Are Machine shops worth it?

[cdlenterprises]

I've been in machining for about 17 years now. Over the years(more recently than ever) I've heard a number of shops owners griping about how tough it is to make money in this busineess. The standard argument being that they have to invest $200,000 into equipment to make a $2.00 part and maybe clear 10% on the job if anything at all. Factor in the Asia factor and they seem to paint a pretty bleak picture for the future of the job shop. So, the questions stands, is it worth owning a shop? Is there any money in it for the amount of labor involved in running a shop or should the investment be made elsewhere?

[ViperTX]

Well....here's how I would look at it.....take the cost of all the machinery (say you're leasing it over 7 years) and let's just guess that that is costing you $2800 per month.

You need a shop....figure $2000 per month with utilities (electricity, phone, etc.).

You'll need a machinist ($3500), a helper ($1500), and yourself figure $2500 for yourself....you have to pay everything else before you pay yourself.

So, we have roughly $12,000 per month to keep the doors open and look like a viable machine shop.

If you're making $2 widgets and the material cost is $0.20 you have a gross income of $1.80 after material cost.....so basically you have to produce 6700 of these per month to keep the doors open....you have to produce 42 of these per hour......you have a machinist, a helper and yourself....

Anyway.....you can work out all the other estimates......generally most shops would want to migrate towards higher end stuff at lower volumes and add more intellectual content....

[jackson]

well i'm not sure what part of the country you are in but im sure it is the same as my area, Macnine shops have up and downs right now its up. Your pretty much going to have to start your shop when buisness is good and make enough money to keep it going when buisness is slow, "Thats one of the tricks". Alot of guys get out on there own, and they do it when buisness is up they get to making some money so they start spending money "buying them selfs new boats and stuff" then when it slows down they have nothing to keep them afloat for a couple months till it gets better or they can find new work. Now starting a shop is real easy if you have the credit and some one that is going to give you work. But just me i would have at least four customers lined up that are willing to give me work before i started buying machines. But the money is good if you do it right

[cdlenterprises]

Yeah, getting the equipment is the easy part. I can probably have two new machines in a building next week if I wanted to. It's getting the work that's tough. It's the typical catch 22, you can't do the work unless you have the equipment, and you can't have the equipment (and keep it) unless you have the work to support it. Damned if you do damned if you don't.

[jackson]

yeah you hit that on the head i have got a few shops off the ground and running and one i paticular was a guy that wanted a couple CNC but he was a conventianal machinist("that was fun") and some one told him they would cover him up with work and they did for about a month and that was it. so then he had tw CNC sitting ther and me with nothing to do. Luckly for him i got him some work. Luckly for me i got him a diferent programer and i got out. Have you ever tried teaching CNC, buisness to a 55 yr old manual machinist.

[ZipSnipe]

Well, I own my glass business and I also work nights at a die and mold shop. I,m really impressed with the business decisions of the owner. His number one shop is located up north right in the same business park as his customers and the same goes for the number two shop down here in Florida. I think cutomers like the idea of a machine shop next door. So point is, location can be critical and valuable.

[jackson]

I have to agree location can be a key factor for larg or small shops i do mostly local work but i do some out of state custumors as well but i do verry high volume

[mog5858]

this thread is just what i need. i have bean throwing arond the idea of starting my own shop up hear in canada. it would be welding and some machine work. i would be doing repare work for the oil feld, framers as well as jo blow. just not shere if i can really make a go at it. i am working on buy tool's, machine when i have money for it. i just woring about cost of tooling up a shop cus i have non to speak of. give me your thoughts thanks

[GAWnCA]

Hey Jackson, How about teaching a 55 year old Network Engineer (job outsourced to India) how to CNC and make money?

Originally Posted by jackson yeah you hit that on the head i have got a few shops off the ground and running and one i paticular was a guy that wanted a couple CNC but he was a conventianal machinist("that was fun") and some one told him they would cover him up with work and they did for about a month and that was it. so then he had tw CNC sitting ther and me with nothing to do. Luckly for him i got him some work. Luckly for me i got him a diferent programer and i got out. Have you ever tried teaching CNC, buisness to a 55 yr old manual machinist.

[ViperTX]

mog5858.....well acquire your first piece of equipment....that which will let you do most of the jobs and then start moonlighting (work weekends and nights)...

I'm thinking that you'll need a mill, a lathe, a metal bandsaw, a welder, and the associated small tools (collets, indicators, etc.)....just buy what you need when you need it.

[mog5858]

thanks viper the only thing is that where i am ( i live in the boonezs) if i need a tool i might take a week to get it. ya frist thing i am buying is a keen mill. than a lath

[dertsap]

Originally Posted by mog5858 this thread is just what i need. i have bean throwing arond the idea of starting my own shop up hear in canada. it would be welding and some machine work. i would be doing repare work for the oil feld, framers as well as jo blow. just not shere if i can really make a go at it. i am working on buy tool's, machine when i have money for it. i just woring about cost of tooling up a shop cus i have non to speak of. give me your thoughts thanks

mobile repair shop
if your near the oil fields go mobile ,get a big truck bolt down a mill ,lathe ,and a welder in the back , most always theres going to be power around to plug into, ive heard of that being fairly successfull,
got a friend in northern ALB. with a 1ton and a deisel welder doin the oil feilds ,dudes making the big bucks