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Thread: VMC Purchase Advise
01-10-2017, 06:22 PM #1
VMC Purchase Advise
Hello Everyone. First off I appreciate all advise, good bad and the ugly.
Quick background - Product development engineer, 5-6 years of CAD background
My current situation I believe is really rare/ hard to seek advice that why I am turning to this forum for some help. I've already gained plenty of wisdom from reading on here and I will continue to.
My situation - I currently own and run a business providing contracted skill labor to one customer in particular who happens to be my former employer. Most of the time I personally am the main contracted laborer doing mostly robotic and automation tooling assembly builds, and I also perform service repair work. I build this customer's product both at their facility and at mine. It's been a great year and things don't seem to be slowing down.
To get to the point... With a lot of special projects that I build there are machined parts being made by other machine shops. I am now moving into the position of basically being the general contractor and have full responsibility of getting the purchase parts ordered, machined parts made, and then assembly. I have already had close to 25k in machined parts made the past 2 months, these are simple parts. I have the time being self employed to machine these parts myself, to be blunt I'm not a machinist. But however I do know CAD and CAM and feel like I can do anything I set my mind to (being 25 and already running a successful business). Coming out of the background I already have I know materials, tooling, tool operations and finishing(s). I also have a 60x80 facility with power to perform the work.
Now for the advise -
should I purchase an order machine that will last? looking for suggestions..
Should I purchase a tormach type machine to get started making the simple parts, and sub out the tougher/ larger parts?
Should I just keep using machine shops who can barely keep to a 3 week lead time, and in my opinion rape me because I don't provide them with 100k in work every year?
01-10-2017, 06:49 PM #2
There must be 1/4 million machine shops in michigan (slightly less then number of bars?). If you think you are being raped go somewhere else.
But if you are not familiar with machining you probably have no clue between what parts should cost what and how to simplify them to reduce cost.
If you buy a tormach and tackle the little parts you can slowly get your feet wet and buy bigger latter.
As to your situation being rare......... Not really. All situations are unique but nothing new under the sun.
01-10-2017, 06:59 PM #3
I know basic material purchasing, sawing, setup, machining, taping, and finishing enough to know that if one guy quote me 11k for a job and one guy quotes me 6.5k that the 11k guy is so busy that if he gets my work it's a win, and if the 6.5k guy gets the job he's still making money.
To give you an idea on how much I understand of manufacturing these type parts, I did an analysis where I broke down every step I would take to make my parts and allocated what I would want to make if I were making these parts and came up with the same dollar amount as the 6.5K guy.
Buying a tormach is something that I have heavily considered because of the amount of resources (videos mostly) on getting the machine up and making chips so quickly and with for what I am doing good enough quality.
01-10-2017, 07:17 PM #4
I do a lot of decision making with the "what's the worst case scenario" type of analysis.
Since you have a building you only lose your time and effort plus the difference in what you pay for equipment and what you get back when you dispose of it if things don't go the way you like. If you buy used equipment in Michigan there must be a gazillion of them, then I can see you lose say 50% of the price you pay for them. If you set a budget of say $20K, are you prepared to put a max of $10K at risk (plus your effort) of loss? In my main business which is teaching people to fly as a hobby, we call it "risk and reward assessment".
01-10-2017, 07:31 PM #5
The reward is far larger than the risk just with my single customer that has hinted towards a couple jobs with large quantities that would pay for a cheaper machine x 100.
01-10-2017, 07:32 PM #6
01-10-2017, 07:44 PM #7
you're in a great place right here. If you show a few pictures from your cad drawings of the most common and easiest parts you send out to have made and ask if anybody here within driving distance of you is upgrading their equipment and has a set up they want to sell for a set budget (say $14K) then I'm confident you will get some interest. You then take a sample part to the place he makes it on your future machine if you are satisfied it can make it. This way at least you can make the easiest parts right away and get used to it while at the same time make some money back. With time you can evaluate where to go from there. Where are you located in Michigan is a good start so members that are close and might be interested might offer other advice?
01-10-2017, 07:50 PM #8
01-10-2017, 08:07 PM #9
let's hope I'm right and you get some action.
01-10-2017, 08:14 PM #10
Depending on the contract with the customer, might this not be a conflict of interest?
If you're solely responsible for sourcing and purchasing, whats to stop you from buying nuts and bolts from yourself for $50 each?
01-10-2017, 08:19 PM #11
I look at an entire project, get quotes from people making parts, price out nuts and bolts (which usually they already know all the purchase parts cost so it's a wash for me) figure in painting/anodizing/ black oxidizing and then figure in my assembly with a little bonus for managing everything.
The other avenue with this same customer that isn't explored yet is there prototyping, I used to work in the engineering department and could get work turning around simple or complicated parts to the engineers if the more "project/production" work slowed...
01-10-2017, 08:40 PM #12
If you can do it yourself AND YOU LIKE IT I say do it in house. I bet you could get a used Haas TM with tool changer, fourth axis and a vice for $15k. You'd have support up the ying yang and you could even go to a Haas training class in Grand Rapids or Flat Rock to learn your way around.
Word of caution - appreciate the risk involved in having a large portion of your business tied up in one customer.
01-10-2017, 09:04 PM #13
I really love creating, and making things so I have little doubts that I will LIKE it. Honestly show me where I could get a Haas for that kind of deal??
Yes flat rock is around the corner and have already looked into training and used machines offered out of that location! Great resource.
01-10-2017, 11:23 PM #14
You're in luck. I'm essentially on the same hunt and have amassed a few resources:
Ebay is a big one obviously. Just be weary because it seems to be getting more common that 3rd party brokers are double listing the same ad on Ebay as another sellers.
Surplus Record (Used MACHINING CENTERS, VERTICAL, CNC Mills - CNC MACHINERY & EQUIPMENT For Sale - SurplusRecord.com) is a better one. This site won't always have prices but several sellers do post them. The link is directly to vertical machining centers. Each listing has the location in the description, so you can easily Ctrl + F and find some close to you.
520 Machinery (52� Machinery - Home Page) is in Shaumburg, IL and keep quite a selection of machines.
There are plenty of other machinery dealers similar to 520 Machinery but I don't bother checking each one individually. Surplus Record seems to be pretty comprehensive.
Regarding Tormach, don't always believe what Youtube says. I've been watching NYC CNC for a while and although he can run his machine pretty well, his parts don't really turn out that great. Moving what you've been outsourcing to a shop with proper equipment to in-house on a Tormach will only piss off your customers with the quality of parts that will go out. You can also find older, well supported machines for the same or less money than a properly equipped Tormach. I really wanted a Tormach a couple years ago but after thorough research, I figured out it wasn't really a proper machine for any sort of production work.
Edit: May look at these guys Lee Stevens Machinery | Quality Production; CNC, Milling & Drilling Machinery, maybe 30 mins from you. On the left side it says CNC Vertical Machining Centers. A Haas TM-1 is the first item.
01-10-2017, 11:39 PM #15
The thing is my customer has been getting parts made by someone who looks like they made them with a chisel and hammer. I mean holes not taped that are supposed to, machine surfaces that look like garbage, the list goes on (trust me I assemble the garbage). So honestly I think a tormach's quality with the right speeds and feeds isn't going to raise an eyebrow.
01-11-2017, 05:50 AM #16
I am looking at this from a contractors view - whilst you have landed on your feet with your current role you are not an employee so can go as fast as they want you out. You then have no work and a investment in a machine with no clients...
There is an opportunity sure - but there is also risk, and I know if I was your client and a young contractor came to me who I'd trusted with procurement and said they would take over production of the items they used to procure I wouldn't be happy.
You spec the requirements, therefore you have a conflict that you will order more than needed, over spec or fudge something - that would concern me. That is aside from the fact that the natural competition you mentioned earlier which drives a $4k difference between job shop A and B will vanish - so no downward pressure on prices.
Next, if you sub'd out a job and the parts came back REALLY bad, you'd reject the order, maintaining quality for the client - but if you make a rough ass part, and dont reject it and your clients notice/are effected they will drop you faster than a rock.
Do not underestimate your relationship - You are in a position of trust, but you push it and they may question your independence, and therefore value
The real question you need to spend time considering, is what do you want your business to be? You have a skill set, and you can leverage that to make money - but if you sink your time into making parts, learning, buying stock, cad,cam, that is time you are not using to secure more customers/work for your contracting part of your skill set, which on a per hour basis may be worth more. Also consider the market, you have already said ( as well as others) there are tons of job shops in the area, so if it all goes pop - will you be able to compete? Figure out where the LONG TERM profit is to be made, and maximise your efforts in THAT area.
Also consider than a VMC alone isn't enough, you need 3 phase, compressor, vice, tooling, band saw, and consumables etc etc - that can really add to your investment.
Having read your replies you sound very enthusiastic, but you need to recognise the problems that come from that enthusiasm - full on rose tinted glasses are NOT helpful when making business decisions - especially ones that not only expose your to risk, but significant (for an young individual rather than a company) level of capital investment.
Be objective, consider the downsides, sound out your client, record the balance of risk/reward and make a proper decision.
My sense is (and having been there myself) you will go with your gut - but hopefully the points above have given you another viewpoint to chew on.
Whatever you do, all the best!
01-11-2017, 07:59 AM #17
those are some pretty simple parts as you first described them.
Can you estimate the quantity of each one of these two parts you will be either buying or fabricating in 2017? Or is every part in the "less than a dozen" quantity and pretty much unique for each project?
Also what would you expect the best supplier so far to be able to make each of those parts for in the past in terms of price? What would your expectations be in terms of the price you want to make these two parts for?
This would give members more info to give you better advice.
01-11-2017, 09:06 AM #18
If You are willing to lose some money in the event it goes bad, of course do it.
You will not need 20k, more like 60-120k, over time.
Most (50-150%) of the costs will be extras, not the machine+tools.
Stacking, racks, pallets, saws, finishing, deburring, packaging, invoicing, taxes, insurance, etc-
A used auto-saw 3-6k.
A used stacker, 3-6k, etc...
Typical costs are 20-40k in extras, plus machines+tooling.
How do You know Your parts are good.
Does not matter, paying off 40-60k in extras is 2k/mo, for 30 months.
Just plan to bill 2k machine, 2k extras, 4 k salary, 2 k taxes and overhead, every month.
You NEED to bill 10k margin, to make a profit.
If You can, go for it.
01-11-2017, 09:26 AM #19
I understand there are extra cost involved, but do you go out and spend 10k in tooling on parts for one customer? That doesn't sound very wise, why wouldn't I just purchase the tooling I need for the job(s) I have and buy tooling as I need it? I already own a bandsaw capable of the requirements I need, I own racking, pallets, pallet jacks, forklift and don't forget I do more than just make parts so I accrue some of these cost based on the big picture which is assembling the product. In regards to book keeping cost like you mentioned I already have a streamlined system that I use and is paid for again by already having a successful business, so is it really that more cost accrued?
There are definitely some cost in Metrology and I tend to buy the best from the beginning so I would probably fall more in the 5-6k range.... Good point!
I just don't see the extra 40k you are saying to watch out for? I'm not going to be superman and try and buy every piece of equipment I can to say I have all the capabilities. I will sub out what I need to until my machine is paid for.
Again your math doesn't fit in my entire picture, I can make 10X more money then a CNC can in one month by providing labor performing machine building or service repair work (when they call for it- which is the kicker) so I don't need the machine to make me 4k salary.
Thanks for advice but I think it's seen from a start from nothing point of view, which I don't completely feel like I'm at.
01-11-2017, 09:28 AM #20
Tormach's are not cheap. After you include enclosure, tool changer, tooling, etc... you are with the same cost of a used (almost new) Tool Room, with more precision, rigidity and reliability.