Costs in Machining & Fabrication Shops

[Tundra Twin Track]

Was curious with costs of operations these days,I know quite a few on the Forum that are in the Machinig&Fabrication Business.The Agriculture Sector has gone Wonky with input costs :for example the NH3 Fert in October was $1230 per tonne,it’s current price is $2600.

[Doozer]

Having lots of experience in both
I always thought one could make more profit
with a welding shop over a machine shop.
Tolerances not as tight and tooling costs are
a lot less.

--Doozer

[Mcgyver]

Having lots of experience in both
I always thought one could make more profit
with a welding shop over a machine shop.
Tolerances not as tight and tooling costs are
a lot less.

--Doozer

I'd add that big weldments are expensive to ship so they are tougher to outsource offshore. Tooling costs are less, but you need a much bigger building, craned and with lots of power distribution to rise above competing with Bob in his backyard. otoh, currently machine shops are very busy, if anyone told them about supply and demand they are hopefully raising their prices and paying more to attract talent, which will get more young people attracted to it. China has lost a lot of its advantages, total comp packages aren't exactly a buck a day anymore - maybe 1/3 -1/2 of here for a total comp package for skilled labour. Steel is the same price as here, energy is more expensive and shipping has gone through the roof.

What have we seen cost wise? Stainless sheet about doubled, thanks to the P-word. Steel trebled over a year ago. Covid supply chain disruptions and has been holding. That's cost us, sticker shock compared to what they paid time sort of thing delays some purchases. Currently paint is tough to get, 4 week waits for some of it. That's the worst of it really, we can't invoice it and it clogs up the shop.

The good news is mining seems to be back after taking a decade off (large capital project wise that is). Big equipment design builds are better than machine shops or welding, and there are lots of RFQ's out there.

[mochinist]

Having lots of experience in both
I always thought one could make more profit
with a welding shop over a machine shop.
Tolerances not as tight and tooling costs are
a lot less.

--Doozer

Not dissing the welding trade at all, but I think it takes less time to train a someone to be a competent welder than a competent machinist. I have a few buddies that have welding type shops. One supports mostly the civilian world, he builds things like roll cages and takes on a lot of what I would just call general weld type jobs. He is always struggling to make ends meet and I’ve told him that he needs to focus on the industrial and govt market's. There is some hassle getting into those places, but so much better than dealing with the general public who generally dont appreciate your skillset and cost of doing business. My other buddy will take on jobs from the general public but has a minimum charge of $500 that chases all but the most serious away and is almost always busy and is doing well money wise.

My shop does one-offs/prototypes and small run production for the most part, manual and CNC machining. Material prices have definitely gone crazy and our quotes are now only good for five days instead of thirty days. So far haven’t seen many jobs being cancelled because of rising material prices but I’m sure that will change. The biggest challenge right now is employee hiring and retention. The average age of machinist in the US right now is in the mid 50’s. During covid we lost a huge chunk of the higher end of that population to retirement and probably some to covid itself. The guy that trained me was 70 when covid hit and was still working part time for something to do. Him and his wife are both high risk from health problems combined with age, haven’t seen him in two years(he wont leave his house now) as he decided to retire fully in March 2020, miss that guy. We’ve had paid ads on all the hiring boards for over a year, reached out to friends and family, etc. Applicants we do get, want $20+/hr, with little to no experience and the big shops that can afford that are hiring them. Most weeks we have zero applications or get no response after the initial contact. This is in the Phoenix AZ metro area and we have some of the worst inflation in the country, we are approaching CA prices for real estate and rent cost, so I understand people needing and wanting more money to live, its just tough on a business like ours, and not easy to pass those cost onto the customer without losing work.

[Dan Dubeau]

We're (automotive tooling) busy a couple months out right now, and quoting a ton of jobs that will take us through summer into fall. Material costs and availability are a big issue. But we can kinda quote around that now to a certain extent. It was a lot tougher the past year, and we got stung on a few. Mochinist touched on the bigger problem though is staffing. We just lost a really good employee yesterday to the Hydro Union. We're not looking to replace him right now, and have promoted within to fill the gap for now. But I'm down a programmer, and the hiring pool is pretty shallow for competent programmers and machinists right now. Very shallow. Talking to other shops in the area and it's a desert for qualified skilled people right now. Our workforce is ageing and it's tough to convince younger people to enter a trade that cost you thousands of dollars in tools and years of education and learning to make top rate where you can't afford housing to live in the city you're working in......Things are very out of balance right now, and I don't see it getting better anytime soon....

I worked a ton of OT last year. This year looks even busier. Our owner is also retiring in June, and a few of us are stepping up to fill the gap there as well. It's going to be an interesting year that's for sure........

[Tundra Twin Track]

Similar type of problems here what you guys mentioned.I chatted with a Gal in the US about a Titanium Exhaust I’m wanting for a New 23 Snowmobile I ordered and she said they are having real problems finding Skilled Tig Welders.

[Black Forest]

We are having the same issues here in Germany. Very difficult to get materials and workers. A new still wet behind the ears weldor wouldn't even consider working for $20 per hour. I am paying non skilled workers doing menial tasks here on the farm more than $20 per hour net + all benefits. I need roofing material for a new barn I am building. Minimum 3 months waiting for it.

[alanganes]

Staffing for any sort of even marginally skilled work seems to be a challenge everywhere. It does seem that lots of employers are slow in responding to the market realities though.

I have a friend whose company employs a fair number of TIG welders doing somewhat finicky stainless welding. He is always complaining that they can't seem to find and retain decent welders. On the other hand, they start everyone irrespective of their skill level at something like $18/hr. From how the shop is described to me by a couple of the long term employees there, it's a less that super-awesome place to work. They are not too far outside of Boston, which has one of the higher costs of living in the country, and the local chain donut shops and fast food places are starting people at 14 or 15 bucks/hr. So it's not likely that they are going to attract and retain top tier committed talent.

The place I work seems to not have learned this yet either. We have lost lots of very long term employees, many due to retirement, and they don't offer very attractive starting wages. As a result, you get few applicants and those you do get tend to be less than amazing and even once they hire on, they seem to easily find better paying opportunities and leave before very long. It's not a good situation.

[RB211]

Lack of workers kind of puts the favor towards CNC, does it not? Surely there is less skill in operating a CNC as an OPERATOR, than welding which is an art.

[J Tiers]

The whole "lack of workers" thing is stupid, in a way.

People whine that they cannot find workers, and claim "kids these days don't want to work". All the talk is framed as if there are millions laying around collecting unemployment.

1) Neither laying around, nor unemployment pays very well, so either they are all starving, are all living in mama's basement, or else they are working, but have chosen to work elsewhere, NOT for you.

2) Even with the inflation rate we had before, it already made no sense to work part time for $7.75 an hour. At that rate you are basically paying your employer for the privilege of working. It is $16,120 total annual wages if you work 40 hours a week, before taxes. Just enough to pay to live 2 to a room in a cheap "dormitory" apartment. With the previous trend of employers demanding "on call availability anytime", on top of part time work of maybe 20 to 30 hours a week, people did not reach even that $16,120. Now they have a choice and don't HAVE TO accept those rock-bottom wages.

3) The current inflation is mostly temporary, a carry-over from several political and environmental issues that are now easing. But, even so, you are not going to attract workers these days by paying rock bottom. You will go out of business. Some of the inflation is due to finally having to pay a "livable wage", instead of "racing to the bottom" on wages.

4) With the gradual retirement of the largest generation in US history, is is natural to have a shortage of workers. There are fewer people in the workforce.

All that means it's a seller's market for workers now, whether you like it or not. Don't like it? Tough. You want some workers? Quit whining and pay more.

[mochinist]

Lack of workers kind of puts the favor towards CNC, does it not? Surely there is less skill in operating a CNC as an OPERATOR, than welding which is an art.

CNC was already in flavor and has been for decades. Lack of workers puts robots in favor, for welding too. Yes the skill level needed to operate your average CNC is low, but thats not all that is needed. If we just needed a button pusher and material loader there are tons of affordable robots on the market now. My haas salesman has been pushing their automation section hard for the past year or so. https://www.haascnc.com/machines/aut...tegration.html

[RB211]

The whole "lack of workers" thing is stupid, in a way.

People whine that they cannot find workers, and claim "kids these days don't want to work". All the talk is framed as if there are millions laying around collecting unemployment.

1) Neither laying around, nor unemployment pays very well, so either they are all starving, are all living in mama's basement, or else they are working, but have chosen to work elsewhere, NOT for you.

2) Even with the inflation rate we had before, it already made no sense to work part time for $7.75 an hour. At that rate you are basically paying your employer for the privilege of working. It is $16,120 total annual wages if you work 40 hours a week, before taxes. Just enough to pay to live 2 to a room in a cheap "dormitory" apartment. With the previous trend of employers demanding "on call availability anytime", on top of part time work of maybe 20 to 30 hours a week, people did not reach even that $16,120. Now they have a choice and don't HAVE TO accept those rock-bottom wages.

3) The current inflation is mostly temporary, a carry-over from several political and environmental issues that are now easing. But, even so, you are not going to attract workers these days by paying rock bottom. You will go out of business. Some of the inflation is due to finally having to pay a "livable wage", instead of "racing to the bottom" on wages.

4) With the gradual retirement of the largest generation in US history, is is natural to have a shortage of workers. There are fewer people in the workforce.

All that means it's a seller's market for workers now, whether you like it or not. Don't like it? Tough. You want some workers? Quit whining and pay more.

I'll be going up to Maine soon. Last year everyone was paying 20$/hour for a fast food job, I imagine it'll be the same this year. As I drove from Florida, didn't matter which state I pulled over to grab a quick bite. If it was a drive through, the line was long and took forever. Many times I left the line and got back on the highway. If you pay people not to work, they won't work. Business gets smart and finds ways to not have employees. We are going with a management company in Maine for our rentals that seem like they take a high percentage, but they save us from even needing to have any employees. The numbers still work out and basically turns the rentals into true passive income, and a lot of it. Our last employee, let's just say the police had to get involved.
When I build my new shop and have my CNC machining centers, I'm aiming to not have employees. I'd hate to be a career "worker bee", both the government and themselves are destroying any chances they have.

[alanganes]

Lack of workers kind of puts the favor towards CNC, does it not? Surely there is less skill in operating a CNC as an OPERATOR, than welding which is an art.

This is true and also not true.

You still can't hire CNC "operators" and expect to pay them 10 bucks/hour and be shocked when they would rather fill coffee cups and hand out donuts for half again more.

Also, lots of welding is automated these days and lots more is headed that way.

Maybe a year ago I heard a long interview with a guy from Bug-O Systems, a maker of all sorts of welding automation systems and tools. He was asked about the resistance of welders on the job to adopt automation like his company makes, who feel they are replacing their jobs with robots. He pointed out one particular shipyard that he said that was planning to hire something approaching one hundred thousand welders in the next 10 years due to a combination of growth and loss to retirements. He also said that every welding program in the country combined would not graduate that many welders in the same time. So the automation is coming whether anyone likes it or not. The work will not go undone.

JT sums it up saying that it is a seller's market for workers. It's easy to find work in most places and easy to move to another job if you don't like your position.

[RB211]

JT sums it up saying that it is a seller's market for workers. It's easy to find work in most places and easy to move to another job if you don't like your position.

I wish I had this luxury with aviation. Ironic that it is a union job and my pay does not transfer to a new airline. If I was to go to UPS, my pay would drop to less than 1/3rd from what it is now for the first year, and I would lose all of my seniority. Why the only change I will make is to not fly anymore.
The railway labor act applies to aviation and creates situations like this.

[J Tiers]

.................................... So the automation is coming whether anyone likes it or not. The work will not go undone.

JT sums it up saying that it is a seller's market for workers. It's easy to find work in most places and easy to move to another job if you don't like your position.

So, the seller's market may not last. There may be another employment crash as the number of workers exceeds the number of positions available, in this case due to automation. Some work may switch to other industries, but in general, the total employment may go down.

It is all cyclical.