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Pete Zelinski,
Executive Editor
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Cost and Value Cut Both Ways
Makino recently hosted a valuable seminar in Auburn Hills, Michigan, that focused on mold and die manufacturing. Technical seminars describing many of the technologies and machining techniques the company has developed were preceded by a day of instruction in which none of the company’s products were mentioned. Instead, the die/mold shop owners and managers spent the first day of the seminar hearing from various expert speakers on topics including the overall state of the North American mold industry, selling to the “new domestic” car makers that have invested in manufacturing in the U.S., and the changing structure of the U.S. auto industry overall.
One of the presenters was Jeffrey Fox, coauthor of a book called “The Dollarization Discipline.” He argued that industrial suppliers such as mold makers can’t just assert that they have higher quality than low-price producers. They need to be able to articulate and quantify the cost savings that come from higher quality, because the buyer is not necessarily inclined to do this. The savings from higher quality tooling can include reduced or avoided repair cost, less downtime for mold repair, longer mold life and a higher quality end product. The message was well-received -- something I inferred from the number of attendees around me who were listening attentively or rapidly taking notes.
To me, the message was particularly striking because I had just returned from EMO, the massive machine tool trade fair in Hannover, Germany. I heard the observation there that automation technology is more difficult to sell in North America -- not because the interest isn’t there, but because many American companies focus so heavily on the initial price of equipment instead of the cost savings over time. The purchase price and the potential savings often occupy two different and unrelated budgets within the company’s planning.
Attendees at the die/mold seminar were nodding in appreciation at the speaker’s analysis of the true cost impact of purchasing cheap molds -- as well they should. However, I wondered if it was possible that a shop owner somewhere in that room might have been acknowledging this faulty logic on the part of his customers, without recognizing that he himself had applied the same logic to some of his own equipment purchases.
Hundreds attended the seminar. This photo shows one of the many live demonstrations held in the company’s tech center.
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Your Thoughts: Have you accepted a high price to save cost?
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Inbox Insights
TCO Meets MQL
If a machining system has been automated, that still does not necessarily mean its total cost of ownership (TCO) has been optimized. MAG Industrial Automation Systems provided this chart showing the TCO for an agile production system in which automation has been applied to reduce the amount of labor necessary to take advantage of the availability. The company says the message of this chart relates to coolant cost. In a system such as this, the coolant system can become the largest remaining source of cost after the capital cost -- meaning that coolant-saving technology such as minimum quantity lubrication (MQL) has the potential to reduce the TCO dramatically.
Particularly in sophisticated production systems, consider how much controlling coolant use can reduce the total cost.
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Inbox Insights
Mold making as a Service Business
Some U.S. die/mold manufacturers have gotten business as a result of international outsourcing of this work. They have been asked to repair inferior tooling coming in from overseas. Jeff Mengel of the business advisory firm Plante & Moran, another of the speakers at the above-mentioned Makino seminar, said that a “wild wild East” climate still prevails in international manufacturing that is allowing many questionable outsource suppliers to thrive. However, the pursuit of price savings through outsourcing will continue, he says, and this is one of the factors that will compel many U.S. die/mold companies toward a service-oriented business model.
These U.S. shops will do the “CFL” die/mold machining, he says. That means they will take on the jobs that are too complex, fast or large to be sent far away. But in addition, these shops will win much of their high-margin work by serving as mold- or die-making experts for customers within 100 miles, standing ready to diagnose and fix any problems that these nearby customers encounter with worn-out or distantly sourced tooling.
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Your Thoughts
Share your views, win a prize
Have you recently made a capital equipment purchase in which you knowingly accepted a high purchase price for the sake of the cost savings you expected that equipment to deliver? Describe your experience. How has the decision worked out?
Please share your thoughts on this question. If we publish your response, you’ll receive your choice of one free metalworking title from the Hanser Gardner bookstore.
To respond, send your e-mail to Pete Zelinski at pzelinski@mmsonline.com. |
OUR NEXT ISSUE
Systems and software
Our November issue’s focus on the systems and software that shops use to make their machining resources more effective will include articles on….
- How a Texas plants uses homemade macros for family parts so that its CNC machines don’t have to wait for programs
- The promise of “plug and produce” integration for manufacturing facilities, with a look at the promise for ERP in particular
- Adaptive machining for turbine blade repair
The issue also includes a collection of short articles describing noteworthy hole-making technologies. Don’t miss this issue! Subscribe or renew your subscription at www.mmsonline.com/subscribe.
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