Why the Race to the Bottom Hurts Everyone | Machine Shop Talk Ep. 44
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- เผยแพร่เมื่อ 3 มี.ค. 2022
- Reshoring is growing and it's an amazing thing, but there are some hurdles that come with it. It's important you're aware of them.
Companies have become accustomed to prices that are SIGNIFICANTLY lower than what you should even consider accepting for a job. If you're a $100 dollar-an-hour shop, accepting a $ 40-an-hour job will do a lot of harm. Even beyond just the immediate impact of lowering your bottom line.
Ian discusses some practical ways to protect your bottom line and avoid the race to the bottom, along with breaking down HOW and WHY that hurts everyone.
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Whats YOUR offshoring / reshoring story? Did your shop lose out big when work shipped overseas? Have you managed to get some of it back with reshoring?
We manufactured large custom wall tubing, up to 28” OD and 30ft lengths. China had a ship in international waters that would turn, bore and hone for cheaper than we could buy the raw material. Reason that it was in international waters was to avoid the tariffs. They killed the industry on the west coast. That company is Scot Industries, who only supply Chinese materials. Now with everything going on, we’re busier than ever and are seeing those jobs return; biggest problem I have now is finding qualified or motivated people to come in and work. It’s been a rough go, but I’m grinding it out to make it work. 🇺🇸
@@Feign_Way wow seriously?! That’s bananas, I didn’t even know that was a thing. Literal manufacturing pirates, yo ho ho and all that.
This is an old, old story. Canada and the U.S. relied upon skilled tradesmen immigration from Europe after WWII but when those European countries started improving their wages and lifestyles, that source dried up. Corporations not wanting to invest in apprenticeships, with high school guidance counsellors suggesting if you didn't go to college or university you would be a loser - skilled trades just weren't being replaced. Then along came Sam Walton showing everyone how cheaply they could provide a product from overseas - that was the final nail in the coffin. I retired in '04' after 45 years of general machinist work owning my own high speed production packaging machinery installing and maintenance company. Never once unemployed.
So this is the way it ends. Its been a rough ole time over the past 40 years for American Mfg.'s. A Shop Owner once said this to me, as his
business philosophy. " Make part pieces in a reasonable time, which are with in specifications, at a reasonable cost." (Roland Sutton 1991)
Six months afterward, 200 of us where Unemployed due to offshoring. My thought in retrospect 30 years later, It was a Great Business
Philosophy. If the Powers that Be would have accepted it. I've 5 years left till retirement. So May the Lord Bless and Guide each one of Your
Lives and Keep You Safe.
100% agree! We need to do better, and with companies looking to re-shore due to the supply chain, it's the perfect time to take a stand and let them know WHY they need to pay the prices we require.
I’m a retailer/manufacturer in the RC hobby industry. I manufacture most of my own parts because I can. Both manual and CNC. One thing that gets my goat is the trend of offering free shipping. Nothing is free! I see this as another race to the bottom. On the manufacturing side, one thing I push hard is quality and made in Australia. The pandemic has been a big wake up call for sure but at the end of the day it all gets down to GREED. We are all guilty of this as we all look for lower prices every time we shop for absolutely anything.
Patriotism and politics out the window, when it comes to saving a dollar
@@wilde.coyote6618 yes, unfortunately this is the short term view.
Thank you for this insight. We have left a lot of work on the table because our customers are trying to get Chinese price for Canadian work. We can so easily fill the shop with lo paying work. and no able to take the higher priced work.
This is huge - a big thing I didn’t mention that you pointed out is the opportunity cost. If you’re full to capacity with stuff that barely keeps the lights on, it can really prevent you from being available for the really good stuff. Thanks for watching!
Ian!! Hope all is well at Lakewood. Thank you for taking the little extra time you have to bring us industry/entrepreneur related machinist content. 🙏
Thank you very much sir, it's appreciated! We're busier than ever, I hope things are going well for you as well!
I started in the early 80's right out of a vocational high school. With a midsize tool & die company. They had roughly 25 tool & die makers operating manual machines. Then in 85 they got an EDM. One month later 5-7 die makers gone. Then they got another EDM and 10 die makers gone. Then the 3rd EDM was purchased and they were down to 5 die makers. It's wasn't just off shoring that killed the industry. It was technology also that did us in. I own 6 cnc machines, I only have 2 machinist, myself & 1 helper.
While that sucks, realistically, high end machines are the only hope high gdp per capita nations have to compete on pricing.
I'm in the belief that CNC shops should have a product development part to it so you can make your own products and sell. You have the know how and the machines, you just need to find a market and product. And trust me with this day and age of direct sales, this is the future.
To me, the "blame" shouldn't fall to the shops, desperate for good-paying work, but rather in the attitude of the customer. They all know very well what the cost-basis and structure of on-shore work is, and they cynically took advantage of emerging-market countries to get more profit margin for themselves. When they walk into an on-shore shop and then insist the local shop reach those same, or even similar price-points, they are snickering in their minds that they're gonna force the local shop to grovel just like the off-shore facilities. This is not just lying between their teeth about what they can reasonably expect, but it's a cynical power-play in which they're trying to force their desire for cheap labor onto the local workforce. This is immoral. If, after a shop has explained the cost structure behind their bids, and the customer says "oh, that's too much", the proper thing to do, painful as it might seem, is to literally run that customer out of the shop and tell them not to come back until they're willing to pay the reasonable costs. If the customer is so desperate to get parts that their business is suffering from their addiction to cheap off-shored parts, they they deserve to suffer the consequences of that. I'd tell them to come back in a year, if they're still in business, when their next budget cycle has gone through, and you'll re-bid, at 10% higher cost than this time. This is a technique used in many MANY industries: I'm offering an excellent price for excellent work. If you think it's appropriate to nickle-and-dime me to a lower price, then I raise my prices. Often right in front of their face. The foundational idea behind their trying to get a lower price is that your well-reasoned bid has some unfair extra margin built into it. They are essentially, in not so many words, accusing you of trying to cheat them. Yes, that YOU are trying to cheat them. This tactic has existed since humans stated exchanging things for value, and you should rightfully be insulted by their arrogance. In the big-business world, you FIRE 10% of your worse customers every year. Why? Because they are the ones who constantly nickle-and-dime you; they're the ones who provide bad specifications and drawings; they're the ones who "forget" to tell you about requirements. It's those customers you want OFF YOUR BOOKS and onto some other competitor who will do the work for less with crappy information and all the nightmares. Yup, push them back to the off-shore companies and let THEM deal with those bad customers.
Them's my opinions, and nobody else's.
This is a BRILLIANT take, and I hope a lot of people read this because it’s not only accurate, but important. I’ve done a few videos on bad customers / how 20 percent of your customers will cause 80 percent of your headaches - so I’m right there with you.
I personally have absolutely no time for bad faith negotiations. We do good work at a fair price in an excellent time frame - so when I quote a price, if someone wants to bully me? No problem, I hear the shipping rates from overseas are fantastic this time of year! Have fun!
I think a lot of guys get caught with difficulty in being able to tell a negotiable position that a potential customer is taking, versus a non-starter. Excellent information my friend, thanks for this!
Well said!
@Smitty24 Amen! Not to mention that the second time around, the Chinese parts will be exactly the same as the first wrong shipment. It's almost easier to redesign what the parts fit into!
Wow, this is not a topic I was expecting to hear right now. In my area , what I'm hearing from my distributors and other business owners, is that we are all giving go away quotes with lead times to match because we are all overwhelmed with work right now. And we are still getting these high quote jobs, so we have had to revert to hard no quoting. We all are adding new machines and thinking about automation because we just can't find enough people to work. So ultimately, our employees will get paid more for new skills and added tasks in a days work.
This is what I’m experiencing as well - so it’s interesting to hear that you’re seeing the same thing! We have more work then we know what to do with at the moment (which is a fantastic problem) and a lot of it seems to be quite price insensitive which is unique. Glad you guys are dealing with too much work rather than too little! Thanks for watching!
Ian, great topic - a book could be written about this. My father, grandfather and I have all worked as engineers in the food processing, aerospace and mining industries. The economic footing of machinists, welders and factory workers has totally imploded - while at the same time engineers have largely held ground....and management has seen their incomes absolutely explode. What reason?
It's a complicated issue, but there are some relatively easy root causes. Global capital rewards innovation of management (new products, new tech startups); engineers are largely the gatekeepers of intellectual property so every time an attempt was made to sideline them they would simply leave and take their information with them. The factory/manufacturing work was the easiest to shop around for the lowest hourly rate. I know one executive at an aerospace company who told me he went to thailand, hacked his way through a forest to get to a machine shop hidden away in a jungle. When he finally arrived....he was shocked to find that they were creating a product nearly identical in quality to their N.American plant.....at 20% of the cost. Unbelievable.
Remember how IT was being outsourced in the 1990's? That initial wave of outsourcing programming, engineering resulted in disasters for the companies, and overall loss of intellectual property. Outsourcing/offshoring of the engineering/technical staff almost always results in an existential crisis for the company and their core products.
Ultimately, offshoring manufacturing works in a world without borders and/or trade barriers. The war in the Ukraine, the conflict in the south china sea....all the supply chain disruptions offer an opportunity to reverse some of these trends. In the end, security concerns will likely drive re-shoring of industry. So, take heart.
Very insightful! I've had a lot of the same experiences - and I agree, when global trade is free-flowing and has low barriers to entry, overseas competition is very difficult to compete with on a dollar for dollar basis.
I agree with you as well - the trends I'm seeing are pointed squarely toward reshoring. I'm hoping that the silver lining of the trade disruptions is more and more companies choosing to manufacture / assemble / source from their local economies. I've personally been seeing more of it coming back lately - so let's hope the trend continues!
Thanks again for checking this out!
What your saying is what I've been seeing for the past 20 years that I've been working as a machinist. It's a combination of people, politics, technology and money. I've been studying the history of what really happened and what is going on today from my personal experiences . It's a long story.
It’s pretty crazy, isn’t it? That’s indeed why I always try to point out that I’m a grease monkey with little knowledge or insight into world economics, politics, or trade agreements - it’s so incredibly complicated that I feel like I’d need a masters degree to actually begin to grasp all the factors. Thanks for watching my friend!
This video is probably the best summarization of manufacturing currently that I have seen. Very good video, with spot on pointers!
Thank you very much sir, thanks for checking it out!
I agree with the cons that you listed with unsustainably undercutting competitors for long periods of time....... But the pros are:
- The consumer benefits, and since every single one of us machinists are consumers of machined parts (eg, machines that make our food) we get lower prices in other areas...
- If i am a machine shop that is getting no work, I most likely unsustainably undercut (for the short term) in order to build relations with more customers and then raise prices later on or gradually, other wise i will go out of business
Theres always pros and cons to everything
How long is the short term?
I got undercut so heavily that i could not continue. 2 months after i sold to a customer of mine, 6 of those shops were gone (and the owners of 4 of those were facing lawsuits for fraud) and 2 had been bought out for stupidly low.
my dad gave $150k for one of them with 12 machines, 6 horizontals and 6 millturns (all less than 4 months old) that the owner put his entire life savings into before quoting $50 on jobs with $75+ in material. Just the building was $450k but he needed the money to settle a lawsuit.
Company asked my boss to lower prices. They were a long time great customer so he did give them a discount. They came back and asked for another discount. He told them to kick rocks. They still send us some of their more difficult work but he replaced them with customers that appreciate our shop more
Good for him man, it takes guts to hold firm - it’s a lot less scary to capitulate and roll over when someone tries to beat you up on price rather than risking it with potential better paying work.
Personally, I would rather have fewer customers that I can have a productive relationship with than being the most popular shop on the block with people trying to get exploitative.
Thanks for watching!
You've hit on a tough topic for sure. I wish there was one concise answer. I think if you are a company that can pivot to become an OEM for your own new product, that is one avenue. Another is to provide more services like finishing or powder coating to add value. Lastly, I would be suspect of any 'onshoring' activity that is not backed with a binding document because, rest assured, as soon as things settle down, those jobs are going to wherever the lowest manufacturing price is.
Offshoring not only hurts the Business of today but also hurts the valuable asset of trained machinists for the next generation. no work means no one is interested in learning the skill, soon all the skilled experts leave (pass on without passing their knowledge) and you can't find anyone that can make something without having to go far away to find it. Where I grew up in Vermont, Machine tool was its lifeblood, It is gone, and a lot of the local innovation with it. It is not good for people not to be making things. Many generations of machinists in my family, I work in corrections and collect tools. but the industry will never be what it was in my Grandfather and great-grandfather's days.
Correct on all points, Sir!
Thank you very much sir!
Adam Smith never heard this theory. He called it “competition” for the benefit of consumers. Crazy guy….
Great video . I have a small machine shop in Canada. It's mind boggling that in 2022 we are still charging the same hourly rates that shops charged in the 80s . A plumber or electrician with a van and some tools can charge 100 + an hour and shops with a million + in overhead can't make 75. This keeps the hourly rate of skilled machinist low which is why hardly anyone is getting into the trade anymore . One of the higher skilled trades with the worst pay. Hopefully things will change one day.
i recently did a job for a company i had previously worked for, and because of that i know what it takes to make these certain parts that they sent to me. its a fairly complicated part, and the shops run time on them for all 3 operations is a little over 30 min each. i made a bid on them at my shop rate, which of course they boked at, so i gave them a little bone and dropped my price just for them... but i had to drop it by 25% which i wasnt happy about, and then she still tried to get me to go lower. i would have been fine with that if they were going to give me a lot more work, but of course when it came down to it they did not. and to top it off they took forever to pay, and communication was horrible. needless to say i wont be doing work with them any longer
Oh man I’ve been in this situation so many times - the “oh, just do this one job at this price we want to pay (read: robbery) and we’ll have SO much more to send you!”
I’ve never had that magical extra well-paid work appear after. My rate is now my rate - even if you want a ‘sample’ run, I’m pricing those samples as if I’ll never see the production run because I’ve had that scenario happen too many times.
The result? I have better customers - ones who understand how this business works, versus bottom feeders looking for a quick cheap deal to cover their month-end.
Thanks for watching!
When I was in High School and went the 1/2 day trade route which was a 2 year program , I took Marine Engine Repair in 1973/74 and even then the School professionals were trying to shame you for going the trade path as the obsession with college for all was well underway
Play their game ask for samples of the parts (10 of each) they get made in the East Aisia, then you cheak what quality work the customer will except. If he happy with cheap and nasty , you can supply him with cheap and nasty parts
Don't feel bad if it not to your standards.
Remember that's customer want pay, that's what he gets.
Testify, brother. I’ve been telling people this same story for years. Falling on deaf ears for the most part.
Thank you very much sir! Hey, I don’t expect we can change the world with TH-cam videos, but I’m hoping if we get enough of these conversations going, maybe somebody will actually listen! Thanks for watching!
So I used to work at a LiDAR (think eyes of the Terminator) company and was friends with the sourcing guy. He was amazing in so many ways, but when I talked with him about reshoring CNC work he said the eastern prices were less than half of the domestic rate and he just couldn't buy domestic. That's a bear, and it rests on the shoulders of a bunch of poor people in the east getting used by their country. Personally, I try to buy as much stuff as I can that is American made, or at the very least not made in the 2 biggest 1984 dystopia countries. That said, things are tough, and it is easy for people to get on Amazon and buy stuff made by sometimes literally slave labor. And that's what we as a country do. So maybe we need to change that.
💯!!!! All industries that sent their work over seas are coming back because of supply issues. This is great news for this country, as long as we stand by our principles and standards. If nobody lowers their prices and stands strong then there will inevitably be more work than anyone can handle at the rates that are already set.
This is it my man! The rising tide lifts all ships, but if someone starts drilling holes in the boat - we’re all gonna sink! Mixed metaphors, I know - but I’m glad you’re thinking the same way I am! Thanks for watching!
Hi Ian,
From technical point of view a part will go through the same process or can have an ultimate best process to meet all the specifications. The same process will be followed at every manufacturing unit, whether its USA or India or China or any other machine shop.
Now breaking it further the cost of the material is almost the same globally as now a days the material manufacturer follows the global material index and prices the product.
The cost of the machine globally is the same unless maybe some local machines will be a bit cheaper for the overseas competitors, but if the required specifications does not demand anything specific there is no need to add extra.
The cost of setting up the machine will be almost similar globally. So, the cost of Machine, Material, Tooling will always be in a same bracket globally. The only major player then remains is Labor and Overheads. Yes there is a significant difference in labor cost in USA and Eastern countries but how much portion of the cost is actually labor and how much is the Overheads and Profits. Do also consider a significant cost is been spend on managing the logistics from eastern countries to USA.
The bigger challenge is technology is cutting the requirement of skills every day. These developments are going to be affecting the global scenario, things that were a western country domain now is been challenged by third world countries as the technology is readily available.
I mean if a low technology/specifications involvement is there then do you need to be make it in a $100 per hour shop, absolutely NOT.
Every part is made for a specific purpose and will have its own cost significance, for simple example a motor shaft will not have the same pricing bracket of a Machine Spindle so everything boils down to the final product pricing.
Like machine shops the OEM’s too are under pressure to keep the price competitive as alternate products are available cheaper from the same eastern competitors.
While I still would support you on not underpricing/undercutting the Shops rates but it really requires a deep dive analysis. If a US$ 40k machines per hour rate comes to US$ 80 then there is something seriously wrong.
I think one of the major problems with the industry is distribution of the cost on the resources.
One of the important factors to be considered is the time the machine keeps running, especially in India people run the machines for 2 shift minimum, when the spindle keeps running your overheads starts coming down too. There is a vast difference in the working conditions and facilities that a US operator gets and an Eastern company operator get but then too it cannot be that significant.
As in video you mentioned that a part that cost US$ 1.35 in any low-cost country will cost approx. US$ 10 and if optimized to around US$ 5, believe me you cannot have that cost difference unless your labor is driving limousine to work.
I think its time to retrospect within before concluding.
The tool & die company a friend of mine worked for many years moved to Mexico around 14 years. The company he went to work for after that he tried to steer it in a direction to save the company but they were to stubborn to change unfortunately they finally had a close their doors because they couldn't compete anymore.
It’s sad to see so many companies failing to adapt. Genuinely. There’s such a huge opportunity for all of us to make some money and generally increase our standards of living - it just takes a bit of thinking and work to figure it out. Thanks for watching!
The shop I used to work in would say, "well some parts we loose money on and some we make money on, we just need to have a good mix." Well in the end they were loosing the parts they made money on and only made parts they lost money on. Needless to say that shop no longer exist. Poor management in my option.
Ah, I've seen that story before for sure. I definitely have some work for certain customers that I do as a bit of a sacrifice on the altar for getting their profitable work - but I have to be very, very vigilant in making sure that a) that higher-profit work actually materializes regularly, and b) that the less-profitable work is just less profitable, and not a straight loss.
Thanks for watching!
It will bite them in that ass eventually. Just look at what is happening now with the supply chain like you stated. Sadly Greed is a thing. The skills we have are not worth $1 parts they can go pound sand! 😂 We have the skills! Every shop needs to hold the line and not sell out to cheap quotes! It hurts us all!
Couldn’t agree more! I think it’s not only greed - I think a lot of shops get a little paranoid that if they don’t win every job they quote on that they’ll end up with zero work - so it snowballs into lowering what they’ll accept more and more until even that becomes unsustainable.
As they say, the rising tide lifts all ships! Thanks for watching!
I'll take on a job for less money if it's short duration. I'd rather not be stuck at a lower rate per hour for an extended period of time.
A lot of times, the customer will try to start a bidding war just to lower the price. I'd rather not do a job for a lower rate and just walk away. Then, 3 months later, I'll get a call back asking if I can do the job in a rush 😐 if they pay full price. No, that would be be extra, to cover the cost of the work I'll lose because I put your work ahead of work already in house. Some people just don't get it!
Thank you for talking about this. I think talking about the big corporations is a must with this topic also. I’ve noticed in the US northwest there has been a push in the last 10+ years of big corporations buying up job shops and playing this back and forth game of job shop and long term contract production facility. A lot of that is due to a very large amount of work in aero space propped up by Boeing. But these company’s always have “competitive wages” which means they really win big when all the smaller job shops are racing to the bottom just to get a little bit of work. I’m not trying to go down the conspiracy theory road but it sure is convenient for these billion dollar corporation and conglomerates.
Oh I think I know what you’re talking about - I don’t think that’s conspiracy so much as thinly-veiled predatory business practices. It’s hard because while I might have some suggestions for other small and medium shops, I have absolutely no idea what to do with the big bullies out there.
Thanks for watching!
@@iansandusky417 I think for a good start is what you were saying, don’t take on work that is way under your shop rate. But A huge part of that is to also pay your employees an actual livable wage. I think the wage problem is and is going to continue to be a massive problem as well. Mixed together and we are facing a big die off of western world manufacturing. The pandemic exposed part of this and some machinists that were apart of that exposure have already left and I think that exodus will only get worse in time. How can any machine shop justify $20-$30 an hour wages when people can make that doing non skilled work? It’s a really bad combo that’s gonna lead to a really bad outcome if not remedied.
Its true bro here in india also happened
Also be aware that the person in a store buying a washing machine is what drives machine shop pricing. When someone sees a washer for $ 400 and one for $ 700, which one do you thing they will buy? Do you think they will still complain about the $ 400 washer being too expensive?
I bought a Speed Queen, looked alot like my old Amana. Top loader. 900 dollar.
Price per part is not always shop rate related. If you can be more productive for the same labor dollar that will lower the price per part. Do you have the right machines to do that job efficiently? How many are you making per machine cycle. Innovation and knowing what you do well is a big part of profitability.
You're not wrong there - for sure, innovation and finding ways to increase production can greatly affect the price of a part, and in turn determine shop rate.
It's a very difficult situation. It's not like auto repair or some other service industries where a given job pays book time. We don't have that in machining. How long does it take to machine a part that you have never made before? I think it's easier to estimate tire rotation or oil changes than some part you have never made before. I really think we need to start working together like ATI in the automotive repair industry. Currently I have abandoned quoting with my old spread sheet and moved to using paperlessparts. If we all jumped on bandwagon where we all used the same quoting software we probably could increase pricing and profitability much like ATI in the automotive repair industry. One thing that I have had happen is a new shop will open and they will start doing work way to cheap. They almost always end up going out of business, but they usually end up driving everyone's margins down in the process. I don't know how busy you have been. We primarily do work for the scientific instrument industry and have had record sales during the pandemic. Most of the shops in my geographic location are very busy. Customers are having problems getting parts made. I think if we figured out a way to work together and everyone charged a fair rate the margins in manufacturing would not be as dismal as they are. One of the things I have found is that with paperlessparts my pricing is much higher than it was. I don't really care if we get every job that comes through the door because we make good money on the work we get. I think one of the biggest problems we have is that our industry does not have a good way to get consistent pricing across the board. New shops have a real tendency to do the work way to cheap and unfortunately the only way to learn is baptism by fire. There is not an easy way traditionally to figure out part pricing. If shops across geographic locations could get our pricing consistent this would be the best possible thing we could do as an industry. Let customers and jobs that only pay $30 an hour go away.
Import manufacturing parts is not ISO 900 certified.
as i am still building up my shop from nothing i am not $100 hr shop but i do struggle to find work when larger shops drop their prices to stay busy... quit taking the bottom feeder food haha.
Taxing money at its creation is the first problem. Global corporations consolidating wealth and buying governments is the second.
Blaming all of our problems on international trade agreements is a mistake. Manufacturing has been adversely affected by several things including
modern accounting practices that favor short term profit over long term stability, publicly traded companies that only care about their next earnings report,
etc. There is no value placed on long term investment anymore.
By no means am I blaming it solely on international trade agreements - I agree, that would be short-sighted and definitely not getting the whole picture. What can we do to encourage more long-term investment by manufacturing companies? I think this is a great point that we should advocate if possible.
What about the big corporations demanding %5 cost reductions every year?
The big corporations are unfortunately out of my sphere of influence as a tiny little shop, but I do agree - it's a factor and I can't think of any reasoning for it aside from greed.
I don't believe in labeling yourself a 100 dollar shop.
You are what you cost and if you want to be more that's up to management to figure out.
If your machines charge $15/hr and your guys charge $25/hr and the tooling and other smaller stuff is like $10/hr, then your a $50 shop.
In a well run shop management makes their money off improvements which give you margin.
So for a 5k job, the guy doing the sales makes his 10% and the owner makes his 10%, meaning it's a 4k job, which means the shop should be able to do it in 80 man hours.
Management makes it's money when they create improvements over what the typical shop is doing, either by automating changing labor to work more efficiently or whatever management thing they come up with.
The customer shouldn't pay for sloppy management and management needs to be held accountable for what they do. (even in a small shop where the sales and owner and manager are the same guy)
I definitely hear you and agree with those points - man, are sales guys really getting 10% commission on contracts these days in manufacturing? That's wild if so - makes sense if it's a mainly commission gig though I suppose. We don't have any outside sales guys, so I don't have much experience with it.
I agree with you though, this is mainly a video geared at management / owners - I don't think at all it's the responsibility of the guys on the floor to worry about rate per hour beyond hitting reasonable production targets. Poor management can absolutely torpedo everything, in my opinion. It doesn't matter how much talent is in a shop if it's not given the proper environment to succeed!
Thanks for watching!
Not that simple. If the guy makes $25 an hour after all of the fees that come with that (health insurance, payroll tax, etc.) that now costs $30-40/ hour easily, maybe more. $50 an hour for a shop rate is if you have a beat up Fadal in your home garage. (nothing wrong with that, everyone starts somewhere). In my opinion, in todays world shop rates should be at least $75 if not $100 an hour, definitely towards the $100. If its drop everything crazy rush work it should be way more. Guys that do drywall, HVAC, electrical, tire shop, etc. Charge $100+ an hour and don't have nearly the equipment/ overhead that a modern CNC machine shop has. $50 shops will go out of business unless there is a ton of automation involved for high volume or lower volume with incredibly long cycle times that can run over a weekend without anyone touching it.
Fine but then you need to stop buying the off shore products from Walmart, Dollarama. You cannot have it one way . Both of the principles need to apply whether you are a buyer, consumer or seller. If not it does not work. The person less checkout may be appealing but it is eliminating a retail job.
Couldn’t agree more. I personally try to spend the money and buy things right the first time, things that will last - mostly to try to not be part of the problem. I also try to buy western manufactured tooling and equipment to support manufacturing in every way I can - it would be great if more people did the same! Thanks for watching!
I'm a mazak integrex machinist and what you're talking about is absolutely true 👍 I'm agree with you, is there anything that the local municipality can do something about it and save this precious jobs???
For sure! I’d definitely advocate that we should be doing all we can to push for more trade schools, more trade education in high schools, and helping to get more people involved with machining!
Another big one would be offering loans and incentives for people to start shops and create jobs - it’s very effective where I’ve seen that used! Thanks for watching!
@@iansandusky417 thanks very much 👍 🙏
Global competition brought wages and manufacturing down in the Western world.
Cost of machines needs to be revised. They are eating your profits more than you realize. There is no valid reason to justify $3000 / month per machine when it costs the .10c/$1 to build those machines.
It’s pretty crazy, I agree - machines are basically cars at this point - they lose 50% value the second they hit your loading dock, but the payment doesn’t change. I think it’s good to see more and more companies competing in the space though - I definitely see more affordable options becoming popular within a few years, especially for base models. Thanks for watching!
Businesses are in BUSINESS TO MAKE $$$$$$$$. if the shop next door will do the job for less chances they will get the job.
Oh, nobody is saying don’t take work from other shops - thats just business. What I’m saying is that it’s very easy to end up in a situation where you’re doing a ton of work and making no money if you only focus on getting every job that comes in the door, no matter how little they’re willing to pay.
Agree with the first part and some shops prices are out in Pluto, but if we all undercut no one will make $$ .
@@mikehazenbosch5791 That is true, but I have had situations where I need a sub contractor to do work that I cannot do, and pricing here in the US has gotten crazy, so I have had to go off shore to have work done. Even with the shipping charges it is still cheaper to have it done off shore which I really hate because I believe in US 1st.
@@leehudson2643 I hear you there’s things we can’t touch I was not talking machine shop vs machine shop. Hopefully the US 1st includes 🇨🇦
I made special rivets for a customer for .20 apiece. Then they started buying them from China for .08 apiece even though they were having to throw away about half of them. Go figure.
Seen that game played before. Relish in the fact that when they come back (and they will come back) that all of a sudden, pricing may have 'changed' on your end.
I don't particularly believe in 'punishing' a customer, but when the realities of manufacturing have changed in the time they've been away, there is a small amount of satisfaction to be had.
@@iansandusky417 They didn't come back. Their customer shut down that product line. Then they (my customer) lingered for a few more years, went from 25 to 5 employees, and the owner retired. Building is now leased as a tire warehouse. They were good for 10 years, always paid COD. Haven't been able to replace them...
@@funone8716 Ah, ain't that the way it goes sometimes. People get penny smart and pound foolish.
Shame you haven't been able to replace them as of yet. I know it's a bit of a cliche, but sometimes you just need to keep afloat long enough to be there to answer the phone when the call for work comes in. Best of luck my friend!
Greed, plain and simple. Why pay an American $25/hr when you can send it overseas and have it done for cheaper? Bites ya in the ass in the end.
How to setup 4th axis??... where to take offsets ...? How to take x y z A of 4th axis...?? Where to put offset??? What is difference between 3 axis and 4th axis A rotary axis???... Make detail videos and make playlist ...
I need basics of 4 axis rotary and...also want advanced 4 axis toolpath like an expert.... please share any playlist or video collection
You missed one important point, western lavishness need to be discarded east is also living happily in 1/50th price/resources westerns are spending n remaining frustrated 🥴
I mean, that’s a take. I’d definitely advocate for rising standards for everyone rather than tearing it down to meet a lower level, but every opinion is valid here.
@@iansandusky417 Here in my country manufacturing is evolved to such level that you get machining facility free! they're focusing on scrap .... more chips = more money
Make videos of actual setup..... How did you took actual offset x y and z also A B C .... Bcz.... Programming seems easy to us... How well you setup the job that has more importance
Go pay for a course.
@@spikeypineapple552 where is streaming?