OT- Machine tool prices back in the 70's adjusted for inflation really reflect

their real cost back then ? I ask as a PM member informed me recently that his manual 1972 Deckel mill with base price of aprox $30,000 new, add in some major accessories that were also bought, and adjusted for inflation is now $200,000 !!! Can you imagine paying that much NOW for a 5,500 lb. manual mill ?

So I get to wondering if there isn't another dimension to this. For example perhaps in 1972 the typical manufacturing concern that was doing well enough to buy new machine tools, was simply making more money per hour with their machines, such that $30,000 didn't really have the negative financial impact that $200,000 would today ?

Further complexities today would be manual versus CNC of course.....a sucessfull company might easily justify $200,000 for a 5 axis VMC. But back when manual was the pretty much the only choice*, one wonders how a company could justify that much expense for such relatively low production....unless each complete piece was simply producing more money per hour.

Thoughts ?

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*And yes of course in 1972 there were NC machines but they were insanely expensive for the times, not very versatile, and unless it was some screwball contraption like a Moog Bridgeport, almost never found in a typical job shop so not sure that is relevant to this discussion or not.

Milacron said:

their real cost back then ? I ask as a PM member informed me recently that his manual 1972 Deckel mill with base price of aprox $30,000 new, add in some major accessories that were also bought, and adjusted for inflation is now $200,000 !!! Can you imagine paying that much NOW for a manual mill ?

So I get to wondering if there isn't another dimension to this. For example perhaps in 1972 the typical manufacturing concern that was doing well enough to buy new machine tools, was simply making more money per hour with their machines, such that $30,000 didn't really have the negative financial impact that $200,000 would today ?

Further complexities today would be manual versus CNC of course.....a sucessfull company might easily justify $200,000 for a 5 axis VMC. But back when manual was the pretty much the only choice*, one wonders how a company could justify that much expense for such relatively low production....unless the production was simply producing more money per hour.

Thoughts ?

==========================================

*And yes of course in 1972 there were NC machines but they were insanely expensive for the times, and almost never found in a typical job shop so not sure that is relevant to this discussion or not.

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supply and demand. volume being manufactured
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Starrett tools have gone up more than inflation. i am assuming they make smaller batches or quantities of tools. and pollution control requirements like foundry and plating have effected prices.
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much easier to reduce prices when you make anything in larger quantities. you change fixtures less often, optimize programs, tooling, machines for more efficient production. literally if you spend a extra hour setting up 100 parts made in small quantities thats 100 extra hours to cost. when you buy castings and supplies in smaller quantities you often pay 20 to 80% more in cost. if you produce and sell stuff fast often you need no warehouse parts are stored on factory floor never for long at any one spot. warehouse taxes can add 10-30% or more to cost.
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the little things add up. in China they look to make stuff in quantities of 10,000. not unusual to setup factory produce 10,000 items and possible empty factory of machines when done. i saw used machinery places in China with easily many hundreds of used machines. you drive truck into building they use crane and load into truck. you unload in your empty factory building and plug in electric. everything designed to move around for speed and efficiency. not like some countries where machines stay in same spot 50 years or more. some places in China you lease machines for the job so you do not even have to buy machines

Couple thoughts; The cost of the actual build must be remarkably cheaper now than then. As it is CNC is on every street corner and is used to build the components for something like that, back then the components would have been built on the same machine it was building, so just based on the productive ability to build the bloody thing keeps the competitive market down.

And the ancillary products that go with the machinery is a huge factor in 2017, made in the USA/Germany/UK/Japan/Spain yeah right. The phrase "down to brass tacks" comes to mind. The cost of producing screws, washers, nuts/ gasket material or whatever else is obviously is other manufacturers ballpark.

Robert

DMF_TomB said:

supply and demand. volume being manufactured
.
Starrett tools have gone up more than inflation. i am assuming they make smaller batches or quantities of tools. and pollution control requirements like foundry and plating have effected prices.
.
much easier to reduce prices when you make anything in larger quantities. you change fixtures less often, optimize programs, tooling, machines for more efficient production. literally if you spend a extra hour setting up 100 parts made in small quantities thats 100 extra hours to cost. when you buy castings and supplies in smaller quantities you often pay 20 to 80% more in cost. if you produce and sell stuff fast often you need no warehouse parts are stored on factory floor never for long at any one spot. warehouse taxes can add 10-30% or more to cost.
.
the little things add up. in China they look to make stuff in quantities of 10,000. not unusual to setup factory produce 10,000 items and possible empty factory of machines when done. i saw used machinery places in China with easily many hundreds of used machines. you drive truck into building they use crane and load into truck. you unload in your empty factory building and plug in electric. everything designed to move around for speed and efficiency. not like some countries where machines stay in same spot 50 years or more. some places in China you lease machines for the job so you do not even have to buy machines

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Right....and maybe I'm missing something but what you point out would seem to make it ever more amazing they paid the equivalent of $200,000 for this manual mill back then !

litlerob1 said:

Couple thoughts; The cost of the actual build must be remarkably cheaper now than then. As it is CNC is on every street corner and is used to build the components for something like that, back then the components would have been built on the same machine it was building, so just based on the productive ability to build the bloody thing keeps the competitive market down.

And the ancillary products that go with the machinery is a huge factor in 2017, made in the USA/Germany/UK/Japan/Spain yeah right. The phrase "down to brass tacks" comes to mind. The cost of producing screws, washers, nuts/ gasket material or whatever else is obviously is other manufacturers ballpark.

Robert

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Sort of like the previous poster, you are expounding on why machines were so relatively expensive back then and missing my point. My point is how the hell could businesses afford to buy them in the first place back in 1972 ?

Milacron said:

Right....and maybe I'm missing something but what you point out would seem to make it ever more amazing they paid the equivalent of $200,000 for this manual mill back then !

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prices on machines especially manual machines cost more now cause they are rare. they were cheaper back then as they were more common.
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monarch lathe now can cost more than a Prototrak lathe with cnc ability.
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bridgeport mills are still made and you can buy for what it cost but same price you can get a cnc mill.
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some is the currency exchange rates. in China workers wages buying power is more like getting $10/hr where in USA it would be $20/hr. but reason stuff 25% price of made in USA is overvalued us dollar and under valued chinese currency. that and china government often is in partnership with joint venture companies and helping the company. 10 or 20% cheaper in many ways adds up to often 25% the price of usa made stuff. again setting up a factory to efficiently produce 10,000 items is cheaper than making do with factories that have not changed or moved stuff in 50 years. making in quantity can easily reduce prices 50%.
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setting up efficient factories to produce cheaply in quantity is under appreciated in countries that have trouble competing. that and government assistance rather than taxes and regulations adding hugh expenses is also under appreciated
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face it communist countries used to do big projects with thousands of people due have many advantages compared to little mom and pop setups

I remember all machine tools being expensive back then- even used ones.
I just looked in an old 1974 catalog I have, and a Burke Millwright vertical mill was $3196- the equivalent of $15 grand today- which is a lot, but still not insane.
However, add a Colemaster NC system to make that Burke a numerically controlled mill, and the price goes up to $14,000 in 74 dollars, about $70,000 today.
A Burke aint much of a mill- its a 1hp 1300lb mill that resembles an old Bridgeport M Head.

A real Bridgeport back then was significantly more, and an industrial sized mill, a Cinncinati or similar K&T would probably have run you 20 grand in 74 dollars, which is just about 100 grand in today's dollars.

And, remember at that time, minimum wage was a buck sixty five- at least in my state, thats what I got paid. Saving five or six grand to buy a new Bridgeport J head in those days was just impossible.


We are spoiled today, routinely thinking we can buy machines that cost a hundred grand new for a nickel on the dollar, and demanding they be in perfect condition. Used machinery dealers in 74 sold absolute junk for more than a new car cost.

I do think that industry back then was pretty stingy about buying new at those prices- aside from Boeing, most the shops I saw in 74 were running WW2 surplus machinery. Wasnt uncommon to see overhead belt drive equipment in daily use.

Milacron said:

My point is how the hell could businesses afford to buy them in the first place back in 1972 ?

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I'm not sure they could.

What we do not have sight of - yet - is the shape of the pyramid or bell curve. Some entities earn enough in their primary business they can afford the best equipment, whether justified on the 'specific' economics or not.

EX: Three, not one, of LeBlond's finest-ever lathes with the 25 millionths Timken spindle bearings. Where? Comsat Labs. But everything ended up being contracted out, after all. Three years after installation, the head of that shop said about all they had been used for was making custom Hurst shifter knobs for the staff's personal vehicles.

Minor distortion? The "cold war mentality" could have been a far larger one.

Either way, how many Deckel's bought as 'pets' or for their prestige in an R&D shop, would it have taken to distort their relatively small niche of a broader market that had hard-to-avoid NEED of them?

IF.. Deckel were minority producers, unit-volume-wise, top, but small, point of the pyramid, their price would not have HAD to be any more relevant to the GENERAL market than Ferarri to Ford or 100 foot-plus Feadship to an 18 foot-minus FRP bass-boat.

The prices of Bridgeport vs Toolmaster vs.. easily a dozen other light/medium vertical or 'combo' mills, US, Europe, Japan, Taiwan... might track the general economy with far less variance.

Milacron said:

...My point is how the hell could businesses afford to buy them in the first place back in 1972 ?

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I started in the trade in 1981, the shop rate was $45/hr. That works out to about $120/hr in today's dollars.

If you spent $45K for a machine in 1970, and your shop rate was $40, the machine in today's dollars would be 283K. Your $40/hr shop rate would be $252.

Inflation Calculator | Find US Dollar's Value from 1913-217

I would have no problem spending $300K on a machine today if I was going to get $250/hr for that machine.

The real question is how do we afford new machines today?

guest said:

I started in the trade in 1981, the shop rate was $45/hr. That works out to about $120/hr in today's dollars.

If you spent $45K for a machine in 1970, and your shop rate was $40, the machine in today's dollars would be 283K. Your $40/hr shop rate would be $252.

Inflation Calculator | Find US Dollar's Value from 1913-217

I would have no problem spending $300K on a machine today if I was going to get $250/hr for that machine.

The real question is how do we afford new machines today?

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most companies figure production of 5 years at high enough profit to pay for machines. if profit after 5 years is less than 10% many companies will stop production and put funds in the stock market at a higher return.
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can be frustrating to loose job at a place making a profit but big bosses says it is not making enough profit. i have been told 10% is minimum profit accepted by many companies in usa.
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in China 0% profit is considered ok if factory was setup to create jobs and not just to make a profit. hard to compete against somebody accepting 0% profit and even temporary losses of over 5 years. governments can absorb looses if they see long term value like people learning technology

Milacron said:

Sort of like the previous poster, you are expounding on why machines were so relatively expensive back then and missing my point. My point is how the hell could businesses afford to buy them in the first place back in 1972 ?

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Because widgets used to sell for more money..
25 years ago I needed a brake drum for my jeep, they were $80, cheapest a junk yard would sell one to
me was $50.. Now I can go buy the same brake drum brand new for $20..

Think how long it would take to make a brake drum back in the old days, probably didn't take all too too
much longer than now, but it certainly took longer. And it took more people.

So I would guess that 30k(200 adjusted) machine was turning out dollars similar to what a 200k machine
is today..

CNC side.

I think the first guys that took the leap into CNC (or NC) probably made a pretty good chunk of
cash, even though the machines were crazy expensive.

If you knock them out 3 times as fast as the guy down the street turning handles, you could cut the
price just a bit and make a metric buttload of cash.. They were probably a lot more consistant with
less scrap also..

DMF_TomB said:

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in China 0% profit is considered ok if factory was setup to create jobs and not just to make a profit.

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'once was', not 'is now'. Thirty - forty years ago, yes.

Long time now they seek a HIGHER profit and in a much shorter time-frame than a 'western' company would do. And they have been getting it.

Not our natural 'enemies', but you'd better believe natural competitors before trusting to obsolete stereotypes.

In 1989 my dad purchased a new Miyano KSV31. 3 axis vertical mill. Full enclosure 18 tool umbrella ATC 40 taper. No rigid tapping but did have 3 axis interpolation for threadmilling. I think 25 Inch x-travel. Cost was $85,000.00. I think now you can get a HAAS same or even cheaper.

From what I know this machine is still running.

Ass forward comparison!

Given that wage inflation for a "production person" (whatever that means) over the same period was around 6 1/2 times the real price is pretty static. Which is exactly the result you'd expect from that comparison. Hardly matters anyway as its a completely invalid parameter in any real world sense. All you are saying is that the same number of man hours goes into building it using the same methods and equipment whether you do it in 1972 or in 2017. Well D'oh. Not that you'd build one in 2017, let alone build one that way (assuming you could).

The interesting side is the precipitous decline in real world costs due to increasingly sophisticated factory production. The whole thing about a factory being that the multiplier in output quantity per hour from each production worker is more than enough to cover all the investment in the factory and support staff. The other interesting thing is that you have to have enough demand to absorb the output. If you don't have the demand your economy will stall out when the existing technological basis runs out of steam and its time to switch to another mode. In a closed system old technology factories slowly decline consuming their own capital investment to keep running whilst new technology slides in funded by forward looking investment based on the returns from taking over the old market and making a new one due to lower prices. In an open system a low wage supplier can initially undercut the existing manufacturing base then grow faster by supplying rising local demand generating the finance to implement new technology much faster.

Clive

I think a lot of it was the depreciation period was longer.

A 30 year old manual machine isn't really noteworthy. The oldest manual machine in my shop dates to 1945, and if you had bought one in 1975 it would have been much the same. A 30 year service life means that a $200,000 machine costs $7000 per year (not counting future value of money, inflation, interest and whatever.)

The oldest CNC in my shop is 1987 and that thing is a dinosaur. The only reason it has a place on the floor is it is the only open CNC and sometimes you need a hole pattern in the middle of a twelve foot long bar. The economic life of CNC equipment in a production shop is ten years or so. So less lifespan to spread the cost over.

If in the manual days a shop bought one machine every three years for $200k and now they buy one every year for $70k, that's not hugely different from an affordability standpoint.

Monarchist said:

I'm not sure they could.

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True a Deckel FP4 is an extreme example. Surprisingly however, an estimated 50 of those were sold in the USA in the 1970's before they transitioned to the next generation....the FP4M, which is a much less stout and simpler Deckel. The final generation was the FP4MK in the late 1980's where they got back to a heavier duty machine but still not as HD as the original FP4.

I've worked on some old machines, and sometimes you find an old invoice and it's pretty shocking. I worked on a 5K96 Devlieg circa 1970. As I recall the price was somewhere around $160,000. That's over $1 million in today's world. For a totally manual machine.

People are always convinced that things used to be cheaper and that old things lasted forever. Of course, if that was true we would not need landfills and scrap yards. A few really good things have survived and we judge everything based on those anomalies.

Some things were cheaper. Cars for example. I think an average car in 1965 (muscle car era everyone is obsessed with) cost the equivalent of about $25,000. It's more like $35,000 today. But, you get 30+ MPG, a 150,000 mile warranty, 10 air bags, and less emissions than an abandoned outhouse. My dad bought a Mustang in the early 1970s. I think it was about 5 years old. It was already rusted completely through the doors and fenders, and he rebuilt the engine (straight 6, maybe 80 horsepower) before it hit 100,000 miles.

One issue I believe you are ignoring is that manufacturers like GE, GM, Ford and such did not buy used machines. As those businesses expanded, they bought new machines, some which were NC, stuff that the small shops couldn't afford. Also, as I came up through the ranks, most large business as mentioned, had their own tool and production shops.

Tom

Bobw said:

Because widgets used to sell for more money..
25 years ago I needed a brake drum for my jeep, they were $80, cheapest a junk yard would sell one to
me was $50.. Now I can go buy the same brake drum brand new for $20..

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Yes, that is what I what I suspected and helps explain how more expensive machine tools could be justified back then.

TDegenhart said:

One issue I believe you are ignoring is that manufacturers like GE, GM, Ford and such did not buy used machines. As those businesses expanded, they bought new machines, some which were NC, stuff that the small shops couldn't afford. Also, as I came up through the ranks, most large business as mentioned, had their own tool and production shops.

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I hope your "you" isn't me 'cause I'm not ignoring that at all and agree completely