Sounds like a kick back.........

What a joke. Another shop owner and I job work back and forth all the time. Great guy, straight shooter. He has and "in" at a big pump mfgr. His buddy is an engineer at "Big Pump" who helped design some specialty tooling for their VTL's. They had protos made by a shop @ the rate of 6pcs $12K/each. Wow! Talk about gravy train since these are not tough parts. Now they want 6 of each part(36pcs total). Us two shops scratch together some numbers that are more inline with the work. I quote(with very juicy margins mind you) about $2250/each. At that these are GRAVY parts since I have only about $350 into each for material, heat treat, fixtures, and tooling. Thinkin' this will buy 1/2 of a new turning center for my shop. Submit our quotes, engineer buddy puts in a good word. In a few days ENG Buddy calls back: NO GO. Big Pump's shop foreman personally makes sure they go back to the first shop @ $12k each(6 parts X 6 of each X $12,000/each = $432,000!!!!!). No questions. I'm sure our quote was filed in the trash. He's buddy buddy with the other shop. We could have saved them $351,000.00. Yes $350K!!!!! THESE ARE NOT, I REPEAT NOT $12K parts!!! WTH? I can't believe it. Other shop guy can't believe it. Engineer buddy can't believe it. It's a huge Corp. They have no clue what kinda of $$ is being wasted.

Sure sounds like it,
Only other explanation I can think of is that the shop foreman got burned before with some other job he sent out. Got it back and it was wrong and he got in a lot of trouble over it.
So now he thinks only "very expensive shop LLC" can do anything right and he won't take a risk with anyone else.

But it sounds like he's being looked after.

I'd make friends with the guy that owns that shop... I bet he has a really nice boat.

Don't forget that this is America, Dave. You need to get together with Big Pump's shop foreman for some coffee and donuts.
He'll tell you everything you need to know.....

When you leave that kind of money on the table you have missed something big in the drawing.

You need to thank your lucky stars that they didnt break you.

It's not like this is Davidn's first rodeo though... I'd be curious to see a print but I know that wont happen.

mbpp said:

Sure sounds like it,
Only other explanation I can think of is that the shop foreman got burned before with some other job he sent out. Got it back and it was wrong and he got in a lot of trouble over it.
So now he thinks only "very expensive shop LLC" can do anything right and he won't take a risk with anyone else.

But it sounds like he's being looked after.

Click to expand...

I've done that exact same thing myself. I have been in situations where if you don't meet the deadline you basically lose your investment. In a case like that, if I have 100k already into a project, have absolutely no time to have parts reworked/remade, and I could save a couple thousand by using some shop that has never made parts for me before, I am not doing it.

I would love to see what kind of situation would justify spending 350K for a better chance at getting good parts the first time.

I had something like this happen to me where we were way less expensive than the current supplier. Our equipment, ( a multi spindle screw machine) was way more productive than the other guy and we should have won the business but we didn't. A few years later I learned that the buyer was afraid of looking bad for wasting the companies money and just buried my quote. The lesson for me was that if I had been only 15 to 20 percent lower I probably would have been given the job. Maybe that's what's going on here.

Jake

Heavey Metal said:

When you leave that kind of money on the table you have missed something big in the drawing.

You need to thank your lucky stars that they didnt break you.

Click to expand...

I thought that too when I heard what they paid for the prototypes. They paid way too much for those also. I went over the prints and files with a fine tooth comb. Engineer Buddy answered all my questions. Very straight forward parts. He even said the lead time one this was not pressing either. 6-8 weeks. The parts were basically for stock. He was pretty sure something shady was going on. Big place with plenty of red tape and bureaucracy.

In a large company I'd assume they have a purchasing department. My guess is both the shop foreman and the buyer are getting taken care of. If the buyer was a straight up dude, there's no way he'd issue a PO for more than $400K based on a single quote regardless of anything the shop foreman may have told him. Even if the foreman's favorite shop is the preferred supplier, a buyer who's doing his job is gonna get at least a couple more quotes to make sure the first man is honest. He might justify paying them a few extra percent based on prior successful dealings with them, but paying 5X the price ain't gonna happen unless someone's crooked.

I have one of those jobs going on right now big company and got a job back and have an inspecter from hell . On the face I should be making good money

But in reality it sucks. I guess what I am trying to say is you need to be carefull what you wish for.

david n said:

I thought that too when I heard what they paid for the prototypes. They paid way too much for those also. I went over the prints and files with a fine tooth comb. Engineer Buddy answered all my questions. Very straight forward parts. He even said the lead time one this was not pressing either. 6-8 weeks. The parts were basically for stock. He was pretty sure something shady was going on. Big place with plenty of red tape and bureaucracy.

Click to expand...

My take,

Any big corperation is going to have set up a system in place with a review of a PO of higher dollar amounts and signed off by a few people with approvals. Also larger corps have approved vendor lists, you may not be on it causing your quote to be nun and void.

It's a huge Corp. They have no clue what kinda of $$ is being wasted.

Click to expand...

There's your clue. You (I'm guessing here) are maybe not " a huge Corp."

I've lost a few contracts myself, because I wasn't "big enough", that is, the big corp probably wants to work with contractors who have employees, are not run by an "owner" and has shareholders etc., therefore is more likely (although of course there's always an exception) to be around in x years time in their opinion.

Also if they have a budget for these items that is X amount then "saving" a significant amount is not always what is needed, if it can be shown a cut can occur, then that budget will likely be cut the same next financial year and that might cause a shortfall and circumstances might need that cash that year. Spend it or lose it.

Also on top of that your pricing indicates the parts are not "worth" what they are paying for them, well they obviously think they are worth it.

Look up the big corps figures, are they making money? If they are making a profit despite these so called excesses then that expenditure might be keeping them under a tax threshold or something.

Also shareholders will want to see that the company is not being too frugal, that is that the corp is spending to make a profit, sounds mad, but it happens. Many corps have gone bust because of inadequate investment in stock or whatever, and shareholders will not know neccessarily what it is being spent on specifically...

Is it fair? No, but your problem partly with it is that you think that they are being ripped, and on top of that you can't understand why they wouldn't want to save money....well thats the difference between you and them I'm afraid.......and why should you care, you aren't "big corp", they are.....so this then boils down to why you think you should have got the contract and didn't.
Well you didn't get it, live with it.

Next time don't go through your "buddy", go to the "big corp" directly and ask if you can be on the contractors list. Your buddy isn't making the decisions at "big corp".

Is there foul play at work, maybe, maybe not......its just as foul IMO to get a contract through an "insider" (your buddy).
However you might not think thats so bad.....

Sounds like a lot of sour grapes to me.......which is fine, but hey, why bother....?

JB @ C and L Machine said:

My take,

Any big corperation is going to have set up a system in place with a review of a PO of higher dollar amounts and signed off by a few people with approvals. Also larger corps have approved vendor lists, you may not be on it causing your quote to be nun and void.

Click to expand...

Exactly....

To my way of thinking, there's a lot of hearsay evidence on this, you don't know if your buddy is being told the truth, or your buddys buddy??

However your quote was uunsuccessful, and in the circumstances described, I'd be relieved I didn't get the job..... where angels fear etc etc.

Wonder if Big Pump's shareholders would be interested in the economic and legal ramifications of the "arrangement" with the high-priced shop?

Chip

They may have negotiated engineering and prototyping cost's in the original job. Hard to say without seeing a print of the parts your talking about. If you truly think there's something that fishy going on, most large corporations have an "ethics hotline". Drop a dime on that purchasing guys ass. You don't even have to give your name, just a description of what happened. Just be careful you don't get your engineering buddy or shop foreman buddy in trouble.

So now he thinks only "very expensive shop LLC" can do anything right and he won't take a risk with anyone else.

Click to expand...

The largest employer within 500 miles of me, a chemical and plastics manufacturer, keeps several job shops in the region loaded down with work, and has for literally decades. The big company pays huge dollars for what amounts to mostly straightforward cnc work. Yet other shops can't even get a print to quote from this company. I believe the people at the big chemical company think their work is actually complex, and "mission critical", and thus only let the shops they have been buying from for decades quote and do all the work. Arrogance on a corporate scale....wasting millions of shareholder dollars over the years.

I have been in some of these fortunate job shops. Yes, they have all been in business for decades, and yes, without the big chemical company, most of them would be out of business in 6 months. They could not compete and survive in the $50-per-hour job shop world most of us slug it out in. And let me tell you, there is nothing special about these shops. No fancy new 5-axis machines, no palletized cells, no temperature control, no epoxy on the floors. Just a bunch of tobacco-chewing hacks riding the gravy train for all it's worth.

What can I say? It's America....

Catman

Chip Chester said:

Wonder if Big Pump's shareholders would be interested in the economic and legal ramifications of the "arrangement" with the high-priced shop?

Chip

Click to expand...

You would work for a lot less customers after that.
Someone would not trust you to try and blow the whistle on them, some day.
A dangerous road to tread.


I see the same thing. Big company, only a couple of shops can get past inspection.
Even though you deliver on time, somehow, your parts are marked as late, and used as an excuse as to why the production is down...

Parts that you can do for an insane profit, are made at another company for three times the price.
Yet, no one can bid against them.......

Happens more often than you want to think.

Welcome to the wonderful world of bid work. That is what I do for a living. I am in the commercial glass and glazing business. (Machining is my sideline) I have lost many bids knowing that I was low bid. I used to really get pissed off, but have gotten used to it. I get pummeled with more ITBs than I could even hope to bid.

Sometimes if your quoted price is too low, they figger that either you missed something, or you are going to cut too many corners and they will get a crappy job. Many times the contractor doesn't have even the most remote intent to use you, but.................. They want your number to "yardstick" their subcontractor of choice and/or beat him down on price. "If subcontractor XXX wants X to do it, if you can get below their price, you can have it." I have heard this way too many times. Also the subcontractor of preference may well have gotten to be there by copious amounts of graft to boot.

One time a contractor really pissed me off. This company had never bought a thing from us, and used to beat us to death with "I need it yesterday" ITBs. I knew who was doing their work, and they had no intention of giving us the job, so I decided to fuck them over. I put out a quote at a ridiculous low price. (below my cost) Just to get the guy that was going to get the job. (you can always back out before the final contract is signed.) The subcontractor of choice got stuck with the job at a loss right off the getgo! Word eventually got back to me and I still laugh about it!

Dont kid yourself there is a hell of graft / kickbacks / and favoritism going on in the wonderful world of bid sales!
You may well have just simply been a yardstick...............

Just my $.02 worth

Frank