We need to discuss terms: There are several ways we could approach this. 1) Lets say the machine is running good, but there are signs of wear, the original scrape marks are visible in some places but the gibs are out of adjustment, the accuracy is still OK and the spindle and gear boxes are OK. We would do a RECONDITION of the ways only. Scrape the ways to 12 PPI and 1/2 moon flake them. clean and replace the lube fittings, new way wipers, add some Rulon or Phenolic to the gibs, replace simple parts. Lets say it's a size 2 H. A estimate of labor hours for a reconditioning at 120 hours or $12,000.00.
2) A complete REBUILD which would be to clean, dismantle, scrape ways as good or better then new, update lube system, replace spindle bearings, replace older electrical devices where needed, Replace worn parts, Install Rulon in most cases, use old fasteners and parts that are still usable. Repair and rebuild the machine but not update it. It would be the same machine that it was like when new. Brush paint the machine. Estimate labor at 350 hours or $ 35,000.00 and a wild guess at parts could be close to the $54,000.00 price he was quoted. On a small machine like this I doubt anyone would rebuild (or # 4) the machine as you can buy a good used machine for $10,000.00 as shown below.
Kearney Trecker Milling Machine | eBay
On larger machines as Tyrone points out one can 4) RETROFIT, All of the above in number 2 plus new electronics, Installing CNC, retrofit with ball screws, servo's, all new faseners, guards, paint, make the machine better then new in all ways. This would cost the minimum of 50% of a new CNC machine of that size.
I never got into retrofitting. I only recall doing one CNC Cylindrical grinder 20 years ago. But again I only did the mechanical side and the customer had an electronics company do the CNC work.
Here is a friends web-site and how he describes it:
Abbott Machine Services: Machinery Rebuilds, Precision Grinding, Equipment Retrofits & Installs -Abbott Machine Company
Here is a German rebuider who is also swamped. I met the shop foreman who was a scraping student when I was there last spring and rebuilders from 2 other companies who were also swamped.
http://www.huttelmaier.de/en/