Del Monte tomato canning plant and the largest cotton mill in America west of the Mississippi.  Bands of workers came from around the country to work in local factories.

The neighborhood’s contemporary name evokes a time when ethnically-Portuguese immigrants from Hawaii arrived to the area in the 1920’s.  Not trusting banks, the Portuguese-Hawaiians refused to be paid in anything but silver coins.  Later, during the Great Depression, the area was recognized as one of the few parts of the East Bay where employment remained high.  The sound of coins jingling in workers’ pockets was taken as a sign of prosperity, and gave the neighborhood the title it keeps today.

Today, Diamond is one of Jingeltown’s few vestiges of that bygone era.  Inside the gymnasium-sized shop floor, employees, wearing goggles and oil-stained clothes, drive forklifts and operate drills and welders, but outside, the shop’s neighbors include a high-end coffee shop and an Office Depot.

In the parlance of American manufacturing, Diamond is a medium-sized “job shop”—a jack of all trades which can apply itself to a multitude of short-order, small batch contracts.

Some of a parts order for the drive shaft of the Bradley Fighting Vehicle, nearly ready for delivery to the US Army. Small orders such as this one are what has kept Diamond afloat and profitable during the recession.

Founded in 1967 in a machinist’s garage as a manufacturer of parts for dialysis machines, Diamond grew to its present size by filling niches in American manufacturing left behind by a long wave of deindustrialization.  Having stayed profitable for the last decade, managers say keeping the business afloat requires adapting to the needs of an increasingly global manufacturing industry, picking the right workers, and giving them a stake in the company.

Diamond’s wares can be found in many unrelated industries, from energy to healthcare, civilian aircraft and defense.  In addition to nuclear reactor parts, the company has made parts for the natural gas industry, components for medical equipment, and stamping dies for rubber doormats.

Recently, Diamond parts have also found their way into military aircraft.  In the midst of NATO’s bombing campaign over Libya last year, an American fighter jet crashed in the desert after experiencing mechanical failure.  When the New York Times printed a photo of the plane on its front page the next day, one of Diamond’s parts could be seen poking out from the wreckage, Shultz said.  Norman Wong, a project manager at Diamond, says the aircraft’s mechanical failure did not involve Diamond’s part.

While Diamond’s parts come in innumerable shapes and sizes, the common thread in all of their orders is their uniquely small size.  “Where we’re competitive is typically around 50-1,000 parts per order,” says Wong.  Orders of fewer than 50 parts will go to a smaller shop in the area, while larger ones will typically be outsourced to an emerging market where labor is cheaper.

Diamond did try once to make a foray into mass production, and until very recently, the relic of that attempt could be found idling in a cramped room near the shop’s main offices. When it was installed in 2001 for around $900,000, the tan-colored machine the size of a compact bus made metal discs a few inches across for a large electronics manufacturer to use for cutting silicon chips.  Since the discs could only be used a few times before going dull and being disposed of, Diamond was contracted to produce thousands every day, employing a woman part-time to keep the machine operating.

But just like so much American manufacturing in recent decades, after eight years, the chip producer contracted with another firm in Shanghai.  The employee who ran the machine part-time was let go, and the machine was recently sold on eBay to another manufacturer for a fraction of the original price.

It’s a sign of the volatility and interdependence of the manufacturing world today that such a small machine shop has to keep an eye on world affairs just to keep its orders up, but Wong says this is essential to maintaining clients for even the low-volume orders which are Diamond’s specialty.  Nuclear power is on the wane in Europe as the German government vows to phase out atomic energy in the wake of the Fukushima meltdown in Japan.  Defense manufacturing will also take a hit in the next few years as the Pentagon processes massive cuts, mostly to weapons systems.  To stay in business, new markets and contracts constantly have to be searched out and discovered, Wong says.

“If you don’t do that, you’re not going to be in business for very long,” he says.

As part of that strategy, the shop’s one full-time marketing employee has recently approached old customers to look for new business.  In the last month, Diamond filled an order with a defense manufacturer it had contracted to several years prior for 63 drive-shafts for the Bradley Fighting Vehicle, an armored transport used by the US Army.

Wong says that, financially speaking, the company is staying afloat but not growing, a state he attributes to the recession.  But even with the downturn, Wong says the company has remained profitable for most of the past ten years.

Apart from finding new contracts, Wong says recruiting personnel is the hardest part of running a machine shop.  Machinists need to have an uncommonly advanced ability for spatial and mechanical thinking.  Most importantly, Wong says, they need to enjoy and be willing to learn constantly.

When dealing with a given contract, Diamond deals with castings and raw materials, shipped in bulk and then cut to an appropriate size.  Since most of the value a job-shop adds to a given part comes from the labor, correctly estimating the time it will take to machine is critical to determining the price of the contract to be quoted to a client.  A senior machinist, called a “set-up guy” in the shop’s parlance (year-to-year, virtually all of them are men), can look at a schematic and plot in his mind exactly how to machine the part and how long the process will take based on the hardness of the metal and the number of operations involved. The time to machine each part is called the “cycle time,” and if the set-up guy guesses it too high, Diamond will get outbid by another job-shop.  If it’s too short, they’ll win the bid but lose money.

When it comes to compensation, Diamond employees do enjoy one advantage unknown to most other workers with a high school education.  Like the Portuguese-Hawaiian immigrants who worked in Jingletown before them, some of Diamond employees’ compensation comes in an unusual manner: after seven years, employees are eligible for stock in the company. Yet even in a good year, partial ownership of the shop doesn’t yield newfound wealth for employees, as they can only cash out their shares when they leave the job or retire.

Offering a rare perk like a stake in the company may encourage loyalty, but, Wong says, it doesn’t replace the innate dedication and knack for learning managers seek in a Diamond machinist, as those qualities cannot be taught.

“It’s in his nature,” Wong says.

And such workers are a vanishing breed at a time when many with an appetite for learning vie for college and a shot at a white-color job over a spot on the shop floor.

“Nobody with a college degree wants to work in a machine shop for $15, $20 an hour,” Wong says.