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When to purchase a cnc from an econimcal point

doug8cat

Titanium
Joined
Jul 10, 2008
Location
Philadelphia
I know there will be as many answers as folks replying, that being said:
I work in small shop we have a job that is perfect for a smallish cnc lathe nothing fancy at all.
Now granted this job ca be gang busters for 3 months or dry for a month, month and a half. the owner is reticent to make the investment. I asked why and he had no answer.
Now I have done everything from biomedical research to an emergency surgical nurse, and then this "life is lie a box of chocolates." Sorry rebelling. Point is I know next to nothing about economic aspect of business, so I turn to the brain trust here. Is there any formula of sorts to determine with some degree of certainty that the purchase would pay of equal or better than doing the part manually, I should also add there threading involved (VERY SIMPLE).
Right now we farm them out a facility with cnc capability. IMHO we are giving money away, sure things might breakeven for a while but then it is gravy.
A HAAS HL-2 for about 11K would work really well.
Time saving would be immense, I would imagine, I would estimate 50-60 % time saving on each piece.
How would you make this make this call?

Thank you for your advise.
 
If you have no institutional knowledge of CNC then it's going to be a longer process to get setup than you likely think. Same goes with tooling and so on, likely to be more expensive than you're expecting. And buying used machines you're pretty much always have something you'll need to fix, and it's always worth spending some time going through the machine doing 'remedial maintenance' to make sure there are no issues that will shorten the life of the machine you just bought.

All said and done I would say the machine is only 75% to 50% of the cost of actually 'getting the machine'. Rigging, electrical, tooling, setup, repairs and maintenance will usually add 50% to 100% to the 'price' of an inexpensive used machine, which is totally fine but just bear that in mind when budgeting.

There is likely also a reasonable argument for buying new as well. Buying new means you'll get training and support from day one and be able to hit the ground running on the current job, rather than potentially fussing with a used machine for a couple of weeks getting it setup and running. The long term payments on a new machine work to offset the convenience factor, but the higher productivity of a newer machine may offset that as well.

Apart from that I see no reason why investment in a machine is not a good idea providing the company has the will to learn and the space to house it... It will open up the possibility to bid on other jobs that are likely getting passed over now. Ultimately it sounds like the owner may not be interested in changing what the business does, which is a whole other issue. Sometimes change can be good, other times not so much.

Honestly I don't think there's a magic formula to decide when to invest in new equipment. If there's evidence you can get enough work to make the machine pay then it makes sense to at least consider it.
 
If this helps, when I went from manual to nc, it turned out that the nc lathe was just about ten times faster at every job I did.

It was also about ten times more expensive, so I ended up in the same place :D But these days you don't have to spend as much money, so should be a better equation.

However, I would not go that way again. I'd try to find some niche that no one else did, so that I wouldn't have to be part of the race to the bottom. The thing is, it's better to have a plan. Maybe an nc lathe fits that, or maybe not. The decision doesn't just depend on "Wow, we could make those parts in-house !"
 
Two answerer the first point I have been running programing and fixing cnc mills for 5 years, so I feel some grasp of cnc and shop economics maybe I over stated or maybe not. I am also acutely aware of the ancillary costs associated with machine purchasing. The question was more of what does one need to factor in when deciding on a purchase.
E.M. had a good point as longer you have the machine the more profit you make especially the day write the last check
 
...How would you make this make this call?
Do you have people idle right now? If everyone has work to do, there's nothing wrong with sending out work that can be done more efficiently elsewhere.

IOW, the owner is making money on the parts made in house. He's also putting a markup on the parts he's sending out. You might be able to improve the margins by bringing those parts in house, but it has to be measured against the capital costs and the marginal gain. Do you have the manpower to run these parts in addition to what you are already doing?

The machine is the cheapest part of the equation. Employees are expensive. Every hour spent making these lathe parts, is an hour not spent doing whatever that person is doing today.

If it's only a question of moving that person from a manual lathe to a CNC one, he will likely be more productive on the CNC. But if that person is doing something entirely unrelated, you need to consider the opportunity cost. I suspect that's the way the owner is looking at it.
 
we don't have idle people, we only have 2 people including me. I run the majority of the cncs and would have time to run it.
Thanks
 
Rule #1: Don't buy a machine for one job.

Don't tell gkoenig that, I think his customers buy a whole row of machines for one job...

There are probably too many variables for any one here to give you a definitive answer, but another thing to consider is lead time and lot sizes. Having the machine on hand is way more flexible.
 
<snip>

A HAAS HL-2 for about 11K would work really well.

Time saving would be immense, I would imagine, I would estimate 50-60 % time saving on each piece.
How would you make this make this call?

Thank you for your advise.

Is the control on the HL-2 nearly extinct ? / Not supported by HAAS anymore for spare parts etc. ?

Not trying to turn this into a HAAS vs. Fanuc thread.

The problem becomes your business owner pivots around the HL-2 with orders etc. and then it fritzes out. (reliability to your customers is an important factor.).

Maybe there's something more reliable and higher precision out there that can last a few more years ?

The nice thing HAAS mills for example is IF it's not working out you can sell them pretty readily (newer -ish machines) on the second hand market.

I.e. try it out and if it's really not working (business wise) then you can always go back to manual.

Sometimes a manual schaublin or a Hardinge can be a better fit for some small parts than a CNC, and manual machines can be very good for long lower precision work pieces. i.e. you don't always have to buy the NLX 2500|1250 or whatever it is now lol.

Kinda depends what direction your company wants to go in in the future ?

Is quality and precision and surface finishes any added value to the work you do (beyond productivity) or is straight up geared head lathe work 100% fine ?
 
That is the big problem, I am pretty sure know one (ownership) has any plan or idea where the Co. is going or to re-frase where do want to go. It seems I am the only one concerned about the future, having a plan and asking question like this one. If I don't know something (such as what are some criterion whether to pull the trigger on a machine purchase.) I am in know way embarrassed if don't know something, I find someone who knows and ask.
I mean we really do nothing to grow the Co. we rely on clients we have had for years. The owners treat me well and I do my best for them, but I am getting the feeling I need to my best for me, I just get the feeling the ship is sinking. I have the feeling I want run on my own but do not know how to get the ball rolling.
Thank you for listening and I would appreciate any advise good or bad, am I being an idiot?:crazy:
 
Some shops stay manual and that serves them well.

We were all manual till I started playing with one we sort of took in as payment.

I dabbled and got a twin ram Bridgeport Centroid CNC Retrofit making a part that was very simple on our manual Bridgeport. Except they'd over feed and break tools or underfeed and take forever. Over the course of a weekend I setup and programmed the machine to make the cuts.
It was slower then by hand...
BUT no more tools broke, we made two with each push of the button and I could tend to other jobs. After two weeks the job was done, machine paid for itself and we started to rethink CNC.

After that we took in jobs for that machine...soon it was the machine bringing in the money...slow and steady.

Next came a CNC Lathe. Took me awhile to get up to speed on it after I did my normal days work. But soon that one machine ate up a months manual work in less then a week...soon we were taking in work for that CNC lathe.

We soon found we could make more, reduce lead times and gave customer better pricing...in quantity. Soon our customers were scrambling to give us more items to quote and the more work we got, the more work we got.

SO...would I buy a machine for one job...no.

I would however look for a couple jobs that made sense for a CNC and buy the best machine I could afford, with money left over for tooling and time to learn to use it...plus a backup pile of cash to pay for a repair that will eventually be needed.

You mentioned HL...thats an OLD Haas lathe. I have a 91 VF-1 that runs daily, they can last a good long time and be able to make great parts. But, like mine they have worked many a hard year...I keep saying with my old 91, if it dies, I drag it to the curb. BUT then I wonder how much...call in service and wait for the quote. So far its always been...If I run a job or two...I'm ahead and decide to have it fixed.
If it was my only machine...I would not have that choice and might find myself spending more money then I'd like to to have it repaired...also as I didn't have a backup or be able to buy a backup quickly...well choices are limited and dictated and that is not a good place to be.

I'd look SL at the minimum or ST

Also a learning curve like everything in life...careless person can be very expensive to the life of a CNC.

Buying a machine is one thing.
Tooling it up is another

Then learning to setup and program it is another thing.

I learned in MY Spare TIME...meaning after my normal 8-10 hours of work I'd turn on the CNC and try to setup and program a job, proof it out and have ready for someone to run in the morning. They'd run job the next day...some jobs ran a couple days and I'd tweak program to bring times down, get closer results, better finishes. When I left it was hit the books, read up on new tooling, processed...whatever I could. Placed calls to machine dealer for programming help, It was the days before internet...so learning was tough and slow at times.

Just saying...I spent hundreds of hours of my time learning. If I had to pay someone to learn on my time...learn and not bring in revenue as they are learning. My call of buying a CNC would have been different. Its something your company may have in the back of their head.

Plus comes the issuue of not knowing what your guys are doing...CNC setups are very different then manual, aside from the obvious. With manual you are used to see lots of doing...hands on movement and see progress right away.
With CNC the machine sometimes isn't even turned on for a long time...till you have the process down, program taken care of, tooling found and set. My old partner on one hand knew I was working as I always did...but on the other hand saw nothing being accomplished. Sometimes I didn't even cut the slugs till ready to machine...then only one in case I needed to alter my holding or something. I'd get...I could already have had all the parts roughed by now...why are we wasting so much time...nothing is getting done. Then machine went on... a few slow cuts to prove program, bring up the rapids and parts starting flying out and the tensions eased.

Yes, a company will see the pitfalls if they are not quite aware of the benefits...and they can be right.
 
If you are farming it out already and making money then consider keeping it that way. That way it stays someone elses problem to invest in Machines, Tooling, Material, Setups, Quality, and so forth.

Now, I'm a Haas fan just because of the ROI but in this case I would reconsider a Haas. An $11k antiquated HL-2 machine is just waiting to give you problems. For that price it's going to have the discontinued control. If it goes out you are SOL, since Haas wants $20-25K for retrofitting.

If you really just want a good dependable lathe without breaking the bank then look for old Okuma LB-15. They are everywhere and can be snatched up for usually $4-6K. Just have a look around ebay and you will see parts are not an issue. Even as old as they are most still hold tenths all day long.
 
I am with G-coder on this one ..
If the "OWNER" is making money of the parts and he has zero over head in them why would be want to spend money on setting up to do them in house ,,, even if he did he would not do good with a old HL-2 . he would want to step up to something like a ST or SL and then your talking 30K for a nice used one and by the time you moved it , wired it and tooled it your at 50K .... right now he has "ZERO" over head and turns a profit every order .. by the time you factor in the profit he makes not doing them in house to the profit he could make doing them in house he might be better off playing the middle man ,,, I would never run out and drop 50K on a job that might not be there next
month ,

I job out over 50K a year in Anodizing and like it that way as the owner ,, they pickup parts, they deliver parts back and I cut them a check ,, it costs "ME" nothing but I turn a profit from "THERE" work .. why work your self if you can pay someone else and have them make "YOU" money
 
Any thoughts about the OP buying a CNC himself, putting it in his garage, and becoming the go to person for the outsourced operations? Good idea, bad idea, terrible idea?
 
Any thoughts about the OP buying a CNC himself, putting it in his garage, and becoming the go to person for the outsourced operations? Good idea, bad idea, terrible idea?

I think that's a really good idea (assuming OP has a garage ?) ~ Not trying to turn this into a Tormach thread either ;-)

Especially given the "Sinking ship" Vibe OP/ Doug8cat has outlined and future career prospects. Can he take all his Boss's work ???? (eventually ?) lol. ~ So his boss does all the paperwork and Doug8cat get's to spread his wings a bit ?

And assuming Op's Boss's outsource jobshop doesn't also break Doug8cat's knee caps for poaching their job ? / "Contract" ?

Not quite like the mafia and hotdot carts but I would assume there are "Previous long term arrangements" that would have to be terminated either partially or in full ?
 
we don't have idle people, we only have 2 people including me. I run the majority of the cncs and would have time to run it.
Thanks

Ok officially I'm confused.

Going back over this thread again I just saw now your saying you "run the majority of the CNC's"...


So you already have them? or other iterations of CNC aside from CNC lathes.

If your running CNC mills then a lathe could compliment a mill very well...

If your running CNC Brakes, laser, waterjet...it can be a big transition.



In either case its very easy for someone on the outside to see what value a certain machine "could be" to a business.
But hard to take into account the reasons why not and sometimes owners are reluctant to explain for reasons of their own.

Case and point...
I have a gent that wants me to buy a CNC lathe with live tooling. His reasoning is he can complete jobs in one machine, not tie up a mill for a simple second op like a keyway or milled hex. Also it would reduce the 2nd op goofs.
He is right, I'd be able to free up machines from some 2nd ops and likely reduce some scrap do to bad locations and the like.

What he does not see is I need to come up with 50k more for that kind of machine tool...my 2nd op parts do not come close to paying well enough for that kind of investment. I'd also have to look outside Haas machines at that point...so its a new learning curve, new items that would normally be interchangeable.

There may come a day it makes sense...just not now. tighter tolerance jobs I farm out or pass on at this time.
 
As someone who has done both, running a CNC lathe is way easier than a CNC mill. Also since you have mills you probably have all the necessary support equipment in place for CNC lathe work. On the other hand without a rough sketch of the parts, how much you pay and your annual usage it is impossible to project how much would be saved by bringing the job in house. They could have the perfect equipment and skills to run your parts, where you will be starting out with a learning curve.

As an example many years ago on another board I got awarded a job and the RFQ poster listed the price when openly asked. Somebody ripped the guy for going to China and he replied it was sourced in the USA. Then everybody starts saying some 40 year old virgin living in his mom's basement with a lathe working for $15 an hour must have got the job. A few of them calculated what my shop rate must be after they all gave their estimates of the parts cycle time. Most people were in the 3-4 minute range. I was running them unattended from 12 foot bars that lasted 3 hours in a time of 45 seconds.
 
Somebody ripped the guy for going to China and he replied it was sourced in the USA. Then everybody starts saying some 40 year old virgin living in his mom's basement with a lathe working for $15 an hour must have got the job. A few of them calculated what my shop rate must be after they all gave their estimates of the parts cycle time. Most people were in the 3-4 minute range. I was running them unattended from 12 foot bars that lasted 3 hours in a time of 45 seconds.


Happens all too often when people are stuck in there own heads.
 








 
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