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  1. #21
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    The bias of the "discussion" I got into locally was competing with offshore.
    Specifically China and how to fight and some who felt it hopeless with all the whines and cries, piss and moan that go along with that.

    Perhaps some have run more than one cnc at a time or had something like a wire or two with long cycles and lots of free time on their hands.
    I find about four machines at once to be the easy to handle, more than that and keeping track of QC and such gets confusing to me.
    60 per hour is sort a standard base rate for a single machine nowadays. Perhaps low but it makes for the easy dollar a minute calculation.
    Is it insane to go down to me only making $120 per hour running four machines? WTF that is 30 per machine, can't be right and is crazy land.
    Conventional thinking says that this should be priced at $240. Yet somehow I think I end up with cash in my pocket bidding the low end.

    Other machines do set idle during setups.
    Are they eating money when idle? (I think they are to some point but much lower costs).... 8760 hours of uptime per year? Are they eating money at night or on weekends?
    Can you go down to numbers that per spindle seem unprofitable in such a case?
    Bob

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    Just to throw another wrench in....go to piecework.
    Your labor rate is now fixed per piece.

    And have a fixed price for machine set-up.(example 1/2 hour set-up time)

    also consider a separate "travelling" set-up person,
    that can work when the operator is tending a couple of the
    machines, one in the cell can be undergoing changover.

  3. #23
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    Charge what you can get away with.

    I have worked in a shop where we did time studies, kaizen, cell arrangement to minimize handling, etc...large volume quoting was done in an excel spreadsheet that took so many variables in to consideration that it was ridiculous.

    I have also worked in a shop that charged $85/person/hour whether you got the slow 60 year old that hasn't made a mistake in 10 years but takes 3x as long or the 30 year old that can work circles around him but screws up on occasion. The goofy thing is that in this case, actual overhead was bout $35/person/hour when ran out over the year, and total billable was closer to $70/person/hour. Problem is, when the owner went to sell, it came out that quoting was all in HIS head. He knew how long his guys took to do jobs.

    Pricing is never a set of hard and fast rules, it's what you can get away with. It's why I prefer commodities. I don't have the confidence to say "I'm eating filet tonight, here's your bill".

    You are a smart guy that works outside of the box, I doubt that you'll find many others that will agree with your philosophy, but it doesn't matter if it works for you!

    So if you can get away with 30/hr and still make payments on a $100,000 machine, and have money in your pocket, do it. You are still making more per hour than the first company did with their fancy spreadsheet.

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    Are you still working for yourself?

  5. #25
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    Quote Originally Posted by snowman View Post
    Are you still working for yourself?
    Mostly I work for SWMBO the dog and the cats.
    But yes, after a year plus semi-shutdown while I went to work for the old Saginaw Steering Gear (I-75, south end of Saginaw-Nexteer) my shop is back open.
    Bob

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  7. #26
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    Quote Originally Posted by CarbideBob View Post
    Yet somehow I think I end up with cash in my pocket bidding the low end.

    Other machines do set idle during setups.
    Are they eating money when idle? (I think they are to some point but much lower costs)
    Bob
    Bob -

    If you are making money then you are not bidding too low - question is are you leaving money on the table?

    Are the machines totally paid for and you consider them a sunk cost? Or do you plan on always having to pay $XXX in machine payments a month?

    And Digger and Snowman have good comments.

    My Dad ran successful businesses off the back of an envelope - literally. And made money. I had to deal with government audits to absurdity in my life. Somewhere in between is a sweet spot where you control enough but don't drive yourself nuts.

    Dale

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    Not a question of leaving money on the table.
    More a question of how low do you go chasing competition and how can you make it work and be profitiable.
    Machines are paid for but I don't see them as sunk costs.
    You have to buy new ones eventually so that needed put away cash is like payments just no interest and you can make some money off of it.
    I've always paid cash for machines, sometimes literally. You should see the look on your local banker's face when you say I'd like $62,000 in hundred dollar bills.
    Always seen payments as being behind the eight ball.
    The family company did finance a $640,000 machine followed by a $480,000 one. That turned out to be a huge mistake.
    Bob

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  10. #28
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    Thanks for the good news Bob!
    I hope all goes your way!


    ------------------

    Think Snow Eh!
    Ox

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  12. #29
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    Ultimately, as we know, parts are only worth what you can get for them.
    And i was always a believer that you grouped all machines in a shop together, to work out the shop rate amortised across everything.
    And it has to be high enough to allow for renewal of machines too.
    An old place when i started there had a brand new Horizontal, but couldn't put work on it because it was "too expensive".
    I sat the owners down and asked why did you buy it then and then said the obvious of we're paying for it sitting there doing nothing, or we could be running double shift and through the night on a couple of parts.
    The "couple of parts" were cheap part prices, but when you added up how many the thing could make by running 24hrs, the total parts per day increased sales enough to make it more than worth while, and freed up 2x verticals to reduce late deliveries.
    So effectively efficiency went right up, but fixed cost stayed the same (after an operator re-arrange).

    Now for some rambling on cellular single piece cell flow...
    While there, we were tier1 into bed with Goodrich who (because of late deliveries) were all over us - 5x people on site daily to "help us out"...
    Anyway, they decided (and the owners went along with it) that we had to rearrange work to cellurise their product.
    They obviously weren't interested at all with our other customers, and some work that was multiaxis on the millturns went back to 2ax lathe and VMC where their work took priority. That's how into bed we unfortunately were.
    But we had the opportunity to go see their (self named) manufacturing centre of excellence.
    4 or 5 cells giving single piece flow parts with 1x guy walking around in circles in each cell.
    I was looking at one cell and there was 2x 2ax lathes, 1x VMC with 4th axis, 1x studer grinder, and $50k scanner/measuring equipment.
    The guy stood waiting as the part was 1st op turned, took the part to the second lathe for the second op (while lathe #1 stood idle), then took it to the VMC (while #1 & #2 stood idle) then took it to the grinder (while the VMC stood idle as well) and in 15 minutes, you had 1x finished part.
    They were so impressed that someone in assy could damage or lose a part, and they could just go and make another, so lead time was effectively zero and their stock level was dramatically reduced.
    But look at the $750k+ machine efficiency we said - and they weren’t interested in that at all.
    OEMs maybe able to do that - subbys obviously can't afford to.

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    You can charge premium when your machine is special. You do not get to charge for having a tool changer on a part with 5 hole sizes, but you can not readily compete without it. A 32 axis mill with laser vision doing 2.5 d profiles is still charged the same as the 3 axis.
    60 sounds reasonable regardless of machine, then, I am in the south where when slow we drop down to 35....

  14. #31
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    Quote Originally Posted by CarbideBob View Post
    Okay, everyone just forget it,
    Simply asking a question that myself and local job shop owners got into recently.
    The general idea was low volume, high mix, a thousand or so part numbers per year.

    Bob
    A thousand or so part numbers a year? Simple math from your earlier description means 4 set-ups a day average, how does that get accomplished with one man without leading to a lot of down time?

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    Quote Originally Posted by Dualkit View Post
    A thousand or so part numbers a year? Simple math from your earlier description means 4 set-ups a day average, how does that get accomplished with one man without leading to a lot of down time?
    Yup. so a setup/change over every four hours on a 2 shift run.
    Since the entire cell is down it makes you think and work on setup time reduction more than run speed.
    Setup time needs to carry the cost of the entire cell.

    You can also make parts in fancy 5-8 axis machines. What is the setup time for one of these?
    Can you do 4 simple machines faster?
    I am a long way away from SMED but making progress.
    Bob

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  17. #33
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    Quote Originally Posted by CarbideBob View Post
    Mostly I work for SWMBO the dog and the cats.
    But yes, after a year plus semi-shutdown while I went to work for the old Saginaw Steering Gear (I-75, south end of Saginaw-Nexteer) my shop is back open.
    Bob
    The cats will NEVER be happy with your production...but they lick their own ass. I'd be bitter too.

    The dog just wants to be asked just wants to ponder the lifelong quest of "who's a good boy"

    It's the wife you have to worry about.

    Seriously...if you are making money at $30/machine/hr, not leaving money on the table AND able to put money away for future needs, you are doing better than probably 95% of Americans. Who cares if the shop up the street has to charge $60 for the same service.

    Knowing your posting history, you'd probably be bored out of your mind running ONE machine at any rate of pay, so if running four keeps your mind active, and you can keep up and keep busy, that's awesome. Most of the toolmakers I know use the slow periods as an excuse to fall off the wagon and keep their functional alcoholic card active.

  18. #34
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    Quote Originally Posted by CarbideBob View Post
    How would you price the work flowing through multiple machines in a cell?

    There is the rather standard $60-$120 per machine depending on machine payments.
    So let's say you have four $100,000 dollar machine in a cell.

    Is this four 100k machine ops or is it really just one big $400,000 machine?
    Assume one operator, no robots and a product mix that means many changeovers per day.

    Since most hourly pricing includes a lot of add-ons for overhead, supervision, etc, the numbers come out very different.
    Bob
    Assuming all machines are running charging as 4 machines or as one the price is the same. Lets assume 5 minute cycle time, $60/hr per machine for easy math. 5 minutes/dollars x 4 machines $20/part. Or a part comes off the cell every 5 minutes at $320/hr $20. Greatly simplified and your later details of lots of setup times complicate things a lot.

    Here is a possibly related question to hijack an already all over the place thread. When quoting a using an hourly rate on a machine do you include labour in your rate or is that an extra charge?

    When I am quoting I have a "shop rate" that I quote at. I charge the hours for the machine and then hours for labour separately. I am making tooling so my cycle times are typically 3-8hrs so the operator is typically doing something else while the machine is running. Sometimes I feel like I should be charging a lower rate for machine time and possibly a higher rate for manpower. I only charge labour not machine time for setup time maybe I should be charging both during setups?

  19. #35
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    Quote Originally Posted by CarbideBob View Post
    Not so easy.

    A $400,000 machine does not carry the 4 times rate of a $100,000 machine.in most pricing cases.
    Is the cell four machines or one big multi-spindle spread across some real estate machine?

    It gets worse when you run as such. You take 30 second operations at one and slow them down to 120 seconds to have a flow.
    How can that actually make money in the checkbook?
    Bob

    So, apparently you are at least somewhat sincere in this line of questioning....


    One thing to keep in mind is that one $400K machine will take 300 seconds to complete one part.

    That same investment into four $100K machines will yield a complete part every 120 seconds.

    The four machines will most likely require direct human labour. (not counting forty-leven set-ups)
    The single $400K machine is likely much easier to automate. (not counting for your high mix of parts)

    The cell will require much more floor space, but will have 2.5 times the throughput.
    The cell will have more to maintain, but the reality is that it is much more basic to maintain and will moron likely be cheaper to keep running than the fancy unit.

    Can the single machine be changed over quicker than 4 singles?
    Or are we mostly just dealing with program variable changes, and not so much with hard fixture and tooling changes?


    Only you can answer, and Shirley you are smart enough to answer it.


    ----------------------

    Think Snow Eh!
    Ox

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    Shop rate should be proportional to expenses. One can equate the cost of an operator (wages, taxes, insurance) to the costs of a $250K machine (depreciation, interest if financed, property taxes, insurance). Even if machines are free and clear, and fully depreciated, I still like to use these numbers for pricing purposes.

    So a single $100K machine + operator is like having $350K of equipment.

    Four $100K machines + operator is like having $750K worth of equipment. 2.14X the expense = 2.14X the shop rate, and up to 4X throughput. Potentially much lower cost per part if you can manage 4X throughput, but if any of the machines sit idle throughout the day, you're looking at a throughput closer to 2-3X, in which case it's a wash at 2.14X the expense.

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    Bob,
    You're one of the smartest cookies here and if you don't know...

    Perhaps look at it this way.
    How much does the cell cost to sit idle with no work?
    It must be easy to cost floor area, taxes, machine repayments etc.
    Add the cost of one operator.
    Then add some electric and general running consumable costs.
    Divide the total by available hrs and that's your rate?

    Mtl/cutters/treatments/etc are then part specific and added accordingly?

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    If you want to compete with China, all you have to do is find someone to work for$2.00 an hour. When I was in China, you could go into shops with out a single cnc machine. It is cheaper to hire a lot people to run manual machines. Then to buy cnc machines. One of my colleagues was telling me about a shop in India that had cnc machines. They sat collecting dust. It was cheaper to do it manually with lots of labor. Good luck with that.

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    I use to work for a company in Montana that made jar tickets, a type of pull tab. We had 18 machines that could produce 10000 tickets an hour each. We did everything, start to finish. Bought blank paper, printed it, cut it, ran it through the machines. Boxed up the games and sold them. Another company, printed their paper in Canada, shipped it to China. They Chinese cut the paper, folded the tickets by hand, shipped them back across the ocean to the US. They were able to sell them for half of what we could.

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    Quote Originally Posted by rbregn View Post
    If you want to compete with China, all you have to do is find someone to work for$2.00 an hour. When I was in China, you could go into shops with out a single cnc machine. It is cheaper to hire a lot people to run manual machines. Then to buy cnc machines. One of my colleagues was telling me about a shop in India that had cnc machines. They sat collecting dust. It was cheaper to do it manually with lots of labor. Good luck with that.
    Quote Originally Posted by rbregn View Post
    I use to work for a company in Montana that made jar tickets, a type of pull tab. We had 18 machines that could produce 10000 tickets an hour each. We did everything, start to finish. Bought blank paper, printed it, cut it, ran it through the machines. Boxed up the games and sold them. Another company, printed their paper in Canada, shipped it to China. They Chinese cut the paper, folded the tickets by hand, shipped them back across the ocean to the US. They were able to sell them for half of what we could.
    $2/hour is roughly equivalent to the cost of a $25K machine running 40 hours a week, mostly unattended. E.g. an automatic bandsaw.

    Alternatively, $2/hour is equivalent to a $100K machine running 160 hours a week, mostly unattended. E.g. a barfed lathe.

    This doesn't even take into account the fact that the automatic machines are far more productive per hour than the bottom-of-the-barrel labor running junk machines.


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