[Dualkit]

It's countries like India and China that are killing American manufacturing.

I bid my work at $75.00 per hour and I figure if you don't want to pay what I bid, then F U. You can go where ever you get the cheapest price. At $75.00 an hour, I am as busy as I want to be. All my equipment is paid for, and my rent is cheap. Power goes up every year as does phone and insurance. There's nothing I can do about that. My house is paid for, as are my cars. Taxes are cheap ( for California ).

I'm 65 years old, so at this point in my life, I work because I want to, not because I have to.

Jobs I take are not profitable for for companies to send offshore. I specialize in 1 to 10 piece orders, and a BIG production job for me is 25 pieces. I have structured my company such that if I get a job to quote that is 26 pieces, I will turn it down.

You are one of the few that still charge in accordance with the value of your work, not based on overhead, too bad there aren't more like you. You seem to have a good niche. I have picked up a few customers lately than were doing business with people that are no longer around who were charging unsustainable shop rates. I think bottom shop rates are starting to creep up
as the $15 an hour guys are closing up. We can only hope.

[Steve Seebold]

You are one of the few that still charge in accordance with the value of your work, not based on overhead, too bad there aren't more like you. You seem to have a good niche. I have picked up a few customers lately than were doing business with people that are no longer around who were charging unsustainable shop rates. I think bottom shop rates are starting to creep up
as the $15 an hour guys are closing up. We can only hope.

Why should I work just to cover expenses? I've had employees and all they did was cost me money. They make parts, then I have to make them over because they didn't do them right. It turned out to be easier to just work by myself, then I know what's going out the door.

If I have to work just to cover expenses, screw it, I'm goin' fishin'.

[metlcutr55]

interesting thread. 10 yr ago i was working by myself quoting out at $50/hr, and usually had a month+ backlog

7 yr ago i had increased rates to $70 hr, had 1 full time employee and was telling folk sorry, i have a 5 week backlog, they were saying thats great ill take some.

6 yr to last yr back by myself @ $70 and plenty of backlog. my employee took his skills and went into swiss micro machining, wife made him move back south.

last year to now, dropped rates from $70 to as low as $35, even posted that here just to get called a cheap c--t chinese emulator and backstabber. rates are back at $50 just because it didnt seem to matter or help, workload is day to day and gross sales are 40% of past years. actively seeking a job in machining or "industrial engineering", everybody loves my resume. nobody has a job. im looking forward to "next" year.

[bk1955]

I owned a small shop from '87 to '95 and never felt that it was going to go anywhere for 2 reasons: There was no growth and so much tool work that I was getting at that time for larger local companies was being shipped to Mexico. I sold to a larger manufacturer and went to work there and subsequently have seen 3/4 of the work go to China. It is a false god, if we are not working or making some extra money, we can't buy anything at any price. I will also add that I have not had a raise in real salary in 10 years. We held our own the first five years, but in the last five years, wages have not kept up with expenses.

[Steve Seebold]

I race model boats as a hobby, and let me be the first to tell you, the last couple of months, I have had a lot of water time. I still refuse to cut my rate. Like I said earlier, if you don't want to pay my rate, take your work down the street.

Then you tell me you can't because the guy down the street has gone out of business. Gee I wonder why. Did you suppose you contributed to that? I know I charged you $175.00 for this part last year and he took it for $75.00. Well, there was a $50.00 piece of material in it so he was going to make your part for $25.00 and there's 2 hours of labor in it and he was paying his guy $20.00 an hour. No wonder he went out of business. I'll make your part, but it's $175.00.

You guys need to stand up to these jerks. Let them send their work down the street. They'll be back.

I once had one of my racing buddies want some parts for his boat and he also wanted to make some to sell to support his hobby. I gave him a price, and he told me he thought I was a little high, so I made him a deal. I wanted $4.00 per part, but if he would come in and run them I would charge him $2.50. That was fair for both of us. I still made my $75.00 per hour, he got what he felt was a fair price and the only thing I had to do was clean up the machine and sweep the floor when he was finished.

[Dualkit]

I still refuse to cut my rate. Like I said earlier, if you don't want to pay my rate, take your work down the street.
Then you tell me you can't because the guy down the street has gone out of business.

Sorry I have to laugh at this. I don't see how some of these customers can say what they do with a straight face. I have one guy I have done about a dozen jobs for in the $200-$500 range. Only once did he not come back with "I was paying $$$ less than that from our last vendor."

Me: "Sorry, my price is $5 each, I can't do them for $4, You know my quality and prompt delivery, but for that they will cost $5. If you want them for $4 a piece I suggest you go back to your old vendor.

Customer: "We can't, our old vendor went out of business last year, and besides his quality was poor.

Another good conversation, different customer,....

Me: "I can't do these tight tolerance pins for anything less than $6.50 a piece"

Customer: "Why can't you do them for $4 each, that is what we paid for them from our last vendor.

Me: "Can't do them for that price, I regretfully suggest you stick with your current source."

Customer: We know your quality, and the last parts we received from the other shop were all out of tolerance scrap, but they were only $4, your price is too high, why should we pay more than $4 a piece.

I think we all need to find a niche so we don't have to compete with all the cut rate hacks that have crawled out of the wood work. It seems machining center or mill work goes dirt cheap these days. I see pretty complex low volume parts go for less than I would even charge for programming. A lot of
people are no longer charging for indirect labor, I think they are bidding machine run time only. Eventually working 10 hours a day and billing only 3
catches up with them and they go out of business. I don't think we have hit the bottom yet. This recession should weed out a lot of bottom feeders and hopefully those that survive will be in good position to take advantage when the upturn finally hits.

[Cdat]

I know this is a year late but thought I'd throw in something I tell people buying my stuff:

3 choices: Cheap, Good, Fast.
You can take any of those two but at the price of losing the 3rd.

[vernonpurcell]

Not $50 an hour in these days more like $15

[Steve Seebold]

Not $50 an hour in these days more like $15

If you can't make $50.00 an hour, find new customers. They're out there, they're just harder to find.

[Dualkit]

If you can't make $50.00 an hour, find new customers. They're out there, they're just harder to find.

$50 an hour jobs are out there, but you won't find them among parts that anyone with average skills and limited equipment can make. Those end up still going for $15 an hour. About 2/3 rds the work I get these days are $50 an hour and up, some of the stuff is pretty simple. I just happened to have the right machines and tooling to run them fast, most people would run them at 1/2 my speed and end up with $25 an hour.

[BobWarfield]

$50 an hour jobs are out there, but you won't find them among parts that anyone with average skills and limited equipment can make.

Exactly right. If the work is being commoditized by cheap labor, you've got to do something the cheap labor can't do to maintain your prices. Otherwise, dive into the mud pit and start wrestling for the bottom price!

:drowning:

Best,

BW

PS You can win in the mud pit too, but you'd better have some "edge" or reason why you can do things cheaper than the other guys. Maybe you're more automated. Maybe you have more productive machines. Maybe you're just a whole lot smarter. Some of these guys who used to run shops but now work for themselves out of a garage are in that last category.

[Steve Seebold]

Exactly right. If the work is being commoditized by cheap labor, you've got to do something the cheap labor can't do to maintain your prices. Otherwise, dive into the mud pit and start wrestling for the bottom price!

:drowning:

Best,

BW

PS You can win in the mud pit too, but you'd better have some "edge" or reason why you can do things cheaper than the other guys. Maybe you're more automated. Maybe you have more productive machines. Maybe you're just a whole lot smarter. Some of these guys who used to run shops but now work for themselves out of a garage are in that last category.

I REFUSE to wallow in the mud pit with the bottom feeders. My rate is my rate, take it or leave it. Besides, I thought bottom feeders were lawyers. When I bid a job for someone and when he tells me he can get it for less from the shop around the corner, I just shrug my shoulders and tell him, "well, I guess he knows what his s**t's worth".

[Dualkit]

The sad part about this trade when globalization is factored in most people starting their own shop, do so on bottom feeder level. Guy keeps his day job, acquires a mill and a lathe and starts looking for work. Most have no special skills, tooling or machinery. Also they know how to make parts, but have no idea about the white collar part of the job. They have 2 strikes against them right out of the box. Also most of them only have the capacity to do simple jobs, so they are competing against every Tom, Dick and Harry for work. Even as the economy improves, your average guy starting out is going to be fighting for $15 an hour work.

[BobWarfield]

Steve, the point is, there is a sliding scale. If the other guy invested in better means of production, he may be able to deliver the same level of quality for a lower price. You don't want to lose sight of that either if you're in a competitive market. It isn't just a matter of digging in.

That's really the issue for the "mud pit" is competition. It's all fine and well to assume the other guy MUST have lower quality, but you should at least consider the POSSIBILITY that he's found a way to have just as good a quality. That's when telling off that customer means they just don't come back and you've been blind sided.

It's easier to make money in markets that aren't so crazy competitive. If you're a job shop, find niches that not too many others can get into. If you can, build some of your own products instead of fighting to be lowest bidder on someone else's. "Can" means coming up with products that make money. Everyone thinks they "can", but the market will let you know if it's true.

If you know something special, capitalize on it. There's loads of markets that require specialized knowledge of one kind or another.

The point is you're looking for your edge. What's your unfair advantage. What's the reason why you're the big fish in somebody else's pond? That way it's your teeth they see grinning in the dark instead of some bigger fish, LOL.

Everyone can find that edge, but it'll take some hard looking. :boxing:

An edge can be anything from the specialized tooling that was mentioned, to a bigger machine, to special knowledge of a material, or special knowledge of an industry or niche. An edge can even just be that you're retired or have such low overhead working out of your garage you only take the jobs you want.

Cheers,

BW

[Cdat]

I charge 37 an hour for labor.:cheers:

[Steve Seebold]

I charge 37 an hour for labor.:cheers:

I certainly wouldn't brag about that. If you can pay yout rent, machine payments, electricity, phone, mortgage, eat and still put some away for a rainy day, good for you.

What's going to happen when you underbid a job and end up making $7.00 an hour. It's not a matter of will happen, it's when will it happen.

[Dualkit]

I certainly wouldn't brag about that. If you can pay yout rent, machine payments, electricity, phone, mortgage, eat and still put some away for a rainy day, good for you.

What's going to happen when you underbid a job and end up making $7.00 an hour. It's not a matter of will happen, it's when will it happen.

$37 an hour wouldn't be so bad if it was a bar fed screw machine job and the part is .200 long, 2 minute cycle time that didn't consume tooling. If it allowed you to load a bar, go home and go to sleep, then fish money out of the machine in the morning, not so bad. If you are billing that out for manual work that requires cranking handles all day, you are on the edge of survivability, and basically just bought yourself a job.

[Steve Seebold]

$37 an hour wouldn't be so bad if it was a bar fed screw machine job and the part is .200 long, 2 minute cycle time that didn't consume tooling. If it allowed you to load a bar, go home and go to sleep, then fish money out of the machine in the morning, not so bad. If you are billing that out for manual work that requires cranking handles all day, you are on the edge of survivability, and basically just bought yourself a job.

SO TRUE!

[Cdat]

I certainly wouldn't brag about that. If you can pay yout rent, machine payments, electricity, phone, mortgage, eat and still put some away for a rainy day, good for you.

What's going to happen when you underbid a job and end up making $7.00 an hour. It's not a matter of will happen, it's when will it happen.

Rent? Machine payments? Buy. never lease or rent. Cash up front.

[Steve Seebold]

I bid jobs like I am going to run them on a real machining center instead of my PCNC 1100. I bid at $75.00 per hour, and usually end up making between $45.00 and $50.00.

A real machining center has 20 HP, my PCNC 1100 has 1.5. I can do anything on my PCNC 1100 that you can do on a real machining center, it just takes a little longer. But my PCNC 1100 didn't cost me $75,000.00