Apropo of some the car hype you hear, occasionally you hear the claim that such and such car is cheaper to own/run longterm than other lower-priced competitors, w/ reliability, fuel, parts, initial price, etc. factored in.
First, I wonder how accurately this can really be done for cars, and who does it--I don't think Consumer Reports does it, largely cuz I think half the people at CR underwent electroshock therapy that went awry...
Second, is there any data like this for CNC machines, or any way to kluge together some comparative data?
Snippets that I have are things like, Haas selling their machines by the g-code, while fukn Fadal asks $1100 for a goddamm floppy drive, vs. 4-500 for Haas! Thus, reliability is key, AND how deep/hard the service peeple shove it in, when you do need them. And, in what orifice--a major consideration, depending depending.... Along w/ cost of parts, etc.
A "lowest cost to own" number would greatly influence my buying decision, but it seems like such a number is pretty elusive.
And who to bleeve?
---------------------------- Mr. P.V.'d formerly Droll Troll
It seems that such a comparison would be difficult to produce because different machines have different rates of productivity when they're running.
Cars, at least in North America, tend to all get you there at *roughly* the same rate, irrespective of the engine displacement, valve timing capabilities, horsepower, interiour fabric choice, stereo, etc.
If a Haas machine makes $60/hour goes down once a year, does it have a better ROI than an Okuma that goes down once a month but makes $120/hour? Also, what has to fail on each to make them a loser/winner?
This issue probably has more to do with mass production than with low production/one-offs/tool making.
Naturally I have no experience in this field. Should be interesting to see the answer...
"Robin S." wrote in news:wn1Zd.1117$ snipped-for-privacy@news20.bellglobal.com:
In high-volume production, I'll take a Mazak. Although there are a few cleavats with them imho (regarding interfacting an automated production system to them), they will run, and run, and run and run....breakdowns are seldom. We finally retired our oldest machine, circa 1995. It still ran fine, was just in need of a rebuild, approximately 17,000,000 (17 million) cycles on it.
We are going to drag it back up from the boneyard sometime next week for some offline process change testing.
Good points. I proly should have specified a "genre" of machine. I was thinking the more general/generic Fadals/Haas'/Mighty's/BPs, etc. Mazaks'n'all are proly just on another level altogether.
Our local leasing expert, Robert Davidson, might be the best source of data, since he deals with the "net results" of machine purchases from a financial standpoint. Here's what I mean by that:
Suppose two machines each cost $100K. And suppose you want to lease one of these machines for, say, five years, and then, maybe, buy it at the end of the lease. The amount you'll pay to buy it, after the lease is done, is the "residual" value of the machine, which leasing companies have to know with great accuracy if they're to make any money. One machine will have a large residual, and the other will be small. Since, in a lease situation, you're trying to pay only for the part of a machine's total life that you actually use, the machine with the biggest residual (the most life and value left after the lease period) will have the smaller monthly payment during the lease (all other things being equal.) The machine with the smaller residual will be more expensive by the month; but cheaper to buy at the end, if that's what you want to do.
If you translate this into functional terms for decision making, it seems to me that a machine that's still valuable after being used for a while is one that the market (a HUGE pool of talent, skill, and varying needs and plans) thinks is more desirable. If the market WON'T support a decent residual value, that's the same as saying that the machine is pretty much used up by the first owner, so the first owner needs to pay for the machine's whole life during the relatively short period of the lease.
So, if you buy a machine that costs $100K, and you use it for five years, and if it then has a residual or resale value of, say, $20K, then your direct cost to own it is $1,333 per month, plus interest. If the machine is effectively worthless after five years, then you've paid $1667 per month, plus interest.
The basic arithmetic works pretty much the same way even if you finance and buy the machine, rather than leasing it. After the payment period is over, you still have to decide whether to keep the machine, or to sell it and buy another new one. How much you can get when you sell it is still going to be determined by the marketplace, and is still going to affect your total cost of ownership and use.
Maintenance and repair costs, and the costs of downtime, etc., are an important part of the puzzle while you own the machine; but those are pretty well included in the desirability of a machine in the marketplace overall - especially if the machine is a very standard model that's sold in large numbers. Some machines you can buy for the change in your pocket, even if they're only a few years old. Others cost an arm and a leg, despite being well used. There are reasons for that which have to do with the real-world experiences of a large number of users.
Hey - did you know that the remake is supposed to be coming out at the end of April? I was trying to find someone to go with, but up here it seems like I'm the only one who's read the damn books!
Kirk Gordon wrote in news:1110820314.687e8411bc6651787adf4b0119b840b3@teranews:
Excellent post Kirk, the only disagreeing point I have is for a high- volume production machine. Depending (a great deal) on the actual production requirements, even an excellent machine may be past it's useful life at the end of the payment life. Case in point, our Mazak machines. They are excellent machines, with very good residual value, and in any kind of normal production/job shop environment, would last the owner a lifetime or longer. In our situation however, they see in excess of 1.5 million cycles a year. We do not as a rule lease machines, we buy outright. But we still have to pay for that machine over the 8 years depreciation for capital expenditures. At the end of that term, the machine will have ran well in excess of 12 million cycles. That number of cycles will pretty much nullify any residual value, even for the higher end and excellent quality machine it is, in that condition. Now, you can take that machine and spend about $30-40k on it and have practically a new machine, quality and running wise anyway. (Spindle rebuild, new ball screws, new linear rails.) But, in our case, we do not do that because a major reason we buy a new machine is due to the newer technology in the latest drives, control, etc. After all...in our business, same or better quality at a faster speed is the name of the game.
Kirk Gordon wrote in news:1110820314.687e8411bc6651787adf4b0119b840b3@teranews:
Kirk is right about residual pricing. Asset valuation is a major part of a lease company's business when considering a True Lease (the residual will be Fair Market Value at the end of the lease term). That being said, I'm not sure I would recommend using the residual valuation of prospective equipment as the main factor in deciding which line of machine tool to get. According to P.V., there are some very specific questions he needs answers to, like: reliability/maintenance costs, service packages, cost of consumables (fuel & parts), etc. These questions lead me to believe that P.V. is not just looking to see what a given machine may be worth in 5 years, but also what it will cost to run, contrasted with what money it will earn, in those 5 years. (although you would think a machine's general profitability would be a major factor in its residual price...)
If you would like to reduce a large pool of possible choices, order the candidates according to their residual valuation after 5 years. Take the bottom 40% - 60% of the list and discard. Then start your serious research by determining the net present value of each remaining candidate. This part is going to be a long and tedious process, but much better than the alternative of a blind guess. Plus, the results will be specific to you and your shop's needs, as opposed to a general industry-wide valuation.
I wish I had a simpler answer, but if you really want to get right down to the nuts and bolts of decision making, you will need to do a NPV comparison. You can find a nice discussion on the topic here:
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I suggest you use your machine dealer or salesman to gather as much cost/benefit info, for each machine, as possible. Use your best judgment when setting up your assumptions. Best to be conservative...the greater risk is with the buyer, not the seller.
A general article on the subject of equipment acquisition can be found here:
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If you would like to compare NPV of a purchase vs. lease, let me know...I'd be happy to help.
Anthony wrote in news:Xns9619BB54242EBacziparle3sp835@216.77.188.18:
I think Anthony illustrates an interesting point here: the value of a machine is not necessarily in the "ownership" of it, but in its use. It sure sounds like they get their money's worth!
To capitalize on this fact, you may want to investigate the benefits of an operating lease. I don't know your whole situation, but from what you have described it seems that you could take advantage of the use of a machine and pass along the cost of ownership to a lease company. I'd suggest looking into a 36 month lease with a FMV residual. You would have the ability to upgrade to newer technology on a regular basis and avoid getting stuck with a "young" machine with very heavy usage. Off balance sheet accounting, fully expansible lease payments, relatively low monthly payments and no upfront costs add to the value of financing in this situation.
Robert Davidson wrote in news:Xns9619A8B5858DAatlasfinancial@216.196.97.142:
Robert, The problem is, 99% of our machines are custom built specifically for us and to our specifications, and are usually, but not always, customized even further once they are on our floor. Really wouldn't do anyone else any good, unless they happen to make the same or extremely similar product as we do (not likely, there are but a very few). Not likely that leasing companies are going to be interested in a one-off type machine that they cannot dump off at the end of the lease. Interesting point though.
Anthony wrote in news:Xns9619DAA2B428Dacziparle3sp835@216.77.188.18:
I see...
I think you're right. It would be difficult to set-up a FMV type lease on almost-custom equipment.
It just goes to show how poor generalities can be. Thanks for filling me in on your specific circumstances. One last question: what do you do with your older units? Recondition? Scrap heap? Sell back to your equipment vendor?
Robert Davidson wrote in news:Xns9619BDB8E8832atlasfinancial@216.196.97.142:
It depends. We build a lot of our equipment ourselves. Some machines are rebuilt completely (new controls, new mechanical components, etc), some are sold to sister companies to be rebuilt or use, and some are just flat worn out and are junked. Those that are junked are often canabalized for either spare parts, or parts which can be refurbished and used on a new piece of equipment being built.
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