So I have what may or may not be a crazy idea. I am an engineer at a big company and I work at a location in Chattanooga TN that focuses on RnD and one offs for the big company. We have a fairly large machine shop with room to grow. In the shop we have a Haas VF6, VF5, Okuma captain L70, and about a 15 other small machines. Our internal workforce, ie machinists, is getting ready to retire and we are slow to staff up. We are even out sourcing because it is getting to the point where it is cheaper. If we were a machine shop we would have closed up long ago but we are really a bunch of engineers using the shop at about 20% capacity. The company is too bloated to go after small work because our legal contracts are so stringent that nobody is interested in signing it just to get some parts made.
The big idea … I pitched to my management is to hire a motivated and talented individual to basically come in and run a business out of our location. We already paid for the machines, we paid for tooling, and we pay for facility costs. This individual could run a turnkey business with no startup cost, and only have to worry about labor, materials, and tooling. We could cover the cost of machine maintenance and even buy new machines to support their business. For us we just really need talent to support our R&D work. So if they could do cam work and support us they could run the business autonomously. I assume the parent company would want some kind of kick back but I imagine it could be off of profits only. Or maybe they keep track of how much work they do for us and charge us the same rates but we credit for the year. It seems like an amazing win-win symbiotic relationship.
The hitch is, my manger is very risk adverse and passive. The way I see it the parent company bares none of the risk. If said manager succeeds then we win, if they fail then we get someone else and try it again. I would imagine that the person running the shop could be much more competitive than other shops without some of the operating costs. They could run 24x7 if need be.
So my question to all you talented people out there is, am I missing anything? Are there potential pitfalls I should be aware of? Is this a good deal and would you jump at the chance? I am about to take the reins, make a business plan, run the numbers, and tell my boss’s boss. I am not interested in running the shop as I am pretty happy as an engineer. My goal is to see the location grow and take on more design work. To do that it would be nice to offset our current cost by another revenue stream. If the machine shop business offset the facility costs, or was even less of a drain then it is currently, that would be great.
Thanks ahead of time for your thoughts and comments.
~Nick
The big idea … I pitched to my management is to hire a motivated and talented individual to basically come in and run a business out of our location. We already paid for the machines, we paid for tooling, and we pay for facility costs. This individual could run a turnkey business with no startup cost, and only have to worry about labor, materials, and tooling. We could cover the cost of machine maintenance and even buy new machines to support their business. For us we just really need talent to support our R&D work. So if they could do cam work and support us they could run the business autonomously. I assume the parent company would want some kind of kick back but I imagine it could be off of profits only. Or maybe they keep track of how much work they do for us and charge us the same rates but we credit for the year. It seems like an amazing win-win symbiotic relationship.
The hitch is, my manger is very risk adverse and passive. The way I see it the parent company bares none of the risk. If said manager succeeds then we win, if they fail then we get someone else and try it again. I would imagine that the person running the shop could be much more competitive than other shops without some of the operating costs. They could run 24x7 if need be.
So my question to all you talented people out there is, am I missing anything? Are there potential pitfalls I should be aware of? Is this a good deal and would you jump at the chance? I am about to take the reins, make a business plan, run the numbers, and tell my boss’s boss. I am not interested in running the shop as I am pretty happy as an engineer. My goal is to see the location grow and take on more design work. To do that it would be nice to offset our current cost by another revenue stream. If the machine shop business offset the facility costs, or was even less of a drain then it is currently, that would be great.
Thanks ahead of time for your thoughts and comments.
~Nick