How an American Manufacturer Succeeds

Fast Company features Marlin Steel:

Speed is part of the moat, the willingness to do a job as quickly as a customer needs it. Quality is part of the moat too. Scattered around the factory floor are "check fixtures"--simple wooden boards with the outline of a wire part etched into the surface. To see if the part is made correctly, a worker slots it into the outline on the board. If it's made right, it fits.
Often three nearly identical images of a part are etched into the same check fixture. The one on the right is the customer's requirement--say, a tolerance of 0.12 inches. The one in the center is Marlin's "okay to ship" standard, always better than the customer request--say, a tolerance of 0.06 inches. The one on the left is the "Drew" standard--perhaps a tolerance of 0.03 inches--four times the precision of the customer's spec. "If we send them that left one, they will never leave," Greenblatt says. Toyota--legendary for its obsession with quality--was so impressed with Marlin's exactitude that in addition to baskets, it also buys check fixtures from Marlin.
But for Greenblatt, the most important element of the moat is what Marlin didn't have before Boeing called: engineering and design. No one at Marlin designs baskets on slips of notepaper today. Five of 28 employees are degreed mechanical engineers. "We give people slick, elegant designs that make it worthwhile to use us rather than a commodity-part supplier from China," says Greenblatt. More to the point, says designer Alur, "people come to us with a problem and we try to solve it." Marlin has taken something utterly pedestrian and turned it into a tool of innovation--for its customers.

I highly recommend anybody in manufacturing reads this article.  It is fascinating.  The dude did good with his company, but he also got really lucky.