Request For Quote- Off Topic - Manufacturing Still Slow?

I just wanted to ask a question if anyone has seen a pick up in Manufacturing yet.

I currently work at a machine shop that caters to Aerospace and we were hit hard last year with bankrupt companies and major slow downs.

In my companies attempt to seek out new customers, they have spent the last year quoting, quoting, & more quoting. The doors seem to be all open for customers now, but landing work seems to be harder then before and price is the largest factor.

What little bit of feed back we get and with target prices disclosed, it seems to me that alot of companies are looking for prices that are unrealistic. Is anyone else seeing this trend?

We do have large overhead with a big burden shop rate, which the company I work for is unwilling to cut down. But that aside, with the numbers I see coming back from potential customers in the form of their target numbers, I could not see in some situations to cover material costs, let alone direct labor, nor do I see it possible for even small shops to make it on this current trend.

I keep hearing that the economy has bottomed and things are turning around, but I am wondering if manufacturing, specifically precision machining may take another year or two to fully recover.

My biggest fear that going forward, companies that buy precision parts and supplies will pay closer attention to price and be tightening their belts, where quality and supplier loyalty will take a back seat to the lowest price. For the future going forward, I hope this will not negatively affect this trade with wages and benefits, since it has already been eroding away.

Mike in MN

Slow work

Pricing is being driven into the dirt by China and India. Vietnam is quickly moving into the precison machining business. I predict in ten years work in the USA will be confirned to DOD and prototyping. Goodrich which has a facilty in Colorado Springs just advised us the work we currently do for them is moving to india. about 2 mil a year gone. Goodrich is a supplier to Boeing.

I source parts out of China and Vietnam when possible, China prices are lower than my material cost here. Killing us. Thanks to Nafta we had Mexico take all the assembly type of jobs. Now Asia. Hard to compete with skilled machinest making 200 US a month over there.

Buyers don't care

I have the conversation almost daily with my boss when we get the news an RFQ was awarded to another supplier with a price less then 1/2 ours, that buyers right now don't care about Quality or Certifications.

We are AS and ISO certified and management at the company I work for think that should automatically put us ahead of the pack.

My argument is this...

Manufacturing is slow, the economy is barely moving, and yes, buyers are flooding the market with RFQ's, but I believe it's a fishy expedition. Everyone is trying to cut costs and that means the cheapest part for us as suppliers. My boss asks don't they care that we are AS and ISO certified? I reply, NOPE! If they need the compliant status or the quality they are more likely to purchase from their current suppliers because they probably have a tested relationship with them, everything else is price/cost, otherwise they wouldn't be fishy from their current vendors.

We see tons and tons of RFQ's and have too many staff involved to process the high volume which ends in no work. This makes it difficult because you need to have enough people to process the quotes, but yet you have to pay their salaries in the process. When they aren't bringing in anything, it's hard to justify their salaries. That classic double edge sword I guess.

I wonder if buyers actually understand how much money goes into quoting parts/assemblies when they actually have no intentions of awarding the work, they just need the numbers for their own internal justification.

Mike in MN

Claude Jolicoeur said:

Pricing is being driven into the dirt by China and India. Vietnam is quickly moving into the precison machining business. I predict in ten years work in the USA will be confirned to DOD and prototyping. Goodrich which has a facilty in Colorado Springs just advised us the work we currently do for them is moving to india. about 2 mil a year gone. Goodrich is a supplier to Boeing.

I source parts out of China and Vietnam when possible, China prices are lower than my material cost here. Killing us. Thanks to Nafta we had Mexico take all the assembly type of jobs. Now Asia. Hard to compete with skilled machinest making 200 US a month over there.

Click to expand...

Hello Claude,
Actually, I am come from China as a metal work supplier.
I agree with your opinion almost. China, Vietnam and India has took many of your work, specially the Chinese manufacturer, the Chinese price is good but the quality is better then Indian and Vietnam in medium level product. but I have to say, the high technology industry. Chinese manufacturers is still a kindergarten students, because all from the raw material to the precision, your guys is much better then these countries, I think you'd better to focus on the high precision products, and sourcing the medium level product to these countries, then you can get the trade profit(If the Chinese price is lower then your material cost). that would be a good solution for you, right/.?
Best regards
Steven

Hmmmm.

stevenliu said:

Hello Claude,
Actually, I am come from China as a metal work supplier.
I agree with your opinion almost. China, Vietnam and India has took many of your work, specially the Chinese manufacturer, the Chinese price is good but the quality is better then Indian and Vietnam in medium level product. but I have to say, the high technology industry. Chinese manufacturers is still a kindergarten students, because all from the raw material to the precision, your guys is much better then these countries, I think you'd better to focus on the high precision products, and sourcing the medium level product to these countries, then you can get the trade profit(If the Chinese price is lower then your material cost). that would be a good solution for you, right/.?
Best regards
Steven

Click to expand...

Steven,
The price is not always right. Letting one of our machining or skilled manufacturing jobs go outside of the USA at this point is very close to treason and could effect 1000 jobs altogether. Our jobs.
Thanks.

take it easy

Amark Engineering/Manufac said:

Steven,
The price is not always right. Letting one of our machining or skilled manufacturing jobs go outside of the USA at this point is very close to treason and could effect 1000 jobs altogether. Our jobs.
Thanks.

Click to expand...

Hi
I don't know how other Chinese company quote to your guys, but I think all business man want to make profit instead of to lose money in doing business..
in the other hand, business is business, your control the market, and we make things to live, all these contruies has a large family need to to feed. that's nothing about treason..
If I am rude, please forgive me.
Thanks and good luck
Steven

Without Getting Political

I guess I started this thread to see if everyone else was seeing the same thing, that manufacturing was still pretty slow.

As far as work going overseas, I have been machining for over 15 years now and have seen alot of go...

I personally do not blame the government nor politicians, but I do agree they make it easier......But, who I do blame is the companies or the President's/Management of companies that are doing this.

Free Trade or not, it comes down to American Businessmen that make the decisions to source this work there. I realize business is business, but we as Americans are the ones making the decisions to keep this trend going, it may not be Americans as a whole, but Americans nonetheless.

I have this conversation at work all the time. The shop I work at have had cut hours for almost a year now. But the owners and president still take their vacations and buy new cars while their workers are at cut hours and cut wages. It's not the "Who's Who" that all this economy and overseas work are affecting, it's the guys on the floor trying to make a living.

Mike in MN

Time to look at doing something else!

Hello all,

I have started a small shop out of my garage and from what i can see things are still very slow. The only shops producing product are the ones in the medical industry for the most part. I was the General Manager and one of three partners of another CNC shop until I recently decided to get out. I had 99% percent of the responsibility and no tax benefits. I made a decent living but got tired of being screwed over the years.
I checked out some government stats and general machining jobs are going down hill for the next 10 years. There is no more demand for machinist in the future. This trade is being beat to death and I am thinking of trying something new. I have been in this trade for over 30 years and am dam good i what i do and see no future. I currently make custom parts and sell them on line but it is not enough to make a living on at this time. This current uptick in the market is only going to be a blip for the next 6 months or maybe a year and then things are really going to go down hill. Somebody has to pay the piper after all the free money(your tax dollars) being given away. (JMO)

AdvancedMfg said:

I guess I started this thread to see if everyone else was seeing the same thing, that manufacturing was still pretty slow....
Mike in MN

Click to expand...

Last year was our best year to date! I thought we would not be affected, but this year we have been hit bad. Scrambling to keep work in the shop. Making less per hour to do it. I am quoting work, but see little of it.

AdvancedMfg said:

... But the owners and president still take their vacations and buy new cars...

Click to expand...

I am the owner, and the new BMW's will be coming to a stop this year and I passed on the Hawaii vacation earlier this year also. Probably won't make you feel better, but it has hurt us too.

Hope I didn't try to single anyone out??

tmachine001...

I hope you didn't feel like I was diggin' on all owners. Just stating what is going on in the company I work for. And really, I know part of owning a business is financial security and perks do come with the territory. But in my case, management always comes to me and ask despite the cut in hours and pay, what can be down to raise morale on the floor?

Those are the examples I use and tell them it's obvious that owners/managers are in a better position then the hourly shop employees, but over a years worth of company meetings with management saying that they are affected the same as hourly employees, it's evident to an employee body that actions speak louder than words. It's very difficult right now for businesses to run that fine line of trying to survive and also try to find ways to keep morale up.

It's also has to be difficult for the company I work for because they are practically the only shop in town and have basically one customer. They have alot of eyes on them and also no experience in anything else but catering to the one customer. Diversification is pretty hard to do in other industries when you have gone almost 20 years with one customer in a small corner of that industry.

Mike in MN

I have noticed an increase in work for August. Who knows if it will continue. I run a small shop and am luckily pretty well diversified. But even the medical work I was doing went away in June and July.

As far as the overseas outsourcing goes, I try to make the best of a bad thing. Someone has to do the rework on the imported parts when they come in wrong and there isnt time to send them back to whatever overseas countries they came from. Alot of times I can make double my shop rate for rework like this because the customer has paid so little for the parts in the first place that even with my cost added in the part is still less than they were spending to make it in the US.

The True Cost of Outsourcing

The American Business that chooses to outsource there mfg work needs to consider the "real cost" with the complete "real picture" it takes to manage the outsourced arrangement. Often new positions are created on the American side to manage the relationship, the export/import costs, and the quality costs of not doing it right the first time and the oversight required to quality check the outsourced work.

I encourage the American business people that make the decision to outsource to wake up and look at the real cost. Eventually it comes back especially with the $ weakening and becomes a vicious cycle.

This is just my opinion.

DP Products, Inc

Well hopefully we will make it through...

Today we had a tour from our local college with First Year Machine Tool students. I asked them how far they were in and they said 4 days. I almost wanted to tell them to pick a different field, but I didn't because each time we have a tour and you see the fascination on the faces of those students when you show them CAD/CAM and the machines running, you just hope that a couple of them hold the interest enough to keep this field alive.

I also had a chance to talk to some of the other shops that I have worked for down in the Twin Cities in MN here. The ones I talked to are working overtime and going strong, but I guess there are quite a few down there that are pretty slow also.

I suppose this time will be no different than just after 9/11 when there was an auction almost weekly in the area I was working for machine shops. The ones that survived through it made it good. Hopefully if shops can make it through things will be good on the other side for a couple years.

From what I am gathering Medical and Defense are still going alright, but Technology, Aerospace and Agriculture are pretty slow.

Mike in MN