You can imagine with the last 3yrs of everyone cutting their prices more than usual, to keep at least a little bit of work coming, or to not lose what still existed, its not gonna go back up all that fast. 3yrs is long enough to get used to how things are today.
With that said, just got the taxes, property valuation up 9%, and taxes themselves going up at least 7%(no damn reason for it either), so $600 gone there already this year, hence gotta make at least 1K gross just to cover that added expense, power's going up 12% and has time to go up again before the year is over.
From a buyer side, I hate when people ask for target pricing.
I don't get it so much with machining since we do that in-house, but I get it alot with electronics parts. I ask for a price and they ask me what I want to pay.
I usually tell them my target price is 0, and to let me know how close they can come
But seriously... if you have a job you can do for $1/part and they tell you their target price is $5/part, you're not going to bid it at $1, right? You're going to bid it at $5 or maybe a tiny bit below to make 'em feel good.
I appreciate the "lets not waste our time" part of target pricing, but I don't think it benefits the buyer in most cases.
Having said that, if I have a part I've been buying for a long time and I know all the suppliers and the prices and someone comes along and wants to win that business, I have no problem telling them what they would need to hit in order to get it. 9 times out of 10, they can't come close.
Mike, I agree with that. It totally benefits the buyer. I will say this though, as more cheap skates come in the door with your "zero" attitude, it makes me look less at the drawing, put a number on it, and move to the next one. I realize it is just part of business but when I waste an entire day of my life bidding crap I would never get because I cannot work for free, it leaves a sour taste.
I agree that the target price, from your perspective, seems a bad idea, BUT how many times have you really put a higher price on something than a shop can do it for? About twice a month I get something sending me some drawing with little to no info, 5 axis, 3 position, and see if we can do it for 20 bucks "if they buy 100 of them later". While I respect the target price there, that obviously saved me a lot of time since the material will be 25 bucks. Engineering, programming, modeling, and tooling must come free these days to most because they are pretty much expecting it anymore.
I was at an auction today and I spoke with the owner of the shop and he told me he got tired of working for free and decided to call it a day. He did work for Raytheon and they had him rebid work every month or so and they wanted it cheaper and cheaper. He finally lost all the contracts and went bankrupt. Nice shop too all late model cnc and waterjet. Relieable was there so you will see his shop on Ebay tonight.
I'm thinkin there's more & more garage's and even cellars with CNC machines in them these days and increasing every year....."cottage industry" they say.
Could it be these 'hobby' guys might be horning in and also have a day (or night) job, work cheap for the 'fun' of it and a little extra beer money.
Or maybe it's the cottage dudes thinkin they got it all figured out, and they just quit said day job??
But prolly the parts Viper's talking about can't be made on cottage machinery....
Well, while we're here. What sort of rate are you guys still managing to be left with on manual, and cnc work, anyone gonna say?
I've had more manual work lately in the 35-45range than my preferred 50(a bit more on a few exceptions but not much exceptional $ work left, can't remember the last job in the 3 digits/hr) been lucky to run the VMC on some stuff for $40/hr too(low quantity, set up and such eats time fast), a few around 60, nothing special either. I try to quote it all at around $50 but it seems the past year I've under estimated the time it was gonna take on a few too many jobs, and its not like I'm dragging ass doing it either. I think everyone's either not tracking their real time all that well, or underestimating it too. Ah well.. still beats a day job in a regular shop. Got 5hrs in something right now at $0, not sure how to add that one up but at least no metal cut yet.
My current job involves designing and machining prototypes as well finding machine shops to make parts when the quantities are too high for me to handle. I send out maybe $30 000 worth of work a year. I live in a town in southern Ontario that used to have dozens of machine shops, there are still quite a few. My parts are not too hard to make, I design them so that I can make them and I'm not much of a machinist. What continually surprises me is the variation in the quotes. The last part I had quoted ranged from $35 to $350 a piece for an order of 48 parts. The guy who quoted me the $350 has similar CNC equipment, is about and his shop is about 100ft from the guy who quoted me $35. I visited both shops when shopping the work to explain what was important and to show that I was serious about the job.
Other than laser cutting, I can't say that I've stumbled across any of these shops that will make parts for less than my material cost.
One of the more disturbing trends is the move to reverse auctioning of work. This is the WallMart principal where they bid shops against one another until someone bids the lowest rate.
There are more and more people coming out of college who have been trained to do this and they go around to larger companies and contract their services out. They dont know anything about the product to be made or have any investment in it. Only that if they get it made at the lowest price they will earn the highest commission.
I have personally meet two people from different companies here in Atl that actively do this for a living and while this has been the arena of large quantity commercial goods the starving ones are looking at he piece work machined parts as a new market to tap. Actively sending out RFQ's multiple times to different shops trying to get them to drop their price a little less than the next guy.
Pricing you labor to what the market will bare is out the window if one of these cats comes to town.
Well, let's say you are buying a new machine... you don't know what it costs so you call the salesman. Before he tells you the price, he wants to know how much you are willing to pay. I don't like doing business like that - I just want to know the price.
Originally Posted by Ox
On the other hand, let's say I walk in your shop and try to buy one of your machines. You know what you would sell it for... so asking me what I want to pay is sort of playing a game. You know your price - so you tell the price and if they want to buy, great - if not, fine.
I don't see anything wrong with that. If I ask a plumber for an estimate on fixing my sink, or a body shop to quote me on painting my car, they don't ask me to tell how much I'm willing to pay first.
I think there are AT LEAST two ways these low ball bids can arise. One is the slut principle the OP is beefing about. In that case, there is not much you can do but pass on the work. But the more concerning thing is when the other guy really has lower costs than you do. This can be for any number of reasons, but you may be in trouble if you think it is a slut and it really is someone with lower costs.
Yes, I've lost out on some pretty good jobs after doing the prototypes. all small runs mind you.. These wern't the type of parts the cottage industries would have been able to do for the money. more than likely they were from other companies that just bought the latest craze of done in one type of machines thinking that the cycle times are that they can do it for less money. on a real production run, this works. What they fail to take into account is the additional setup times involved with regard to synchronizing these newfangled machines, add to it the huge cost of these machines and the extreme cost of the additional software to match these machines.. The shop owner I work for and other shop owners I have met seem to have this pie in the sky idea of 15 minute programming time with all rotations included and 10 minute change over on untested new parts. the poor schmuks on the floor are petrified of crashing while getting yelled at for taking too much time on these new complex machines..
Most of the shop owners that have bought these machines have elected to purchase the machines now, wing it with what they know now and buy the expensive software later... these are the same shops that have to had multiple service calls on wrecked machines, spindles replacements ect.. so after a 30k service call how much does that part cost now??
As for my cottage machine at home.. I service customers non related to my current employ (my ethics) so if i get my price it's xtra money, if not.. oh well my day job still pays the bills.. and i'll hobby on : )
Originally Posted by SND
You've gotta do what ever you have to in order to survive, but personally, I've decided that I would rather go out of business than work for less than between $50 and $60 an hour. Even at that shop rate, I don't see how anyone can really pay a decent wage and provide health benefits. I would be better off working as an employee for a shop with deeper pockets, and that's exactly what I plan to do if I can't make a go of it at my rates.
When plumbers charge an easy $90 an hour for their services and are able to carry most of their investment in tools in a 5 gal. bucket, $60 an hour is a real bargain for machining. Maybe that's why most kids are smart enough to pass on being a machinist. I don't blame them. When my Dad ran his own shop, they ran parts for twice what I can get for them now, back in the 60's. That's what competing with the Chinese has done to our country. It's pretty hard to outsource that plumber, though, which is exactly why their services are worth so much more than ours.
Originally Posted by Bruce Griffing
Maybe, just maybe, the O.P. is bidding on work that's NOT in your "area of expertise" ?
Sure a generic C.N.C. vertical mill can doo the job, but as quickly/cheaply as something else ?
My neighbor runs a C.N.C. swiss shop, but will NEVER compete against an acme 8-spindle,
nor will they compete against a national coldformer. These are for threaded inserts
for plastic parts for example.
His "area of expertise" is short run, fast turn around, parts needing c.n.c. capabilities.
That happens, something I can do cheap, maybe your not looking at the part the same way I am, or maybe I've already done a similar part and have all the tools and maybe even the fixturing.
Originally Posted by digger doug
It goes both ways, there is some stuff I just flat out can't compete on. Washers, screws, sheet metal stuff, fab stuff. Just got outbid on a rod end, miserable bastard, HP-9-4-30, rolled J threads, that then get the OD ground off, funky keyway, tight bearing tolerance, and there is a heat treat in there, plus a pretty tight deep hole with a full round bottom.
Our customer saved a buttload of money by not using us, but they've been getting these types of oddball parts from this company for years and years, and they are good at it, and still in business, its what they do, and they can do it way cheaper than me.
A few years back a guy from down the street stopped in to borrow a countersink, saw what I was running and thanked me for under bidding him since he was losing his ass on these parts. I was making $270 an hour on basically the same equipment he was running. In that case I was the whore, and I thought I was high on the price.
Just for fun, what price would you guys put on those parts? 41L40 annealed, so it cuts like butter. 2.25" diameter, its a trailer spindle. 1"-12 threads for an inch, 1.250 + .001 bearing journal for an inch or so, taper up about 3 more inches to a 1.625" +.001 bearing journal, then a small shoulder at 2.18.
Backside, 1.75 +0 -.010 for 2", overall length of about 8". Then a wide open crosshole in the threads and a wide open keyway through the threads. like ±.010. Keyway is for a lock washer and the hole is for a cotter pin.
Quantity of 30-50 or so, material is supplied.
Maybe the extract below from your website atracts these customers.The bits where you offer cost reduction and design.
Copied from Mull Engineering website without his permission. But,OTOH it is free advertising.
"Due to our diverse automotive racing and aerospace background, we have the level of expertise to design parts that will meet and exceed your expectations. Many manufacturers will shy away from parts or assemblies that do not have a drawing or model for them. We have done plenty of business with customers that simply bring us a functional prototype and say, “please properly design this and make it”. You bet we can!
Please contact us today if you are interested in producing a new product or looking to lower your manufacturing costs on current products. Mull Engineering is always interested in new industries and views every challenge as an opportunity. We are an outsource vendor for several manufacturers and we look forward to adding you to our portfolio of customers.
The way I see it (with the modern c.n.c. crowd) is this:
The lowest supplier will be the smallest, just able to doo the job.
The smallest is a one man shop with no employees to pay.
The smallest is a guy in a conex box, generating his own electricity,
with one machine.
The smallest guy maybe be in a tin shack with no heat, a dirt floor,
and coleman lanterns for light, he may infact
be amish/mennonite, and his cost's will be lower for many reasons.
Employing the "family" as workers, not being paid even minimum wage,
While there is a surge of "2 car garage, c.n.c. machine shops with
cat-50 machine tools" And these have taken a large amount
of work away from the traditional large company/factory.
There is still no "Backyard, mom and pop, 2-car garage steel mill"
and there never will be.
Some things require BIG, and MONEY. Your not going to roll 18" wide flange
I-beams in your backyard.
Rockfish, I tend to agree. Though it is deeply discussed on this forum how great it is to be in the machining business, it sure seems other skilled trades are a WHOLE lot smarter move right now. Hell, I can run back down to the county and renew my plumbing license and for 100 bucks in fees, I can go out and charge 100/hr to install toilets and and fix sinks.
Some people, especially green horn design engineers, really do think it is as easy as hitting a button, and poof, there is your part.
Take care guys. I have dealt with enough BS from Mark above as well as the site owner. This will be my last post on this site.