Re: Some Cost Comments...
Doug Evans
>Hi Moses:
Just thought I would add a $0.02 on the associated costs, although you are right on the money about the overheads.
Part of the issue for costs in a small company like ours is the evolution of the business. You start out with processes that are relatively simple out of necessity. At the same time, you cannot limit your thinking to that's the way its always going to be. There are very good cases in point with our Lever Cap/Screw combination and our Norris Adjuster assemblies.
There will be a few folks out with pencils and calculators here but damn the torpedos... Up until a week ago, the lever cap and screw combination was 28% of the retail prices of a smoother (at batch quantities). Now, with higher volumes and a more direct link to a supplier we have managed to cut that back to 23% (primarily achieved through the screws). We expect that in the new year, we will be able to go after he lever caps in the spring, and we are considering a couple of process strategies to do so - it is the last hurdle for the bulk of the manufacturing cost. Most folks would take as long to build a lever cap from a block, as we would take to assemble an entire plane. Maybe you have the time to do that once but, you dont have the time to do that 20 or 30 times a month. Our custom lever cap square thread taps cost as much as our planes (many of the others do not do this). If you take 50 bronze bars into a CNC shop with your geometry and the guy figues he has to fixture them three times and buy custom taps, etc., he isnt coming back with a $5 piece price.
Like others, we use 6 machined components in our adjusters. Up until recently, we have been using a "moonlighting" machinist in his basement to make them. After he had made his fixtures, he was taking 4 1/2 hours to make each one. About mid-summer, as volumes were rising, we found a high volume machine shop to make these for us. As we were a smaller order (200 vs. 10000 sets), they slated us for a September delivery. It is now late Noevember, and although we have the majority of the components to make adjusters, our machinist is still making two of the smaller components. And the savings... about 25% from the old manually made ones. More importantly, we will begin January with a two year supply of adjusters and a process has been put in place to provide them with rapid throughput.
Since June, we have created well over 50 CNC machining routines for our own CNC Router. The average hourly rate for such a machine in our area is $60 an hour (ie. a buck a minute). Most of our bench plane wood is fixtured five times. Bringing this work in-house provides us with far-improved cash-flow, greater manufacturing efficiencies and reduced inventories but, it now takes our time - what is our time and that of our machine worth? It aint $60 and hour but, it aint $40 an hour either (otherwise we might as well be running 3 shifts of kitchen cabinet bulkheads for some other guy). We estimate that we have moved from 15% of our parts being made in-house to 85% in the past few months.
All that said and no disrespect but, if we saw a way to get to 25% - we would get there.
Regards,
Doug