Wow, it's been a few years.
We made the decision a couple weeks ago to close down at the end of the year.
Since I last posted, we got deep into large format powder coating and media blasting, bought a UMC500ss, got rid of that damn thing, and learned a good lesson about focusing our energy on one thing at a time.
Turns out, when you have an 8 man shop (we hired a couple full timers and maintained a steady flow 2-3 interns at a time) and you want to get into a line of business that requires a minimum of 20k sqft and 12' clear heights, your overhead is enormous and you can't physically do enough work to cover it unless you have enough cash to build a pretty serious conveyor line and related accessories. We have a 15' long gas oven now, a 20' paint booth, and a 50hp Atlas Copco screw compressor to run the blast room. It's insanely expensive. It's miserable work that none of us want to do, too. Our monthly overhead is approaching $60k and only about 10-15% of that is rent. We have 800A 208V service and it's just about fully utilized. Our current lease ends Dec 31 and we had 7 or 8 buildings fall through on us that we were either attempting to purchase or lease over the last year and a half, and those were all of the options that we could "afford" in the area with the appropriate facilities to let us continue and expand our large format work. Once the last option fell through the week after IMTS, that was the final blow for the company.
We got into that all too common situation where we were doing enough sales to barely scrape by but it was a constant net loss punctuated by bursts of high margin machining jobs, and we managed to keep that up for almost 5 years with about $15000 of total startup capital. Considering we had no idea what we were getting into at the beginning, I'll call that a successful prototype of a business. We decided that I'm going to take the mini mill (paid off), CL-1 (worth more than we owe), and Fuse (necessary to keep a couple lines of business) and do my own thing for a bit while the other guys get day jobs to get to more financially stable positions. I'm fortunate enough that my girlfriend and I bought a house a couple years ago and it's given us a guaranteed low cost of living, so I can afford to get a small space for the machines in order to preserve the important capital equipment that all of us worked so hard to get and want to keep around. The other guys know they're always welcome back whenever they're ready and they're going to help me move.
Currently looking for 1-2.5k sqft that's reasonably priced and nearby, which has been fairly challenging so far given that we need to have everything out of the current building by Jan 1 and both I and the business are tight on cash. I'm going to start asking around in the area to see if anyone will at least let me park some machines in a corner of their shop while I keep looking in case I can't find something by the first week of November. I'm also considering finding somewhere cheap with single phase and running everything off a phase converter, because if I outgrow that I'll probably want to move anyway.
I'll elaborate about the UMC later as much as I'm allowed to - it was ugly and lawyers were involved but I can definitely state facts about the machine's performance while in my shop.
Anyway, I think that if we'd focused on an extremely narrow service from the beginning and controlled our growth, we'd be in a much better place right now. Instead, when I was at IMTS this year and salespeople asked what we do, "machining, SLS printing, powder coating, anodizing, media blasting, cerakote, gunsmithing, and laser marking" made their eyes glaze over by the time I was done. I'm definitely keeping the ano line because one of the interns got really
good at it and he's sticking around for a while, and a small powder coating setup just because it's so nice to have for prototyping, but I never want anything to do with a 15' long oven again unless I've got millions of dollars to do it with. We were at the point where 7 other people were fully occupied with the finishing side of the shop and I was running the machining, printing, and laser side of things on my own, almost as if it was a separate business. I've been watching that money disappear into the void of accumulated debts for way too long now and it took one of my partners telling me that we're closing, not suggesting it, to make me realize that it was possible to fix this by starting fresh with dramatically reduced overhead.
I'm planning on continuing to take some job shop work from my favorite customers who like to pay extravaganly for good service and short lead times, but I don't think I'll otherwise seek it out for much longer - it's pretty clear to me that products are the way to go if you want to have control over your business's direction. I'm currently writing a business plan for my next venture, which will produce hardware components designed to make it easier to 3D print accurate and durable jigs & fixtures for job and fab shops. A friend of mine who we hired earlier this year also wants to finally launch an aluminum widget product that he's been thinking about for a while, and I think he has a pretty dang good idea that suits the mini mill well. I'll post pictures when he's ready to share that publicly.
I've also relearned that I love lathes in the past two years, which is unsurprising given that I learned NC programming on lathes first and bought a harbor freight bench lathe as my intro to machining 14 years ago. In that span of time, we got a 1992 Romi Centur 35e, a CL-1, and a 1947 Monarch 10EE. Pretty sure the Romi was struck by lightning at one point but a replacement z axis drive and a jumper across a thermal overload got it working well enough to justify the $2500 it cost, and we just sold it for $4500. That CL has been fantastic for the right type of work - it's not pretending to be anything it isn't and the radial only live tooling is weak and strange, but it's cheap, bar fed (6' lengths, one at a time), and I've kept it running 8 hour cycles unattended for days at a time, doing nothing more than flipping inserts and loading bar. The Monarch is wonderful of course. Beautiful piece of machinery and so well thought out. I'll probably end up without it after the move but I'd like to buy another in the future. The direction I'm going with hardware parts is going to lead towards more lathes, and I'm trying to keep the nature of the work aligned with small diameter bar fed machines, so Swiss may be in my future. I will never buy another Haas even though the CL has been good to me and reliably holds tighter than a thou without needing warmup or offset chasing if you're working within its limits. A y axis dual spindle lathe is also really tempting but I need to see where things go for me first. SMART had some surprisingly nice looking machines this year at very tempting prices, and service in my area is unusually good according to a few shops I've talked to that have their machines.
Other lessons learned, in no particular order:
- Don't buy a $2500 low hours Hydrovane
- 5 axis is expensive for a reason
- Actually, most things are expensive for a reason
- Financial transparency is important when working with partners (and even without) - I had a general idea of how we were doing most of the time but there was not nearly enough communication with hard numbers
- Contrary to most people's experience on this forum, I actually really liked working with my partners and I'd do it again with them
- Chinese lasers are so good now and can make you so much money
- A good business plan tells you what you need to do next so you can think less about planning and more about execution when you're busy running the business
I'll try to post the UMC stuff soon. I'm really bad at keeping up with this kind of thing and my life is very chaotic right now, as I'm sure you all can imagine.
I think things are going to work out better for all of us this way. I'm very glad we pulled the plug on our own terms at a natural stopping point rather than trying to force the business to continue into deeper debt and inevitable collapse.