[the_chad04]

I work for a small company that currently outsources all of its machined parts. We are thinking about building our own in-house machine shop, but aren't sure if it's cost effective.

Last year we spent $300k on all of our machined parts. Most of our parts are 1-5 quantities and our highest quantity part was 100 per year.

I was thinking we would need one vertical CNC and one manual lathe to do 90% of our parts.

Any thoughts on the viability of implementing an in-house machine shop for a small company with low quantities?

[Geof]

An in-house machine shop for a small company with low part volumes is totally viable; I should know because I own just such a company. I have never outsourced anything except plating, anodizing and powder coating. When I first started part volumes were in the 1 to 15 region and I had one employee for the first year who was just a lathe operator; now I have six employees in the production area running 16 CNC mills and lathes with part volumes from 20 up to several thousand per batch.

The main reason I never outsourced was that I am a Machinist not a draftsman. I could design the parts, develop the procedures for making them and build fixtures and gauges so the parts came out correct all without having detailed working drawings that are essential if you want to outsource.

Your company must have the expertise to do the drawings and documentation that is an integral part of outsourcing but does it have the expertise on staff to run the machines and make the parts. Currently the cost for outsourcing is 300,000 but what portion of this is attributable to material and what is the labor cost. We work mostly with 6061 and for many parts the material cost is a decent fraction of the total; i.e. some parts start with 3 to 4 lbs of 6061 and have a total machining and handling time of less than 10 minutes so the material and labour are comparable. If you are working with a similar ratio then maybe only half the outsourcind cost can be applied to paying for the in-house work. In other words you may only have 150,000 to cover machine payments, wages, tooling, etc, ??? And you only expect to do 90% of what you need...how about the other 10% is this the stuff that is really complex, i.e. expensive, so it will still consume a decent chunk of the 300,000. Also if your sales volume drops for a while when you outsource you just stop ordering but the machine payments and in-house wages still have to be paid.

Making a jump like this is not to be done lightly; it is all too easy to jump off the edge of a cliff.

[cdlenterprises]

I would think it's pretty easy to spend 300K on a start up machine shop. A decent Vertical will run you about 60k. Then you have to tool it probably another 10-15k. A CNC lathe will run about the same. Software to program them 10-15k. Now you have to find people that know how to program setup and run them @ 50-70k each. Then there's material, cutting oil, maintainance...

For 300k I'd send it down the road to the job shop. It may seem expensive but sometimes the expensive way is the cheap way out.

BTW, Post some of the jobs on this forum and maybe you can get better pricing. I'd be happy to look at them for you.

:cheers:

[JDenyer232]

I work for a small company that currently outsources all of its machined parts. We are thinking about building our own in-house machine shop, but aren't sure if it's cost effective.

Last year we spent $300k on all of our machined parts. Most of our parts are 1-5 quantities and our highest quantity part was 100 per year.

I was thinking we would need one vertical CNC and one manual lathe to do 90% of our parts.

Any thoughts on the viability of implementing an in-house machine shop for a small company with low quantities?

We used to have our stuff machined out of house, about 6 months ago we purchased a new VMC, a RoboDrill Mate made by Fanuc. This is a small 30 taper machine, but most of the stuff we do is small. We paid 50k for the machine and that included tooling, setup, delivery and training. Not only has the machine paid for itself already, we have been able to shorten our lead times to our customers. It also gives our engineers more flexibility in their designs. For us it worked out great, hope this helps.