New Shop and financing

[Houdini]

My tool vendor said he just helped a rich guy setup 2 Haas UMC's to make AR parts, thought he was going to clean up, Now the vendor said he is looking to sell the machines.
And also, just because a market has tons of supply and demand, doesn't mean its flooded, it just looks that way.
But as a side note, you do know that a forced recession has already started, bad time to start a CNC business, wait a year or so.

 

[Ox]

My tool vendor said he just helped a rich guy setup 2 Haas UMC's to make AR parts, thought he was going to clean up, Now the vendor said he is looking to sell the machines.
And also, just because a market has tons of supply and demand, doesn't mean its flooded, it just looks that way.
But as a side note, you do know that a forced recession has already started, bad time to start a CNC business, wait a year or so.

Apparently you don't understand the AR market?
It is a rubber band economy to which all other rubber bands are measured.

You can be running balls out for 6 months, a year, maybe more, but not usually.
And by the time a year has come around, everyone has been scurrying for any shop that they can find to make parts, and now the supply is WAY up, and about that time - those that were gunna buy one - this scare around - has now bought one (or two? They git lonely don't'chew know?) and now the bottom falls out almost overnight.

Now you have record supply*, and bottom of market. Production is quelled as quickly as possible, and warehouses fill up all over the place. Businesses that are upside down are dumping inventory for $.50/$1 just trying to eat another day.

This is NOT an industry to give credit terms to!

The machines that run these parts can (and have) set idle for 2 full years before there is any call to make more.


* It gits "flooded" to say the least.


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Think Snow Eh!
Ox

 

[standardparts]

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Point being - some folks would pay extra for parts known to have been made State-side.
(some)
Are these $70 units local?


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Think Snow Eh!
Ox

Can send you a link to the vendor and name of the source....but I'll be darned if I can see any kind of icon for email or pm or even contact info for you--but be this new site.....maybe PM me and then I'll respond that way....

 

[Ox]

Can send you a link to the vendor and name of the source....but I'll be darned if I can see any kind of icon for email or pm or even contact info for you--but be this new site.....maybe PM me and then I'll respond that way....

Huh, yeah, it looks like some of that kind'a info needs to be hammered out for the new software yet too eh?

Well, the Private Message part of this software is MUCH better than previous, so you can ping me that way.
Just go to my name/avitar and click, and you should find a "start conversation" link there.
I guess that is what they call "private messaging" here now.

But with that said - I am not sure what MFGR that you are asking about?
Are you sure that you are asking the right person?
It seems that you are asking about the $70 lower?
That's not me.


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Think Snow Eh!
Ox

 

[Ox]

OK, wait ... YOU posted that!

So - what is it that you wanted from me?


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Think Snow Eh!
Ox

 

[mhajicek]

It is a rubber band economy to which all other rubber bands are measured.

Thing to do would be to identify a machined product that tends to go up when AR demand goes down, and versa vice.

 

[Ox]

I believe that's been identified as "ammo"?


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Think Snow Eh!
Ox

 

[triumph406]

I would think anybody thinking of making AR recievers would be insane. 'specially starting the way the OP is.

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On the other hand maybe you experts should tell the people who consistantly have pallets of AR lowers at my local anodizer why their making a bad business decision making AR lowers.

I suspect their too busy making lowers to care what the rest of us think.

 

[Garwood]

I recently bought a load of HMC tooling from a gun manufacturer. Some AR stuff, but mostly other things. They started about 10 years ago. They owned a couple 5 acre parcels with several 10K sq ft buildings full of HMC's. They had just bought another 5 acre parcel and were building a huge concrete tilt up and had robot fed Japanese machines of some sort on order for delivery as soon as the building was done. The owners started out with deep pockets. The guy I was dealing with was their first employee. He was hired as a button pusher. He had a new King Ranch with expensive goodies and he didn't seem to worried about anything.

 

[mhajicek]

I recently bought a load of HMC tooling from a gun manufacturer. Some AR stuff, but mostly other things. They started about 10 years ago. They owned a couple 5 acre parcels with several 10K sq ft buildings full of HMC's. They had just bought another 5 acre parcel and were building a huge concrete tilt up and had robot fed Japanese machines of some sort on order for delivery as soon as the building was done. The owners started out with deep pockets. The guy I was dealing with was their first employee. He was hired as a button pusher. He had a new King Ranch with expensive goodies and he didn't seem to worried about anything.

Fair, but consider who's who. These aren't the current startup, they're the established competition. Ten years ago would have been a great time to get in.

 

[Garwood]

Fair, but consider who's who. These aren't the current startup, they're the established competition. Ten years ago would have been a great time to get in.

I agree.

 

[latheman78]

Well, in all fairness, me, my wife, and two kids were all supported by a business started with $10K (all borrowed).
(1989 dollars)

So ...


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Think Snow Eh!
Ox

You have 3 helpers that worked for hugs and kisses, I think the OP has helpers that want paid in money.

As for the OP the only thing that hasn't been covered is a P.O. is no guarantee of income.
The customer can go out of business or bankrupt and the income can end. A verbal agreement is as good as the paper it is written on.

Sorry to be a Debbie downer, considering the shape the country is in, combined with going in somewhat blind I would suggest minimizing overhead, and trying to make as few payments as possible. Start in someone's garage, with a PC driven CNC Mill, then if the items sell, look to swoop on a nice used VMC when the upcoming recession hits.

Your learning curve combined with payments on a machine and rent plus all those things you will have to buy you did not budget for plus marketing a new product is a big deck
stacked against you.

 

[latheman78]

Where is most of the 7075 coming from and how are the prices? Didn't a lot of it used to come from Russia?

 

[LOTT]

It's been hinted at, but I don't see anyone pointing out what I see being the main selling point- which party is in charge in DC. Gun sales jump when people think Democrats are going to pass bans, and drop down when Republicans come in. An actual ban hasn't happened in decades, but the fear is still there. And since a red wave is likely this fall it follows that demand for AR's will drop off. And that's on top of recession concerns.

Just an observation.

 

[SageGlad]

Don’t go to any banks asking financing for the machines, there are a tons of companies who offers financing with the very small down, my first one I paid 10%. So I would down this 10% and keep the rest for a payment’s you have to make, when you realize everything goes not the way you thought. Don’t know anything about what you trying to start with (product) but if it’s a super low margin, you wanna take it as a opportunity to pay the expenses, rent etc. if possible, and never stop seeking the normal machine shop job contract. Good luck!

 

[mhajicek]

It's been hinted at, but I don't see anyone pointing out what I see being the main selling point- which party is in charge in DC. Gun sales jump when people think Democrats are going to pass bans, and drop down when Republicans come in. An actual ban hasn't happened in decades, but the fear is still there. And since a red wave is likely this fall it follows that demand for AR's will drop off. And that's on top of recession concerns.

Just an observation.

Sure, that would be a decent argument to jump in two years ago. Figure six months to get financing and machines, a few months to get setup and proven out, another month and a half at the anodizer, and you've got stock hitting the market in time for the next election.

 

[LOTT]

Sure, that would be a decent argument to jump in two years ago. Figure six months to get financing and machines, a few months to get setup and proven out, another month and a half at the anodizer, and you've got stock hitting the market in time for the next election.

Yep, and makes this the worst moment to jump in.

I have a firearm related product idea I'd like to put out in the world, but even with the machines and whatnot in place I don't think this is the right time.

 

[Comatose]

On top of all of that, I have to assume that your reason to want to go into business making ARs is because you're way into ARs. That's fine. But the very fastest way to STOP being way into ARs is to make it your business. Even if you're super successful with it, after another 12 hours on Saturday making, packing, shipping, ordering stock for, doing customer support for and getting new ideas for ARs, the last thing you're going to want to do on your free Sunday morning (before you go put in another 8 hours making ARs) is go to the range.

I assume this is why porn stars always look so bored, too, but maybe that is something else.

 

[jackal]

I have a buddy that didn't have any collateral or assets, and went to a bank for a loan.
He financed the whole shebang.
Now sometimes, he goes for 5 weeks without a paycheck.
He gets a PO from a big company ( $40k)
Orders material, (bank pays for it).
When halfway thru, company pays 50%.
Bank takes out their part for equipment, pays his building rent, insurance, truck payment, welding supplies, tooling,any other expenses. There's very little left.
He was doing OK at first, now it's just him and a young kid that works for him.
He's doing 7 days a week, and keeps getting further behind.
He can't hire anyone, because he can't pay.
They have some machines not running, and can't afford to fix.
It's really tight and he is scared.
Not sure what will happen.

 

[LOTT]

I have a buddy that didn't have any collateral or assets, and went to a bank for a loan.
He financed the whole shebang.
Now sometimes, he goes for 5 weeks without a paycheck.
He gets a PO from a big company ( $40k)
Orders material, (bank pays for it).
When halfway thru, company pays 50%.
Bank takes out their part for equipment, pays his building rent, insurance, truck payment, welding supplies, tooling,any other expenses. There's very little left.
He was doing OK at first, now it's just him and a young kid that works for him.
He's doing 7 days a week, and keeps getting further behind.
He can't hire anyone, because he can't pay.
They have some machines not running, and can't afford to fix.
It's really tight and he is scared.
Not sure what will happen.

What kind of shop and work is it? You said welding, is it a fab shop?