Running a shop with old, low end machines

[dkmc]

It's a bad tool that makes a poor workman.

Rabbit hole X2

 

[snowman]

The way I see it, the successful shops that are running with old and low end machines aren't being paid for their spindle time.
They're being paid for their knowledge and experience. They're not making a part, they're fixing a problem.

I really like that. I've got a couple friends who get jobs in places there shouldn't be jobs. I was surprised when I found out where his work was coming from, then he told me, I just do the work nobody else knows how to do or wants to spend the time to figure out.

 

[Philabuster]

The way I see it, the successful shops that are running with old and low end machines aren't being paid for their spindle time.
They're being paid for their knowledge and experience. They're not making a part, they're fixing a problem.

Fixing a problem can be profitable, I agree.

However, pulling someone's ASS out of a shitstorm is where you can make ridiculous amounts of cash with old machines. It's not what the part is worth necessarily, it's about downtime for the customer. If you can crank out the part he needs RIGHT NOW, you will forever be the go-to superhero guy in the eyes of your customer:

Oh yes, it sure as hell does...
I've made $400 an hour on a 1944 No 5 Gisholt ram turret lathe.
And $800+ an hour on an old tired 24" Bullard VTL.
And these were 'several hours at a time' not 1 hour here and 1 hour there jobs.
Admittedly, they were also rush-rush repairs with big overhead burning up money fast. Fun stuff actually.

I like those kind of jobs.

 

[cnctoolcat]

I run my shop with old, "high" end machines...Mazaks.

Yes I know how to fix them myself, down to board-level repairs.

Yes having the same brand and era of machines allows part commonalities, making repairs much easier and faster to do.

My 20- to 30- year old Mazak lathes are just as accurate as a brand new 6-figure $$ lathe, maybe not quite as fast in rapids and indexing, but who cares?

Mine have no payments, they just set patiently for the next time I need to use one. And when I offset a tool .0002", the next part comes out .0002" different.

Most machine shop owners have no idea how to diagnose and repair their own CNC machines. I just can't understand that, considering most shop owners are machinists!

Aren't machinists supposed to be good with machines? Ain't that what we do??

ToolCat

 

[Matt@RFR]

maybe not quite as fast in rapids and indexing, but who cares?

I do!

I compete with two other local shops doing small to medium production work. The two other guys have old equipment and I have new-ish. Mine outpaces theirs by alot, therefore my part prices are much, much lower than theirs (sometimes half price), while I'm still making at least 30% above my shop rate. At this point, the only work I'm not getting is the work I'm turning away because we are booked for 2 months.

I'm getting ready to plunk down $150,000 on a second mill. Based on the amount of work that has been going to these other shops strictly because we are too busy, this new mill will increase capacity to the tune of about $10-$15k per month back in my shop, but it will also massively increase efficiency AND speed (spindle utilization rate goes through the roof and cycle times reduce), thus putting us even higher over shop rate while lowering prices to the customer, which will then bump the volume up because the end user can now afford to buy more, creating this really cool upwards spiral. And we're not even getting in to the positive tax implications of buying new equipment.

If projections hold up, we will gross well over 1/2 mil with two machines and 3 guys on payroll, myself included. I can say with 100% certainty that this would not be possible in my situation if I were running old shit.

EDIT to add:

Most machine shop owners have no idea how to diagnose and repair their own CNC machines. I just can't understand that, considering most shop owners are machinists!

Aren't machinists supposed to be good with machines? Ain't that what we do??

Sure, but it aint what we get paid to do.

 

[Jashley73]

Most machine shop owners have no idea how to diagnose and repair their own CNC machines. I just can't understand that, considering most shop owners are machinists!

Aren't machinists supposed to be good with machines? Ain't that what we do??

ToolCat

True, but not all machinists/machine shop owners are good with electronics troubleshooting. And not all of us/them have the time...

 

[Bobw]

I do!

I compete with two other local shops doing small to medium production work. The two other guys have old equipment and I have new-ish. Mine outpaces theirs by alot, therefore my part prices are much, much lower than theirs

I'm going to go out on a limb here.. I'm going to say that it isn't just your machines that make you faster...

I'd actually say its only a smallish portion of why you are faster...

You are here, on this message board, I'm guessing the competition isn't... To me that says that you give a shit
about what you do, and you want keep improving and keep learning....

Tooling and technique trumps the machine any day... Doesn't matter how new and fast your machine is if you are running
old school tools and conventional techniques.. A HSS corncob rougher plowing away at 3ipm on a $100k machine won't
make anybody any money.

 

[Jashley73]

We're looking at a new production job on some aluminum castings. Something to the tune of 30,000 parts a week, and a cycle time of about 20 tools in 3ish minutes. If you do the math, that's pretty much (3) parts per minute, in a 24/7 work week, at 100% efficiency, with zero downtime... Maybe it's not the case for everyone on here, but, sometimes, a fast machine matters.

 

[TheCook]

We're looking at a new production job on some aluminum castings. Something to the tune of 30,000 parts a week, and a cycle time of about 20 tools in 3ish minutes. If you do the math, that's pretty much (3) parts per minute, in a 24/7 work week, at 100% efficiency, with zero downtime... Maybe it's not the case for everyone on here, but, sometimes, a fast machine matters.

Absolutely. But you're also not going to use that setup to fix a tractor. Different solutions for different problems...

 

[WILLEO6709]

20 tools in 3ish minutes. If you do the math, that's pretty much (3) parts per minute, in a 24/7 work week, at 100% efficiency, with zero downtime... Maybe it's not the case for everyone on here, but, sometimes, a fast machine matters.

but you'll make a lot more money doing it on a pair of 20 year old paid for hmc's with a pallet changer( junk ) than spending 500k each on a pair of brand new ones no matter the manufacturer. Even if it costs your 30% on cycle time.

 

[Matt@RFR]

Tooling and technique trumps the machine any day... Doesn't matter how new and fast your machine is if you are running
old school tools and conventional techniques

Point taken Bob. But I'm sure we can agree that the best tooling and technique will still not allow a '98 (insert brand here) machine to compete against a much newer machine in a production environment of anything more than 5 parts per run.

 

[Jashley73]

but you'll make a lot more money doing it on a pair of 20 year old paid for hmc's with a pallet changer( junk ) than spending 500k each on a pair of brand new ones no matter the manufacturer. Even if it costs your 30% on cycle time.

Tell that to all the Tier-1 automotive suppliers then. I'm not going to pretend that I understand every single financial factor (such as how to deal with buy vs. lease decisions, how to navigate the interest, taxes and such) but the main point stands - if it were that simple, peopleasy would never buy new machines, and firms like Makino that build some of the finest, fastest machines when it comes to production machines, wouldn't exist...

When you depend on your machine to generate $10,000+ a day in parts, it hurts when it's down. But, if the machine isn't even capable (read: fast enough to make the parts in time) to generate that money , then it's not even an option. Plus, when your customer is breathing down your neck for parts (with contractually-bound penalties mind you) the last thing you want to tell him is, "Sorry Mate, our <junk> machine is down again...

 

[Philabuster]

I run my shop with old, "high" end machines...Mazaks.

Yes I know how to fix them myself, down to board-level repairs.

Yes having the same brand and era of machines allows part commonalities, making repairs much easier and faster to do.

My 20- to 30- year old Mazak lathes are just as accurate as a brand new 6-figure $$ lathe, maybe not quite as fast in rapids and indexing, but who cares?

Mine have no payments, they just set patiently for the next time I need to use one. And when I offset a tool .0002", the next part comes out .0002" different.

Most machine shop owners have no idea how to diagnose and repair their own CNC machines. I just can't understand that, considering most shop owners are machinists!

Aren't machinists supposed to be good with machines? Ain't that what we do??

ToolCat

I agree 100%, but only in context. This model ^^^ works well with your shop obviously (and mine ), but it wouldn't be sustainable for balls out production like Tonytn36 who tracks his production times down to a tenth of a second or less.

Point being we all are machinists, but we attract customers and provide services (parts) based on our unique niche. Our niche largely determines what machines and other support mechanisms we ultimately need to be successful.

 

[Ox]

"Rapids" is a very over rated aspect.
I have checked to see how much the 50% button effects cycle time a few times.

Generally a 3 minute part would shave maybe 4 seconds by going to 100%.

Tool change speed, spindle RPM, available feedrate, and through the spindle coolant (and the tools that utilize it) will doo 10x more good than insanely high rapids for cycle time, and fast rapids jerk the way covers apart way faster, and when they crash - it's that bigger of a bang.

Now if you are still running a 1985 mill with 400" rapids, then that is a horse of a diff color.

Also - how much your control "stops to think" too. I have two Siemens 810D's that dwell 1-2 sec after hitting the go button before it decides to doo something. Drives me &%! nuts! No big deal on 1 hour cycles, but sucks on those quick secondary opps!

It does it sometimes if there is a little fancier feature to mill in SHOPMILL too. "OK, so you want me to doo what?"
G code is faster for sure!




If your machine isn't fully booked, it doesn't matter how fast it is. Slow and cheap will win.



------------------------

Think Snow Eh!
Ox

 

[WILLEO6709]

I have some 1996 Toyoda hmc's with full 4th, 10k rpm spindles, 1500 ipm rapids, rolling screen filters in the augers for aluminum chips primarily that flat out fly.....
It depends what you have available whether it makes sense to upgrade. Bottom line a lot of the oem's "keep machines under warranty" or upgrade more often in attempts to limit downtime. sometimes seconds matter, if its what you do every day you'll be able to tell when that is. For the rest of us out there with occasional high run jobs and nothing that is there day in day out years at a time the used market will serve you well.

 

[BulletB]

but you'll make a lot more money doing it on a pair of 20 year old paid for hmc's with a pallet changer( junk ) than spending 500k each on a pair of brand new ones no matter the manufacturer. Even if it costs your 30% on cycle time.

Would you really give up 30% cycle time to avoid buying a new machine? I have three shiny horizontals and one vertical and all are less than five years old. There are a few things I am trying to pick up with these purchases. I'm after that 30% and I'm after the 50% spindle utilization that the VMCs leave on the table. I'm beating the pants off the shops running Haas verticals in price, quality, AND lead time and I'm doing it at a shop rate of $200+ per hour. When you get REALLY efficient that 30% represents a TON of money. If I am running 10 hours per day at $200 per hour the 30% represents $600 per day that is left on the table.

I didn't spend $500k on a shiny new machine, I spent $800k on a horizontal hooked up to a cell. I would gladly put that up against a shop with 10 VMCs any day of the week as we are running it at 95% utilization. Me, my full time employee and part time high school kid grossed $1.2mil last year running simple parts and some molds. We did so at 60% NET margins. I'd love to hear what some of the other shops are doing per employee and how the numbers stack up with the old "junk" and old school thought. It isn't only the machines that made this happen, it is the mindset and the entire process. We have Vericut, off line tool setters, modular fixtures, computerized tool crib, it is a top to bottom approach and it isn't for the cheapskates.

I'm not trying to say this is the right way, to each his own. Can you make money with old machines, sure. Are old machines easy to fix, maybe... My time is worth a lot more than some mechanics so I leave the machine fixing to them while I do higher value work. I am just trying to illustrate what can be done and has been done. I'm not Ford, or Ferrari, I'm a 2.5 man job shop doing brackets, etc... and bringing down seven figures with the best that money can buy. Incidentally I started really making money when pushing the last turd Haas VMC out of my shop and replacing horizontal starting with "M".

The payment on an $800k machine is less than $10k per month, or $500 per day given 20 working days in a month. It is less than the 30% you are talking about and it gives me two more shifts for the cost of electricity. So lets be REALLY conservative and say we are running crap and making $140/hr. Over 24 hours that is $3360 for that machine alone. A shop with stand alone HMCs would be doing well to get 12 hours run time on an 8 hour shift which represents $1120, or $2240 less (I'm not even going to talk about VMCs). A cost of $500 per day doesn't seem so bad anymore. What does a new cell get you over something 20 years old? Scheduling, tool management, ERP integration, remote access, etc... It is easily worth a 10% increase, which is around $120k per year.

So lets see some numbers. Gross per square foot, gross per employee, net margins? It is hard to argue with those metrics. Here goes... $238/sf, $480k, %60. There is the shiny new machine argument. This is new equipment run to its potential in every respect.

 

[dkmc]

If you can crank out the part he needs RIGHT NOW, you will forever be the go-to superhero guy in the eyes of your customer:

Unfortunately, sometimes more often than not, it's "You SAVED MY ASS!....now
yer my buddy.....for THE NEXT 15 MINUTES". After that, your magic and image can fade fast....till next time. This is where the BIG BUX serve as the "pat on the back"

Yes I know how to fix them myself, down to board-level repairs.
My 20- to 30- year old Mazak lathes are just as accurate as a brand new 6-figure $$ lathe, maybe not quite as fast in rapids and indexing, but who cares?
Mine have no payments, they just set patiently for the next time I need to use one. And when I offset a tool .0002", the next part comes out .0002" different.
Most machine shop owners have no idea how to diagnose and repair their own CNC machines. I just can't understand that, considering most shop owners are machinists!
Aren't machinists supposed to be good with machines? Ain't that what we do??
ToolCat

You are a more rare Cat than you think Toolcat, and I like your business model.
Most machinists are NOT good with electronics I don't think, and many don't have a clue about machine maintenance. They just want to push the green button.

I know a guy that owns a Mazak shop, and he told me when it comes time to buy a new machine, his operators tell him which one to buy! He says "I don't know whats in the back doors, and I don't care". Then he says he has to get going, off to the golf course to meet his customer(s). He's grown steadily for the last 20 years. From 1 employee to 30+ currently.
Different strokes for different folks.

 

[dkmc]

Tell that to all the Tier-1 automotive suppliers then.
<sniped>
Plus, when your customer is breathing down your neck for parts (with contractually-bound penalties mind you) the last thing you want to tell him is, "Sorry Mate, our <junk> machine is down again...

Tier 1??
Ugh......who wants to mess with that??
Talk about being "your Buddy" for the next 15 minutes.....
I'd much rather "fix a tractor" * any day.

* Work for small start up's, design small fixtures or machines,
run production for small OEM's, weld and re-machine on a worn widget, ANYTHING but the automotive rat race.....to the bottom.

 

[Ziggy2]

So lets see some numbers. Gross per square foot, gross per employee, net margins? It is hard to argue with those metrics. Here goes... $238/sf, $480k, %60. There is the shiny new machine argument. This is new equipment run to its potential in every respect.


Those are impressive numbers.

I suspect that you are operating your business highly leveraged and have some very profitable work to keep that horizontal busy and that allows you to achieve those numbers.

You have not stated how long you have been in business. I'm willing to guess probably 7 yrs or slightly less. This also means that you have not had to survive a down turn in the economy if my guess on your business start date is correct.

Not trying to take anything away from what you are doing or have accomplished to this point but I do think that you are missing some important other metrics. I wouldn't expect anyone to answer these questions but how much cash do you have in the bank and what is your actual net worth? These are important questions to be able to answer for yourself. From what you have said, if you have been doing these margins for more than three years, then you should have zero debt with a comfortable sum in the bank.

Why I raise the question on net worth and cash on hand is that those two metrics are what determine the long term viability of a company. The metrics that you originally stated tell us mainly how much cash you are handling and an indication of your overhead. What really counts is how much profit you accumulate in the bank.

You also should ask yourself, am I making too much profit on these jobs? What would happen to your business model if a competitor next door purchases a similar machine to yours? I'm all for maximizing profit but when I hear business owners openly discuss business metrics that are unusually strong, I have often found that their numbers were good only until the next contract letting when a competitor got smart and starts to copy them but at a lower margin. If you are doing unique high value work, then you can probably maintain your margins but I am guessing that you are currently enjoying some very unusual business situations.

I used to hear the laser shops talk about similar profit numbers that were out of sight. The good numbers lasted until the laser salesman made another sale to a competitor and the margins started to erode.

I have found over the years, no matter what the business is, companies that have the newest and shiniest equipment, do very well during the good times but are usually crushed as soon as any little glitch occurs in their volume. There is also a tendency for the equipment to own their master. The business owner is merely a slave to the machines.

The guys that run old equipment usually never grow much beyond being one man shops. They make money but it is the owner that is the actual cash engine. They also tend to be laid back and enjoy the simple things of life.

The companies that do well over the long haul usually have a healthy mix of good serviceable older equipment with a reasonable amount of new stuff. These are the companies that reach the finish line and do well financially. They are also frequently decent to do business with and respected by their peers. Their business owners often have the best mix of money and free time.

The trick is to know where you need to be at in your business model to accomplish what you want.

How you live life is the most important metric of all but usually ignored until too late.

 

[cnctoolcat]

Unless a shop has a product line, it's going to be tough maintaining $200+ per hour shop rates over the long term. Unless you have contracts in defense, aerospace, or medical, I can't see the automotive sector paying that much for milling and turning - it's just too competitive and cut throat.

Of course "shop rate" is a broad and vague term. Making $200 per hour on a Haas vmc is quite different than making $200 per hour on a 2 million dollar Makino hmc cell.

And when I was referring to rapids and indexing that was for CNC lathes. Lathes spend way more percentage of time actually in the cut than machining centers, so non-cutting time is pretty much irrelevant. Therefore my 30-year old lathes with 400 ipm rapids and 1 second indexing can hang right in there with a brand-spanking-new 2-axis lathe. Like Ox says, I might be 3 or 4 seconds slower on a 5 minute cycle part.

The primary advantage of new lathes is the live tooling, Y-axis, and sub spindles you can get now...with a significant increase in price of course.

Now for machining centers, non-cutting time is a much bigger factor, and that's where newer machines can outrun older vmc's quite handily.

Since the title of the thread was "Running a shop with old, low end machines", I was just offering a real world example of how it can be done, and done successfully.

We sometimes forget that machines are purchased with 'profits' not 'gross sales'. So if your shop has a 30% profit margin, that shiny new 1/2 million dollar machine is going to cost about 1.5 million in sales to buy. Often these are make or break decisions for the small shop.

ToolCat