growing very fast, new equipment purchase advice

[millNchill]

Wow, I'm very surprised and thankful for the amount of advice given here. Thank you all.

Everyone's advice considered, I am leaning towards buying another Fadal or 2 for now. Definitely not the greatest machines I have ran but the one I have seems to be suited pretty well for the work I am getting. I will continue to diversify my customer base and keep on pushing on until things are comfortable and busy enough to hire and or buy new equipment.

I hope 2020 brings great things for all of you!

 

[kustomizer]

Our first few years as a machine shop we looked more like a wrecking yard for machine tools but they were ours, the first cnc was a 1984 Myano bnc34 w/3t control. It was old, ugly and $7000., it paid for itself in weeks, then we started buying new machines and the hiring nightmare began.

 

[gbent]

If you gotta run junk, you gotta have a lot of it.

If you are successful, your biggest problem will be running out of working capital. All these folks saying "pay cash" is great, but make sure you have enough working capital to buy the unexpected repair, or the material for a hot job.

Never go to the banker with your hat in your hand. Go with confidence, and tell him how you are going to succeed without his money, you will just succeed faster with it.

Things never go according to plan, so make sure your plans have enough room in them for the unexpected.

When you look at loan payments, look at the principal repayment. That principal payment this year will require that much more profit next year.

 

[kustomizer]

Now gbent, back that train up one stop, I never suggested buying any "junk", and I don't believe any of the above either. Because a machine is old, or in need of repair does not mean it is junk. We are only saying it is good to live within your means. Always buy good tools and if they need repairs you can make it can keep a few bucks in the bank for a bit. There are a lot of old machines out there still earning their keep. That antique Miyano we had made $15,000 worth of little aluminum spacers every month for several years before I ever gave it another job. My oldest slowest machine is almost as fast as my newest at making little cam lobes out of 8620 because there are only 3 tools and I put 24 parts on the table at a time so rapid and tool change don't mean squat.
Now on the other hand if you are making parts worth a couple cents each you need them flying out of the machine faster than you can count them. A lot depends on the type of parts you are making.

gbent is 100% correct in saying you need some cash on hand, things can go to shit pretty fast sometimes and all at once on occasion.

I saw it written on a wall in 3 foot tall letters one time "Life is what happens while you are making other plans"

 

[Rob F.]

I dont think that anyone here is suggesting the OP buy clapped out scrap machines to rebuild and bring back to life. Plenty of good used machines out there, used does not automatically mean broken junk. All this talk of keeping money in the bank is fine but what is the downpayment on a new machine? About the same as purchase price of a used one? Either way the money is out of the bank account. The used machine has no monthly nut to crack incase his overflow work dries up.

 

[Oldwrench]

Leasing versus buying outright:

Because of the high cost of tooling alone, machining tends to be capital-intensive. Lease-purchasing machine tools conserves your working capital. In an intelligently run operation, that advantage usually outweighs the cost of the interest you will pay. I get that a job shop has a future that is somewhat less easy to chart than a product shop, but leasing is still a powerful tool. Keep in mind that you will eventually own the leased machine outright. If you take care of it, it will serve you for the next decade—maybe longer—with practically zero overhead.

As for new vs. used:

Except for the totally junkyard machines I started with in the 70s (e.g. $130 for a ram-type turret lathe, etc) I have always lease-purchased. Since about 1996 we have only bought new. However, in 2019 I made an exception for a group of four used gear hobbers, which if they were the new CNC type would have cost around $300K each, and even one would be well outside my comfort zone. But you can lease-purchase used machines too (provided their price is reasonable, which means approved by the leasing company's appraisers). Mechanical machine tools are much more easily refurbished in-house than CNCs—especially in the case of a hobber which has five (or six) axes. Used CNCs can also be reconditioned in-house, which was the only way I could get into CNC (rebuilt 4 turning centers with 5T controls) but that only works if you have a lot of time and are willing to live in the shop and eat ramen. Any purchase decision boils down to time versus money, but sometimes rebuilding used is the only leverage you have.