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Speaking of Precision

Speaking of Precision is a knowledge preservation and thought leadership blog covering the precision machining industry, its materials and services. With over 36 years of hands on experience in steelmaking, manufacturing, quality, and management, Miles Free (Milo) Director of Industry Research and Technology at PMPA helps answer "How?" "With what?" and occasionally "Really?"

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14 Causes of Machine Shop Pain

Posted January 28, 2011 9:00 AM by Milo

  1. Continued small lot sizes requiring more time to set up then to run.
  2. Inability to find "what used to be easy to find standard (materials, tools, holders, etc.)" (disappearing suppliers and products).
  3. Lack of lead time on jobs; Increase of lead time for needed materials.
  4. Increase in rejects from remaining suppliers to our shops.
  5. Too much to worry about, externally.
  6. Regulatory uncertainty - HR, EPA, OSHA; approved and banned materials; Increasing local agency "oversight".
  7. COBRA
  8. Workers Comp
  9. Difficulty to get financing
  10. Inability to break through Voice mail at customers
  11. Uncertainty on pricing for needed materials
  12. Cost of capital to make investments to meet new regulations (cleaning and VOC's in California, for example)
  13. Customer attitude that says you need to be financially strong before we give you an order; when everyone is in the same boat.
  14. Desperate competitors who take an order below their cost just to sustain cash flow.

These are not our favorite things.

Julie Andrews won't be singing about these subjects anytime soon.

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Editor's Note: CR4 would like to thank Milo for sharing this blog entry, which originally appeared here.

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#1

Re: 14 Causes of Machine Shop Pain

01/28/2011 9:45 AM

Just wanted to point out that most, if not all, of these points aren't confined to machine shop operations.

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#4
In reply to #1

Re: 14 Causes of Machine Shop Pain

01/29/2011 12:03 AM

They sure aren't.

They don't all apply to me, but many do.

I appreciate the blog Milo. Sometimes I look around and wonder if everyone else is doing great and somehow I'm in the small minority of people who's business and income are in drastic decline. It's not right, but it does make me feel a little better knowing I'm not alone.

It's strange territory we're in. Not having work and not making decent money is something that I never worried about. I thought I never would.

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#2

Re: 14 Causes of Machine Shop Pain

01/28/2011 3:46 PM

As usual, there is something relevant to me and my business in your blog. Thanks Milo, for the food for thought.

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#3
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Re: 14 Causes of Machine Shop Pain

01/28/2011 4:06 PM

Thanks guys.

milo

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#5

Re: 14 Causes of Machine Shop Pain

01/29/2011 10:11 AM

Thanks Milo,

As always, your posts give one reason to evaluate what we are seeing, especially in my line.

#14 gives me the most pause when I travel to do oversight on a project.

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#7
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Re: 14 Causes of Machine Shop Pain

01/29/2011 10:49 AM

#14 has forced me to lower my prices. It's that or stay home.

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#8
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Re: 14 Causes of Machine Shop Pain

01/29/2011 11:18 AM

That is sad that a manufacturer comes to that.

I just hope that you do not cut any corners compromising safety.

Ways to be leaner are there and I see more ideas from the blue collar worker today than the professionals who tout there skills.

A couple hundred buck bonus program does wonders.

Most few thousand dollar lean gurus cause grief in the long run.

I remember going to a shop years ago that had no sensible work flow pattern, used a lot of tools one would not expect, including hand built ones.

Alas, Dad took a back seat to junior, who proceeded to modernize the shop, but not the workers.

The workers became resources, the shop was clean and impressive, the quantity and quality of work underwent the obvious changes, but never achieved more than, oh maybe 75% of the old antiquated shop managed and ran by people, not resources.

Later on, being called to visit and do an audit, I found Dad at 80 something back at the helm, directing the shop with all of the old ways.

Now, these guys specialized in a lot of off shore Oil Business stuff, so they needed quality not quantity and perfection in their assemblies.

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#9
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Re: 14 Causes of Machine Shop Pain

01/29/2011 12:19 PM

No corner cutting.

As was mentioned earlier, that list goes far beyond the machine shop.

I'm a painting contractor. People are out there working for peanuts. I've got a sizable customer base, so word of mouth work is still coming in. The problem is, I can't continue charging my old rates, despite the fact that my work is usually superior. At some point I'll loose my clients, which I think is already happening.

My saving grace at the moment, is that people trust me in their homes while they're at work, as opposed to hiring a stranger. But, I still can't justify charging double what someone else would. I'm down to less than 1/3 the income that I was making in the mid 90's and it may drop more. Not sustainable.

I've got other skills and can work in just about any factory/industrial setting.......but we all know that no one is hiring.

I'll stop whining now. I've always figured out a way to make things happen to bring in money, and I'll do it again!

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#10
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Re: 14 Causes of Machine Shop Pain

01/29/2011 12:32 PM

Come on up to the Pittsburgh area and The Marcellus Shale Play.

Our existing base of skilled workers is either working or retired.

A lot of the entry level jobs that can be done with unskilled workers are being filled by temps (that brings up a whole new set of problems).

PA is 2nd in the nation, after TX, in hiring last year, and almost all of these jobs were tied directly or even indirectly to the Natural Gas Industry.

Workers imported from other states, lots of money, house purchases, remodeling required, and opportunities for the go getter.

And, we do not have the influx of low paid migrant construction workers here in W. PA, that seems to be the norm in the rest of the state.

A disclaimer is due about the last statement: I do not and will not shed any reflection on the quality of these workers, it is a shame that they have been exploited by unscrupulous contractors and greedy home and business owners.

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#11
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Re: 14 Causes of Machine Shop Pain

01/29/2011 1:07 PM

Glad to hear things are going well up there.

We've got roots here. All is not lost. My wife makes good money in the legal profession, and I've got a fairly large project to start on Monday.

I've also have a patent pending, that is finally slated for review by an examiner. I've been hesitant to develope the product until I find out what the decision is. I still hold out hope that it will pay off. It relates to early childhood education, which is something in which there always seems to be interest. Childhood obesety is also a concern. My product combines learning with outdoor play, so I'm keeping my fingers crossed.

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#12
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Re: 14 Causes of Machine Shop Pain

01/29/2011 1:36 PM

Excellent, the go-getter always survives.

Made me think of a guy I know near you who is probably a 3rd generation roofer.

He bemoans his lack of work constantly, but to him a pneumatic nailer is ultra high tech, as he still just throws down asphalt shingles, and has no interest in the newer technologies. I have told him to look into the less labor intensive part of the business, but we both have heard the drill.

It was good enough for my daddy and his daddy, so it is good enough for me.

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#15
In reply to #11

Re: 14 Causes of Machine Shop Pain

01/31/2011 10:02 AM

Hi Marat,

Follow the principle of Sell, Design, and Build and only in that order. When you have customers what you offer, you have to design what those customers want, and produce for them with profitable way for you.

It's simple but many people follow complicated route for success. Look around and observe what make successful certain companies? See the progress of Illinois tools Work or Eastern Airlines. Simplicity is thre way yo go for success, Gil.

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#14
In reply to #8

Re: 14 Causes of Machine Shop Pain

01/31/2011 9:56 AM

Hi Man,

First, get a customer to sell something. Second, be able to design the only thing that satisfy the customer. Finally, produce only what satisfy the customer.

Many business people don't follow that route and fail. Fail because they enter in a competitive area, they are against established companies with large pockets to protect their marketshare.

Study what is not sold or see unsatisfied customers in businesses that you can be in, and sit down with yourself, think about if you can make something valueable for those unfulfilled customers. If yes, start to design something and show those customers what's your solution.

Simply said: Sell, Design, and Build and only in that order.

Try it and let us know, Gil.

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#6

Re: 14 Causes of Machine Shop Pain

01/29/2011 10:13 AM

Milo once again toots a big horn.

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#13

Re: 14 Causes of Machine Shop Pain

01/31/2011 9:42 AM

Hi Milo,

You have problems because you are in a very competitive business, you are not the first in, and not focused. Change your business to a niche market and you will eliminate 9 to 10 of your problems. Suggestion: Sell, Design, and Build, and only in that order! Before you start your future and trouble-free business read: Laurence J. Pino's book: FIND YOUR NICHE. Read, learn, and enjoy it, Gil.

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#16
In reply to #13

Re: 14 Causes of Machine Shop Pain

01/31/2011 10:09 AM

I believe that you have totally missed the point here.

Your advice to sell, design, and build in that order is totally incongruent with the fact that our industry is contract manufacturers who make something that others have designed after we evaluate the part, our process, and means to provide. It is an auction where our shops provide quotes to win the bid to provide.

The sequence is 1) OEM designs. 2) Tier one or two supplier wins bid for a system / assembly to go into that design, 3) They bid out key subcomponentry to specialists with best technology to provide the precision engineered components, 4) Our shops provide parts to customer drawing despite the 14 points given in my original post.

Please try to understand the context before making broad general prescriptions. Our business model is "manufacture to customer's specification.' Most of our shops are ISO/ TS certified. Their scope generally does not cover "DESIGN."

Thanks.

Milo

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#17
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Re: 14 Causes of Machine Shop Pain

01/31/2011 10:22 AM

Milo,

I can't see where the clarity on your Organization's Site and in your post not showing this. Big companies seldom manufacture, they may just assemble or test. The expertise, equipment, and craftsman of the smaller 3rd or even 4th tier shops provides the product in a more timely manner. We need to do what we do best and leave the other "stuff" to others.

Respectfully!

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#18
In reply to #17

Re: 14 Causes of Machine Shop Pain

01/31/2011 11:13 AM

"big companies seldom manufacture, they may just assemble or test."

Look closely at the customer in this scenario. There are lots of niche players out there who want to make a complicated, expensive and profitable part. The customer is going to buy a part. Underestimating your customer is a terrible mistake. They are the brains, you are the brawn, in this picture.

If you are so smart, take the capital risk, and go it alone, like they are. Organize suppliers and rank them by proficiency and service to your bottom line. That may mean that your project manager calls them every week, and updates them every day by email. No equipment, no craftsmanship, but quite a lot of expertise. I'm just pointing out that success rarely revolves around product. If your company is at the top, it's all good.

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#19
In reply to #16

Re: 14 Causes of Machine Shop Pain

01/31/2011 1:49 PM

Hey Milo,

Just out of curiosity, how prevalent is #14 in your industry? With home building and construction almost non existent, it's hurting everyone in the trades. Electrical, hvac, plumbing, painting,...........you name it. There are more people out there that can do the work than there are jobs to go around. That's forcing prices and profits down. In the meantime, the cost of materials is going up. It's not pretty.

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#21
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Re: 14 Causes of Machine Shop Pain

02/01/2011 8:04 AM

It used to be very widespread, but most of those shops closed in the last downturn. Most shops have learned you can't buy market share with low price, all that does is reduce everyones profitability. However, Almost every one has a big job that they lost to a "weak sister." Milo

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#20

Re: 14 Causes of Machine Shop Pain

02/01/2011 3:42 AM

Don't you also get customers who want to change the order just when you've finished.
Del

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#22
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Re: 14 Causes of Machine Shop Pain

02/01/2011 8:05 AM

15!

milo

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#23

Re: 14 Causes of Machine Shop Pain

02/01/2011 11:19 AM

Knowledge is power. Strive to know your customers needs and wants better than they know themselves. Combine that with technical capability(many elements to this one), an understanding of your own limits, leadership ability and personal integrity and you will have a winning business model.

I have seen this time and again in the semiconductor equipment business. Trusted contract suppliers were right there when products were being conceptualized helping frame the creative thinking in the direction of what could actually be manufactured. Inevitably they got the prototype and preproduction orders for difficult to manufacture items putting them way out in front for a position as the "60%" supplier for volume production orders.

Ed Weldon

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#24

Re: 14 Causes of Machine Shop Pain

02/11/2011 1:22 PM

Hi Milo,

You describe a company just before bankruptcy or close? Every business is organized to do something for someone: SELL. When the company has a customer who wants to pay for the something, DESIGN it for complete satisfaction of the someone who pays for it. Finally, BUILD the satisfactory something and deliver to the someone paying for it. To operate, you have to create and write a STANDARD OPERATING PROCEDURES (SOP) for every action in this company.

At the start, you create a flowchart to establish the processes and operations to make what's sellable followed by the SOP. This flowchart include a timely staudy of every movements of machines, materials, and workers by using statistics. With obtained informations eliminate wastes and redo the flowchart and SOP as improvement, and never stop to do again. Regulations and financing is another problems mainly at the start but not later, Gil.

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#25
In reply to #24

Re: 14 Causes of Machine Shop Pain

02/12/2011 12:14 AM

I have just one question for you, Guest. Just how well do you think your model company with its SOP book would do against Apple, Google, Facebook or the big surviving Wall street investment bankers? ..........EW

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