The 20-Hour Machine: Automation, Throughput & Smarter Capacity Planning, Ep #42

[0:00] Nick, why is it dark in here? I can’t see anything. That’s what happens on Lights Out, Mike. No, no, no, no. We’re doing a By the Numbers. We’re doing a Lights Out. I’m trying to lure you in. I can’t see the numbers in the dark. Play the music. Each week, we’ll explore the numbers that drive your business, from accounting and finance to operations, and the exciting realm of mergers and acquisitions. Whether you’re a seasoned veteran or just starting out, our discussions will equip you with the insights and strategies you need to rein in the power of data to elevate your manufacturing company. Welcome to By the Numbers. Get ready for Making Chips Lights Out. But this new era brings new technology and a different perspective on your operations. What you will hear will turn on a light bulb in your mind, so you can turn out the lights in your shop. Get ready to sleep soundly while your shop never stops. With your hosts, Nick Goelner, Eric Nekkich, and David Buick. So who got the intro then? I hope we covered both. Did we just? Is it like the mix-up? The mash-up of the By the Numbers intro and the Lights Out intro? The mash-up.

[1:42] I think the young influencer kids call this a colab or something like that. A colab. Not a colab. Way to sound not young, Mike. So yeah, if you do hear music even during the episode, it’s because we are live at the DN Solutions event in Chicago, where we are machining greatness all day. It’s quite an event. What did she just say? Like 700, 800 people or something? I think, yeah. So shout out to Ainsley from DN because she puts all these events together and she does a damn good job of it. She’s like, the goal was 500 customers. They had 580 just yesterday and it’s a two-day event. So they’re obviously smashing the target there. I mean, Mike, we talked to her a little bit about what we’re going to do next year. And I think we should maybe like kind of soft launch or tease like what might be with this kind of like roadshow concept. You’re so much more comfortable soft launching and teasing things than I am. Oh, I love to tease. So we’ve been thinking for years about like you picture IMTS and everyone’s got to move all their machines in there and you have the biggest party in the industry. But like that’s a logistics miracle, disaster miracle. It’s a lot.

[3:02] And then it’s like along the highway, I-90 between Rockford and Chicago, you’ve got pretty much all the tech centers, right? So like what if you just like bust people into those tech centers and did an event that way? Yeah. Wouldn’t that be cool? Yeah. So maybe we can help arrange something like that. If you’re listening to this, go ahead and put a comment in whatever LinkedIn or email us and let us know what you think. Would it be interesting for you as a manufacturing leader to come land in Chicago at O’Hare, get on a bus with great music and some drinks like you’re a rock star on tour and then hit a bunch of tech centers on the way to Rockford where we have the making chips headquarters? And I don’t know. I think that’d be pretty dang cool myself, but. It’d be a fun couple of days for sure. Yeah. And you’d learn a ton too, which is what’s happening right behind us here at the massive showroom. Have you ever seen a tech center? It’s not even a showroom. It’s like a show mall. Yeah. It’s, I mean, this is nice. This is really nice. And for them to have so many machines, like actually making chips and you can see them running. I mean, I’m here partially shopping, right? So for me to be able to see this much all in one place has been really great. We were walking together and that hell air was just like ripping chips. Oh my gosh.

[4:18] It almost scared you because it was like. Yeah. That thing, that thing rips. Yeah. So what are you, what are you shopping for? Cause we’re going to do a little, you know, collab here. Co-lab. Co-lab. Little lights out, little by the numbers. And you know, obviously I’m here trying to push automation and you’re here looking to buy machines and maybe automate them. So what are you here for? Well, you know, so we have, um, I think I’ve talked about this on some show recently, but I mean, I’m kind of doing like a two to three year CapEx spend budget right now. Just like, what do I need now? What do I might need in the next couple of years based on like the work we know we have the work we want to go get, you know, we have a mix of newer and older machines now. So I’ve got stuff that needs to be replaced. I’ve got stuff needs to be upgraded. I’ve got stuff. And then, you know, I mean, I have stuff that’s new and nice, but, um, yeah, so we’re just kind of always looking, trying to look ahead at what need now and what we need in the future. But, you know, I need to, um, you know, about 80% of our work goes across delays and, you know, there’s been a lot of advancements and we talk, it seems like we talk mostly about, you know, like automated five axis, right. That’s the, that’s the sexy thing we always talk about, but, um, you know, gosh, some of the, the turning technology that they’re showing me today. I mean, I could be pulling off a lot more lathe complete parts than I currently am just with all the options that are on the market now and the twin spindles and twin turrets and the bar feeders and the parts catchers and the B-axis heads.

[5:46] And I mean, it’s, it’s a little overwhelming, but there’s a lot. Um, so that’s, you know, looking at our short-term needs and our long-term goals on that. And then certainly as we’re getting, you know, we got our first five axis and that’s gone well and we’ve got some work in the queue now that we need to figure out how to really up our capacity, like by thousands of parts per month. That first five axis was your Emco? Yeah. Yeah. And, and so now you’re like starting to talk about. Yeah. What other options? Needing another one already. Yeah. And then automating that. Right. So like looking at your workflow and. Yeah. Which the, I mean, the little setup you have here is great. Right. I mean. It’s showing well, people like it. Yeah. I think it looks good. It definitely looks good. I mean, we’re here to sell like what it actually does, but it looks pretty darn good. Yeah. Pretty lights. I want to see it like with the lights out. Yeah. Because the way it glows, it’s got this kind of like spaceship blue glow to it. And it just looks high tech. Well, as soon as I get one in my shop, I’ll turn all the lights out. Yeah. Yeah. We’ll have to do some video like that. So I saw you walking around with your machine tool dealer guy. What was his name again? Scott Ames from machine tool specialty. Yeah. Shout out to him. He was showing you some things. Was there a particular machine that like you weren’t expecting to look at that jumped out at you? There was actually a couple. And I I’m actually, I’m seeing if I can read far enough across the showroom right now to see a model number, but I can’t. Yeah.

[7:09] There’s too many people in the way for me, but I do have that Eagle vision. Yeah. You know, the horizontal cell they have back here in the back with the linear palette system is that that would definitely serve one of our needs, but I did come here to see that you asked. Anything that was new. Yeah. So really more on the lathes for me. I mean, again, with so much of our work being there. Yeah. Some of the twin spindle, twin turret, which I mean, I’ve seen before, but you know, like the affordability, I guess maybe is what surprised me more than the machines. And you know, I think the technology, the price of the technology has come down so much that we’re used to, it might’ve been hard to justify that spend. Now you’re like, well, it’d be hard to justify not getting that for the flexibility it brings and stuff. Yeah. I’ll use the DN name here to make one point and then I’ll keep the other party nameless. But like, it’s clear that DN is trying to conquer the world right now. Yes. I mean, they’re aggressive as heck, great machines and they’re really aggressive trying to move them. Sure. You know, there’s other brands who have like big prestigious names and it’s like, if you want to come buy a Porsche, come buy a Porsche. I’m not going to try to convince you to buy it. And I’m not going to go fight for every order. There’s people who know they want what I have to sell. And DN’s like going out and trying to capture the market and they’re doing it. Yeah. There’s a couple other big open houses this week that, you know, my guys are at too.

[8:31] And this one’s by far the busiest. Is it? Yeah. Yeah. I was surprised they were telling me yesterday when I was meeting with some of the DN folks that like 450, maybe 500 machines in the catalog now. Yeah. That’s a lot. I think they’re moving like a couple thousand at least every year. So it’s exciting to be a part of it as one of their partners too. I mean, we partner with a lot of different machine tool companies, but like we kind of get the inside track on who’s really growing a lot. Right. And it’s exciting. There’s some super great people. You know, like you met Mike Padilla, just super great. Ainsley, Dan. Mario. Chris Robson. Of course, Mark that we had on the show a couple of weeks ago. Yeah, he’s awesome. And I did promise to bring him a bourbon and I did deliver on that promise in case the metal working nation was wondering, you know. But you came here like kind of on a mission and it’s part of that three year deal. Yeah. Something like that. So is it, do you have like a pretty formalized process for how you plan CapEx or, I mean, is there a system you could teach or anything like that? I mean, I think everybody should have, I think, I mean, all businesses. I mean, but certainly with, in manufacturing where CapEx is massive, I think you should always have an idea of your CapEx budget every year.

[9:47] Right. Yeah. So like, and there’s probably a lot of ways to intelligently do that. You know, for me, I mean, I always want to be reinvesting. Right. So if I, if I know, I mean, I have projections on how profitable I’m going to be this year. Right. So some portion of that I want to reinvest. So that’s, that’s part of the CapEx. And then I think, you know, you start looking at, you know, in our case, again, having a mix of new and old machines. I mean, I pay a lot of attention to our like repairs and maintenance budget. Right. So with the older machines, you see the repair costs going up. So at some point you’re like, okay, I can start to replace some of these. The other thing for me, I mean, I’m kind of in a, I’m in a spot right now where, and I think we’ve talked about this before, but, you know, through acquiring six shops now in eight years, in a lot of ways I have too many spindles. Right. So when you think about it, if every, probably a lot of shops have one or two, too many spindles. Right. When we talk about some of the numbers of efficiencies and spindle utilization. Yes. I’m glad we’re going here. Yeah. So then if I’ve got, if I’ve bought six shops that all had a couple of two, you know, one or two, too many machines. Right. Yeah. It would make sense that maybe at some point I have 10, 12, too many machines. And then I would take it a step further. Again, because of the kind of the way I acquired my machines and it, you know, I’ve got this brand and that brand and this styles and, and some of them being older. I also have a situation where, you know, again, talking about some of the newer technology that you see here today. And of course we’ll see at IMTS.

[11:16] I mean, I could replace a couple of machines with one. Right. I mean. Yeah. Go to a twin spindle, twin turret bar fed and with live tooling. And I might get rid of two lathes in a mill. Yeah. Just reducing the ops. Right. Consolidating the amount of machines or reducing the amount of ops it takes to. Exactly. Finish a part. Or, you know, throw, throw a workflow on a five axis. What is up metalworking nation making chips family. It is an even year, which means IMTS is coming September 14th through 19th at McCormick place in beautiful Chicago. It is the largest manufacturing trade show in North America, bringing together thousands of manufacturers, OEMs and solution providers every two years to explore how new technologies are being applied to real shop floors. So whether you’re planning future capital investments, benchmarking operations, or simply trying to cut through the noise around emerging technologies, IMTS is designed to help manufacturers make better, more informed decisions. Whether you’ve been going for years, or this might be your first time, put it on your calendar right now, schedule your time away from the shop. It’s good to get out and see new things. It’s going to be a big party. I hope to see you there. Go to IMTS.com and register today. You know, we’ve talked a lot recently about like, get the most out of your machines before you just go and buy new ones. And it seems like a lot of the generation CNC episodes are kind of like a little bit of by the numbers and a little bit of lights out and a lot of machine job mastery, of course.

[12:49] And so like they almost could be published on any one of Yumi or Paul’s episodes or at least segments of it could be published there. But yeah, when you brought up like, OK, you’ve acquired six total shops and it doesn’t fit together like a perfect puzzle piece of it, the exact type of machines you would need. Right. So you end up with maybe some redundancy and like maybe two or three machines of the same type that aren’t being fully utilized. And as you’re talking about your CapEx plan, it’s like, OK, how do you do that? How do you get the most out of the machines you already have before you go and just keep buying new ones? Because you come to open houses and you’ve got that like, I’m hungry while I’m grocery shopping feeling. So you just buy stuff you don’t need. Well, and I think, yeah, no, that’s that’s such a great point, because a lot of the way that I’ve grown Hill over the last eight years has been through, you know, making the most of the machines we had. Right. I mean, I haven’t bought a lot of new machines in eight years. And I’ve added 40 spindles. Like on your, that Mori Horizontal that you had. Like you did. We did a couple of upgrades. Upgraded the tombstones and the workholding and the new conveyor on the other. Yeah. I mean, a lot of people just let their old machines die and they don’t even like take care of them. And they’re great machines. Yeah. And I mean, like we, you know, we found, again, good machines. The example I always use, I have a 1997 Takasawa eight inch chuck lathe that looks like it’s from 1997. I mean, it just looks like a piece of junk.

[14:15] Holds plus or minus two tenths just fine. Yeah. Right. So do we run everything across that? No, but there are jobs. It fits really well. It costs me nothing at this point, right? I mean, it’s. It’s fully depreciated. Sure. Yeah. Like 30 years ago. But, you know, there’s a place for that machine at a certain point in time. Now, is it, is it in my future equipment plans of being there forever? No, but I didn’t need to come in and just replace it right away. Yeah. Just because I saw a prettier one at IMTS. And your particular shop has the benefit of like, you have a lot of space. I do have space. You know, a lot of these customers coming in, looking at the workflow, they’re looking at like how compact it is for a 40 pallet system. Sure. And that’s like, that’s like one of the number one points that they’re talking about. Right. You know, you get on either coast and space is just at an absolute premium when people don’t, you know, have the space to like do what they really want to do. So they got to figure out how to be creative with you. You don’t really have that problem. Yeah. I mean, we’ve got a lot of square footage. Yeah. Especially amongst the four locations. Right. So we can bounce stuff around if we need to, but it is, it’s something that you seriously need to do, need to take into consideration for sure. Um, and that’s of course helps too, when you get into some of these machines that can do more, right? I mean, like, okay, again, I can get rid of potentially two lays in a mill and throw this fancy, I don’t even remember what model I just looked at.

[15:45] Yeah. And I literally could, where I have a cell of three machines right now, I could just have that one. Just that one. Exactly. So there’s a, no, there’s a lot to be said for that. Back to the CapEx budgeting, you know, I think I know I’ve talked on a lot of shows about like, you know, maybe I don’t know what the right word is. My astonishment sometimes how shops will just jump on a new machine every year or a couple of new machines a year. And then even when you help them look at their numbers a little bit, sometimes you’re like, I don’t think you need one. Right. Cause again, back to efficiencies and spindle utilization and stuff. But, you know, in defense of that, I mean, if you’re planning to spend a couple hundred thousand dollars, like if you just say, okay, I’ve got a quarter million dollar a year CapEx budget and that’s budgeted out and that’s in your numbers, do what you want to do. Yeah. You know, I mean, it’s, it’s the ones that just randomly buy one cause they saw it that is where it often doesn’t make sense. Right. It often doesn’t, but there’s sometimes when it does. Who was that guy we met at the, he did all that creative art. And we had him on the podcast and at the, um, the Top Shops thing. You remember that guy? And he was doing like the fire breathing dragon, I’m blanking on his name.

[17:00] Yeah. I can’t remember his name. But I loved his approach. Cause he’s like, I, I’m like a fiend. He wants one of everything. And he’s like, exactly. He’s like, I’ll find the coolest, weirdest machine and I’ll just buy it. But then he’s able to find the work for it. And he goes and finds the work. So, I mean, probably not a, an approach you could recommend to everybody. I’m probably a little fiscally conservative to do that. But you know, I mean, more power to me. Hey, if he’s filling it with work and it’s profitable work, then. Seemed like it was working for him. Yeah. When you start looking at the automation, like of the workflow and of course, there’s other automation here. Um, but then like combined with like the slide tech, I mean, I think that’s where you start to really get into the numbers behind automation and not even just automation, but the numbers behind the efficiencies and like, can I get a new machine? Should I get a new machine? Yes. See, you’re like, you’re like explaining our whole strategy here because it’s like. It’s not secret, is it? No, I’m here to share it. But like, why would you buy, form a joint venture and have an automation system and then end the same year and get like the machine monitoring solution that also has like tool life optimization as well? Well, because like, those are the things that each require. So, so if you can’t justify why you’re automating by like, oh, look at how much more utilization we’re getting, how much more OEE we’re achieving, then it makes it harder to sell the automation.

[18:20] So that’s where the slide tech comes in. And then also like one of the biggest constraints to selling automation is when you’re running unattended and a tool breaks, like no one’s there to fix it. Right. So you’re losing all those free hours that you were hoping to gain because the machines can run 24 seven. Right. So, but if you had a tool optimization solution that was like telling you, okay, the tool starting to wear, it’s creating more of a horsepower draw. Now go and get the sister tool, the redundant tool and pick up where you left off. So it doesn’t break, it doesn’t crash. And it does keep going. You’re less likely to lose those free, what I call free hours that the lights out hours that everyone wants to achieve. Right. So they really work like to sell each other and support each other and kind of justify the whole ROI. Yeah. And you guys have, I mean, along that line and the website that you do, the ROI calculator. Yeah. Yeah. Did you like that? Was that good? It was great. Okay, cool. It was great. Yeah. Well, why don’t you tell people about that? Because they should go check that out. Yeah. On the Hennig site, there’s, I don’t remember the exact URL. Maybe we can drop it in show notes. Yeah. We’ll put it in the show notes. But, you know, we have a pretty robust ROI calculator and one of my concerns with it is is it too robust? Because I feel like it considers everything.

[19:38] It’s a lot. You know, I would almost want like a light version of it where you can put in just kind of like the base level numbers and get like a basic ROI. But if you want to consider everything and really get your ROI, we have that on our site. And Chris, shout out to Crystal because she’s one of those meticulous consider everything type people. Yeah. I saw the preview of it and it was great. It’s really cool. And we had you test it because you’re the numbers guy. Right. It’s important to know those things. You know, like I’ve talked about a hundred times on by the numbers, it’s, you can’t, you can’t always let the numbers make your decision for you. Yeah. But you need to know your numbers. I mean, you could run the numbers and I shouldn’t buy a new machine. And, but, but you maybe still have their soft reasons that don’t apply to the numbers that you just know, but I need to do this. Yeah. That’s fine. Like for you, it was, I don’t necessarily, the first time you bought your Emco. Yeah. Keith told you, um. Not to buy a five-act. I don’t need a five-act. He’s like, no, you just need like what you were just talking about. He’s a multitasking, super creative turning machines. Right. And you were like, yeah, but I want that work. I want to go in that direction. Right. So that’s kind of some of the feel of your investment strategy too. Right. We needed to, yeah. So it was bringing us a capability we didn’t have. Right.

[20:55] And that’s what, and that’s actually the exact conversation I had with him. I said, okay, Keith, I understand where you’re coming from, but, and you’re right for my existing work. I don’t need it. And the other would be better. That would improve me and make me more efficiently, more efficient, quicker. But, but I can already make those parts. Right. Right. And, um. And you’re putting yourself in a new category being in oil and gas where there’s maybe a tons of turning machines, a lot of multitasking turning machines, but there’s not a lot or as much, you know, these creative five-axis mills with automation. So now you’re in like a different category that allows you to get outside of the feast or famine that is just the oil and gas industry. Correct. Correct. Yeah. So we were, you know, with us diversifying and stuff. So, so again, the numbers didn’t make sense to buy that machine just based on the work we had and. Yeah. But, but it brought something else. So my only point in like, you know, so go use like your ROI calculator on your website or run your own math. It doesn’t matter, but just know what the numbers are saying. Yeah. So you at least know when you’re debunking them. I mean, like when you’re, when you’re not following them, you know what it’s costing you too. Well, you’re, you know, you’re the decision maker, you’re the business owner. You know, my family can decide we want to buy a machine because we think it’s cool and we like the paint color. You know, you could do the same thing. Sure.

[22:17] You know, but for those that have to like make a business case to someone who’s signing the check at the end of the day. Or the bank. Yeah. Right. You got to really like put some, some extra thought into it. And a little, it is a little bit of art and science and the whole time you’re talking, I’m thinking about like how you buy or sell a company too. Like a lot of it’s math and you’re pretty scientific about it. And then some of it’s feel and some of it’s like, well, are these, are these people the right fit? Do they have the right values? Do I believe in the future state of these people I’m investing in more than just the business I’m investing in? Right. And it’s kind of similar in a lot of ways, you know? No, it’s very similar. You know, so like when we talk about that in a, in like an acquisition or selling your company thing, you know, the, the numbers give you the EBITDA, right? So in our industry, it’s a multiple of EBITDA, right? The, the numbers are going to give you the EBITDA. There’s no making it up. There’s no, I mean, you can affect it over time, but you can’t affect it today for what happened in the past three years. Right, right. What you can start to affect today is the multiplier, right? So the multiplier in buying a business, you know, if it’s completely, I was just talking with someone, machine tool dealer here about this really cool client they were telling me about, but that they are like, you won’t believe this guy though. He’s, you know, he’s 70 years old.

[23:38] He’s got a hundred spindles or something. And in his, he has no systems in place in his brain. He can tell you what’s running on the 97th machine over in the back corner. You know, and that’s a two X, right? Cause that’s all tribal knowledge. There’s no systems in place. He cannot decouple. When he doesn’t show up to work, those machines aren’t going to run past about a week, right? They’re going to run what’s on them. And then nobody knows what’s next. Yes. Versus a well, you know, a company that’s got systems and processes and people in place that you can disappear for a month at a time. And the, you know, you know, now you’re going to be at a five, six, maybe higher X, you know, depending on if there’s strategic value and stuff. So it’s the same thing, right? So the numbers are the numbers. The soft side is the multiple, right? And some, there’s not, the multiple is not all soft, but that’s certainly where this, the soft skills will affect your multiple. Yeah. And then, you know, I don’t know how much we can disclose at this moment when this airs, but like you’re helping us invest in some businesses that aren’t even valued on a multiple of either. And it’s a whole different game. It’s just been so cool. Like for the audience, you know, you hear what Mike does and you hear what I do. And like Mike is such a great mentor to me and a support advisor to my family. It’s, it’s just awesome. Like you got a great friendship and then you can work through some really cool like deals and stuff and learn so much.

[25:05] But that one’s like brand new to us. You know, the one that maybe by this time we’ll be able to announce it in the show notes, but we’ll see. This episode’s coming out next week. So it won’t be, but highly likely to get done and you’ll all hear about it soon. But yeah, like this, you know, more of a kind of like early stage techie startup is not just like some EBITDA multiple, like a machine shop. Right. Totally different. It’s totally different models. And, and, and in that case, right, you get more into, lots of times you have to get more into the soft skills, right? Because you’re betting more on people and more on markets and stuff that are unproven. How much do you believe in this tech? And then also how much do you believe or not believe in what could disrupt the tech? Right. You know, and that’s kind of maybe fun to get into with, I mean, forget what the thing is. It could be anything right now, but you know, if it’s a software as a service company or some sort of digital value proposition, and then like what’s happening right now in the world with Miguel, Mike, like he’s got this like vibe coded badass shop app that actually is a radio station that plays music, which was so cool to see. Right. Like that was a lot harder 15 years ago. You could do it.

[26:21] But it was a lot, now anybody can do it. Even a moron like me could probably figure out how to do something like that. I’m sure we could figure it out. But Miguel, I mean, I’m so impressed with him and what he’s doing. Oh yeah. No, it’s yeah. And then what’s really cool in that case, right? He’s taking legacy data we have coming from our ERP system, coming from our machine monitoring and has just created his own little spinoff, like tool room management. So that as a machine, as a machinist indicates it needs a new tool, you know, the phone in your pocket’s buzzing and saying, take a three quarter inch end mill over to this machine. Yeah. While it’s playing a radio station and interrupt. I mean, it’s pretty cool. It’s so cool. You know, he’s got status. So he’s taking the status light and put it on the phone for every machine in the shop. And then again, being able to tie that back to expectations coming out of ProShop and machine monitoring and all that. And like, are we doing okay with this job right now? Yeah. It’s pretty cool. It is. Like the speed of innovation is so fast. That doesn’t mean don’t bet on innovation because anybody can do it. Because what you always talk about is, well, let’s bring this back to reality, right? Yeah. 20 years ago, people could invent their own stuff and do it, but can you support it? Can you support integrations? Can you get, maybe the base layer is easy to accomplish, but then once you start getting a bit more advanced and it starts getting a little bit crazy, it doesn’t really make sense to do it yourself. And what I go back to just on like actual hardware, one of our biggest competitors selling tombstones is just people fabbing up their own tombstone. Right.

[27:57] Sure. Because anyone can do it. Yeah. But yeah. We have some homemade tombstones. You start like calculating. Okay. You had to buy the material. You had to fab it up. You had to make sure it was totally perp and parallel and everything had to be perfect. Right. You probably have some weird grid that doesn’t have the same hole-to-hole tolerances. Right, right. Was it worth your time to do that? Maybe if you were slow? You know, gosh, the better example I can give, you know, or a similar example, and I think manufacturers are all guilty of this because we can make anything. We can fix anything. We can… And you have that DIY mentality like, I could do this. Right. So, you know, the example that you mentioned earlier, we have a new, you know, we got that conveyor to beef up a machine. So one of our thoroughbred machines that, I mean, is basically always running. For three years, we were fighting the conveyor and we’d lose it for two or three days at a time when we’d pull it and we’d pull the belt out. We’d have to replace some pins. We’d do all this stuff at least once a year, probably more often than that. It was because no one ever said, how much is a new conveyor? Yeah. So we would lose two or three days in the machine, the people working on it, all that for, you know, a couple of times a year for three years.

[29:18] And then like you and I are, you’re walking through the shop, maybe the first time you’d ever been there. I don’t remember. And yeah, you were just talking about how the conveyor gives you fits. And I was like, well, we can retrofit a new conveyor. Yeah. Why don’t you just get a new one? I was like, well, how much is that? And like, you’re like, I don’t know. Let’s, we’ll find out. And you send a quote. It’s like, well, I lost that last month. Yeah, because they don’t, too many shops like don’t know how to do the math. Right. They don’t know how to think by the numbers. And they’re like, well, that’s, that seems like an expensive thing. And it’s like, well, what’s your time worth? Right. And I think that’s, that’s one of the bigger things for shops. You know, we, we calculate time for like quoting parts, right. Cause it’s going to take seven minutes on this cycle. And then we got to do that, you know, whatever. But I don’t think there’s a strong grasp of, of the fact that all that stuff you’re doing yourself though, is also time. Right. And, you know, I’ve, I’ve sat in some frustrating conversations and situations around our own shop where, you know, a problem happens and all of a sudden you’ve got all your best people working on it. Right. And you’re sitting there and maybe it only takes 30 minutes to solve, but you got your six top people doing it for 30 minutes. You just lost three hours.

[30:34] Yep. And if they’re your top people, that just costs you a thousand bucks. Yeah. We think about machine rate, but what’s the rate of a person who’s should be doing something valuable and now they’re all monkeying around with something dumb. When we have those types of incidents at Hill, I will often like, as it’s resolved in the resolution, you know, the, the, the communication of what happened and how this never should happen again. And here’s how we came up with, you know, as that communication happens, I, lots of times my reply would be like, okay, let’s just also address the fact that, you know, we spend a combined 27 hours on this, right. Of the entire management team and our two top people on the floor, you know, or whatever it was. And I remember they, they used to push back. No, we got it done today. It didn’t take 27 hours. I’m like, it took three of you eight, right? Like, I mean, that’s 24 and I messed with it for, you know, two hours or whatever. And every one of those, I mean, we want to people our people, right. But they’re also resources. They also have a number attached to them. Could have been doing something else. Yep. And that’s expensive. They could have been doing something that was generating revenue, right. Yeah, exactly. And the whole thing, you know, back to the automation side, since this is a CoLab, the whole thing with like running unattended, I think it was Ryan Bankel who called it lights in manufacturing. Like, like you’re still in the shop and you’re running unattended.

[32:01] And so you’ve now graduated from a doorman to a throughput expert. What I mean by doorman is like you open and close the door, reload a part and hit a button, but, and you can’t really leave because it’s a five, 10 minute cycle. So you can’t really do anything else without getting distracted and having to switch back to open and close on the door. How do you, how do you do a two hour setup while you’re having to walk away every five minutes to change a part? And we all know, like the psychology of switch tasking is like, you don’t really get right back into that flow that you were in. And so, yeah, just, just being able to kind of like work ahead of your machine and have your machine running and then free yourself up to do something valuable. It’s like you automate not to replace your people. You automate because you respect your people so much that you think they’re more valuable than whatever that dumb thing you had them doing was. Right. Yeah. That’s, I mean, you know, as much as, as much or as little as we’ve invested in automation, which, I mean, we have some, I wish we were more, but that’s probably been, I mean, we’ve done a lot more lights in than lights out manufacturing. I mean, there’s, there are still jobs that will run lights out, but a lot of them, it’s because of some tolerance, because of something, we don’t want to leave it and run all night. Like maybe the it’s, we, we don’t want to automate scrap.

[33:20] Like you always talk about for whatever reason, we can’t, we probably could, but we’re just not, we don’t, maybe we don’t just don’t need to from a schedule standpoint or whatever, but it does free up that doorman. Like now while it is running all day and they, and we do need to go over and IPC check every part, that’s fine. But it got two hours on her interrupted at a time to set up three more machines throughout the day, right? Exactly. Instead of not. Or do or build a shop app or do something cool. Like the doorman, we got to like brand this. It’s like the new term for button pusher. Don’t make your best guy, a button pusher. Don’t make your best guy, a doorman. Yeah. I like the doorman name better than the button pusher. Yeah. That’s awesome. Fellas. Hey, well, I got you both real quick. So I’m really trying to drill in like our workholding options at Hill and all of our shops. Any advice? Mike, it’s as simple as RASRAM. As what? RASRAM. You’ve never heard of it? I have not. Paul, what Nick is referring to is the seven habits of highly effective workholding. That makes more sense. Repeatability, accessibility, scalability, reliability, adaptability, and modularity. If you want to find all of these principles in one catalog, check out the SMW Autoblock catalog. You can find it at smwautoblock.com. Thanks, fellas.

[34:52] All right. So what I love about Mike and making chips is you are the audience. I mean, you are making the same decisions and you’re thinking through the same issues from your perspective, which doesn’t necessarily match every manufacturing leader out there. That’s right. Like, I thought I was going to be here alone and then you’re like, oh, I’m coming. Right, right. And you have a mission for this visit. I mean, you have like, yeah, we talked about your three-year plan, but you have like some stuff right now, right in front of you and some really exciting stuff that frankly I’m pumped about because you might be buying some stuff from me because of it. But let’s walk through from like the numbers perspective without naming names, talking about your specific customer, what’s calculating in the professor of pain’s mind right now? Yeah. So, I mean, we have a new customer that, I mean, you know, frankly, they alone could be 20-25% growth for us this year. Just one customer? Just one customer. Wow. For, depending on my capacity to fulfill their demand, right? And is it more of that like traditional hill work where it’s turning or is it more of the milling? It’s more milling, but some turning. Okay. But it’s heavier mill.

[36:10] Two different product families. One, some lathe with some mill and the other one is all mill. Five-axis mill? Most likely. Doesn’t have to be, but would be better. And just let’s pause there for a second. Like the people who have the most success with five-axis mills aren’t buying them to do like blisks and turbine blades. Right. They’re just doing everything in one up. Right. So that’s what you mean by could be better if it was just one and done, pull it off the machine and you’re done with it. And that’s why we will, there’s 99% chance we would do that. We wouldn’t have to and we could save a little bit, but I don’t think it would meet the capacity that we need to. Yeah, yeah. So, yeah, so I do, so I have this short-term need. I’ve got two product families that I need to figure out the most efficient way to make so that I can get back to the customer. Like we already have the, we have some of the POs in place and we have verbal commitments basically on just tell us how much you can do. Right. So, cause they have, they don’t have enough capacity to make it all themselves. We’re getting first rights at the balance of the capacity essentially. Right. And then whatever we can’t fill, someone else will fill. Yeah. I needed to come and say, okay, for these, these two product lines, it’s two totally different machine needs and say, okay, what, what does my investment look like to, what does the investment say? One machine, one automated machine to do this. And what is that capacity going to give me? And then.

[37:39] How much of that chunk of work does that capture? Right. And then do I need two? Do I need three? Whatever it is and for both product lines. And so, you know, like I’m not even really shopping price right now as much as I am like capacity, right? Like what is the throughput of this part model that, that I will, you know, I can make 5,000 parts a month. I can make 600 parts a month, whatever that number is. Um, there will be a price to that. Yeah. Right. And, um, and then I’ll be able to weigh that against the, the, the demand my customer has and say, okay, I’m willing to go all in and buy and buy enough to fill all of that demand. Yeah. Or, okay, maybe it only makes sense for me to take half of that demand. Got it. Um, or, I mean, I guess it’s potential that it would make sense to take none of the demand. Sometimes like the best thing that happens also creates this like bittersweet thing you have to do where it’s like, well, I got this great job, but I can’t do it all. Right. So now I got to like give some of it away and you never want to do that because you lose control. Obviously it’s more profitable if you do it yourself. Sure. But you want to make sure that ultimately you’re delivering success. Yeah. And every time you have to get another partner involved, it’s like, uh, you know, they’re not maybe going to wake up at one in the morning and go restart a machine or whatever. They’re not going to, they’re not, I have no control over that or less control over that.

[39:04] Yeah. Well, and, and, you know, and, and being able to come to something like this, and of course you and I have talked a little bit about it before, but you know, being able to be here and, you know, for one of the product lines, the workflow appears to be a really good fit. And then like working with you and Eric and your team to say, okay, here’s, here’s how we could design these 40 pallets to feed this five axis. And then, so your throughput’s now going to be, you’re going to get 6,000 parts a month of, you know, of this model. Right. And then looking at the, the, the looking around the shop at the, at the other, for the other part family or around the show, um, kind of same thing. We’re like, what does this need to look like to get me like 20 hours of runtime? Right. Okay. 20 hours. So I want to, so that’s what you think is like your target utilization. Well, I think in both, you know, in both areas, I’m fully confident that the machines can deliver me 23 and a half. Right. Yeah, of course. Um, but I don’t… So what’s realistic? I mean… I want to bank on 20 though, right? Yeah. Cause I mean, stuff happens. So yeah, I’m not shopping for a hundred percent capacity. I mean, I’m sure, I guess I’m buying a hundred percent capacity, but I’m a, I will base my calculations on 20 hours is assuming I can get 20 hours out of this machine at a time. I w I can make that commitment to my customer.

[40:22] Yeah. Right. Got it. I don’t want to commit that that thing’s going to be running 24 hours a day. Right. And if it does, it won’t. If it does though, you win. I win. And you get to capture that extra. Right. Whatever profit margin, because you overachieved. Right. Hey, it’s Paul from Making Chips. If you’re a manufacturing leader like us, you’ve got big goals and big challenges. That’s why I tune into the Manufacturing Executive hosted by Joe Sullivan. It’s not just another podcast. It’s a masterclass on modern manufacturing strategy from sales and marketing to leadership and tech. Joe brings in real experts who get it. So if you want to stay sharp, stay competitive and stay ahead, go check out the Manufacturing Executive. You’ll be glad you did. While you were chatting, I had some time to look it up. It’s hennigworldwide.com slash ROI dash calculator. Okay. So, or just like, it’s shouldn’t be hard to find on our website, but in your example, and we’ll get to the 20 hours utilization thing, but in your example, the number’s already there. Like, you know, the rate you quoted it at, you know, so, so you could like plug that into a calculator. Yes. You know, you got quotes from DN and probably others.

[41:38] Yeah, exactly. To like, okay, so you know what the equipment’s going to cost. You know what you pay your people, right? Any shop owner should know this, right. Or at least be able to get pretty darn close. Sure. So you can plug it in and like have your answer right there. Yeah. You know, just straight from it. Yeah. It’s just math at that point. It’s, it’s a bit more guessing when you’re trying to do the ROI calculator on like what the business could look like if you did, if you got this or whatever than it is when you have someone knocking at your door. Right. Being like, can you take all this work? Right. So when you get that project, that’s when these calculators are even more valuable because you’re like, yes, let’s go. If I buy this right now and I start making parts right away, I know for a fact that this thing will get an ROI by X date. Whatever date. Yeah. Yeah. So that’s, I think a good point to make on the calculator thing. So you feel less guessy when, when you have a job like knocking your door down. Well, and I think that’s, I think that also points back to what we kind of started talking about. I mean, it’s part of that is the importance of understanding your CapEx budget. Right. I mean, like coming to things like this, seeing what’s possible, understanding the costs of those things. Like you have, you’re when that opportunity does come up later, like you’re, you’re already months ahead in the process of figuring out how I would do this. Right. I mean, I’ve seen things today.

[43:00] I mean, these massive machines over here on the left, I don’t know what I would ever use those for, but I know they exist now and what they’re capable of. Yeah. And if the right work came along, I’d be like, oh, I didn’t know who to call. Yeah. Right. And send a $2 million check to for that machine or whatever that is. What’s cool about the like, I know a little bit about this work cause we were concepting the fixtures and these particular parts are like not super tight tolerance. Nothing’s too crazy with it. And so you’re like, all right, well, I’ll, I’ll plug in this machine. Right. You know, but then you look at like that Heller that was ripping. Yeah. And those things are like insanely accurate and they’re just built like a brick shit house and it’s just a fricking monster. They’re big. And, uh, you know, you pay a little bit more for that, of course, but like, it’s not only like, will it fit in the machine and what does the machine cost? It’s like, well, what kind of a niche can I wiggle into with something that’s this accurate to set? That’s how you, you can kind of go to like, all right, well, should I spend more for like an super elite hardcore machine? And that’s where the numbers might point you in the wrong direction or give, you know, if you only went by the numbers could be wrong, right? Because again, go ahead and get capable, go ahead and buy some capability, right? Like, I mean, it’s one thing to have the capacity and that base capability, but I mean, if it, you know, might only be a hundred thousand dollars more to have a million dollars more worth of capability.

[44:34] I mean, if you don’t have it now and you have to replace it at some point, it might cost you $800,000 a year from now to have the same capability. Exactly. Yeah. You can, all that easy work can be done on a super expensive machine too. You paid a little bit more for the machine, but like you, the capability of, instead of having to no quote that or be like super paranoid that you’re not going to be able to hit the tolerances and achieve it. Like, you know, for sure you’re good there. Right. Well, I mean, I guess it even goes back to like, we talked about it, you know, a year ago when I bought our first five axis, right? It’s like, I don’t need it, but it does bring me a new capability. Since then we’ve been able to find plenty of work where we need it. Yeah. I mean, it’s wild. You look at some of these machines, they’re small machines and they’re a million dollars, but they’re like the most accurate thing you could ever imagine. Right. You know? And it’s like, there’s all these different factors into why you would buy the type of equipment that you would buy. And I think, yeah, it behooves the leaders of the metalworking nation to like, kind of like rank everything and have kind of like, well, here’s how I rank all these different brands. And a factor that needs to not be overlooked is service too. Yes. Like when everything’s apples to apples, service is like maybe the most important apple.

[45:50] Sure. On which one you’re going to buy. Yeah. Because like, there’s some great equipment out there and I won’t name names, but there’s some brands that have a reputation for incredible technology and just terrible service. Yep. I’ve got some of those. There’s a cost to that. There’s a cost to the four, six week. We’ll get somebody out there, but we don’t have enough people or whatever. Yeah. We don’t know when. Yeah. I mean, that’s expensive as heck. I think service might be one of the most important apples. You know, I mean, you know, again, I haven’t bought a ton of new machines. When I, when I talked to peers around the industry, I mean, I think, seems like that’s a, that’s a highly believed component. You know what I mean? Like that is certainly anytime I talk about machine tool brands with, with other shop owners, they, that seems to be the first thing that comes up. Yeah. You know, everybody’s talking about service first. It seems like the fastest growing machine tool dealerships, like are talking more about how many service guys they have than how many sales. Cause it’s like, we’ll be there. Like a shout out to HEMOC in Mexico. They have like a 24 hour, if their service team isn’t there within 24 hours of your request, you don’t have to pay for the service visit. Jeez.

[47:05] It’s, it’s wild. Have they thought about expanding to Broken Arrow, Oklahoma? I mean, they’ve got hundreds of employees, I think at this point, but it’s pretty amazing that they can do that. And that’s part of how they sell whatever they’re selling. Yeah. So. Oh, that is incredible. So kind of full circle here. You know, one, one point I wanted to make a minute ago is you were like, yeah, I’m trying to get 20 hours, but I could get 23 and a half. Right. And I think just kind of the general principle of like, just because you’re automating and you’re getting more efficient and your cost structure is getting better, doesn’t mean that your price needs to continue to drop. In fact, it should maybe be a little bit the opposite because you’ve become a more reliable, more consistent supplier where you might actually even be able to raise your prices, but it gives you that flexibility, in my opinion, to kind of go after it and compete harder if you want to. Yeah, no, I, I mean, that’s certainly, I mean, I think most people have heard me talk about, I mean, I, I don’t give up that margin, right? Why would you? Now I have the option to, and sometimes we do, right? Like it’s, yeah, I want, I want to get down. I want to fight for this. I want this work. It’s a new client, you know, whatever. Then I’ll price it as automated. The only problem I have there is like my shop’s not fully automated. Yeah. So if, if an order comes in for that and I can’t get it through the automation routing and I have to run it, you know, across two lathe ops and two mill ops, now I’m losing money on that job. Right. So yeah, we generally price it kind of our worst case scenario.

[48:33] And then if we can use the robot I bought or a, you know, any of the automation techniques that we bought and paid for, right. Customer didn’t. Yeah. That’s, that’s my return. That’s my ROI, not my customer’s ROI. Exactly. Like we’re competing here and if you take like sports and you’re competing in sports, like you go and you run sprints up a hill and you get faster than everybody else because you did the work. Right. Like you get to that race or you get to that, whatever sport you’re playing, you don’t like run slower to make it more fair. Right. Like you did the work that they didn’t do. Right. Like go win that race. You deserve it, you know, and, and capture that. And then, you know, in our case, like let’s be profitable and let’s get, do good things with the profit. Let’s. Yeah, sure. Let’s take care of our employees a little bit better. Let’s do stuff with the community. And like. Yeah. Competition is good. There’s compassion with competition. A hundred percent. I mean, it’s the most responsible thing you can do as a business owner is be profitable. Right. I mean, that’s. That’s and, and not just so you get a. Get a yacht. New car or something. I mean, it’s, it’s cause that’s how you keep people employed. That’s how you support your community. That’s how you. Amen to that. You know, if, if you give to the community, you know, whatever it is. Yeah. You’re not doing anybody favors like doing nonprofit work in your machine shop.

[49:50] Yeah. Right. I mean, like it’s, you’re supposed to make money. When you’re making chips, it’s a for-profit endeavor. So I, uh, Scott Shortus and I on, on by the numbers a couple of weeks ago, we, you know, we, we made the comment about, I don’t know any nonprofit machine shops and, and then, and then Scott threw in the joke. He’s like, well, at least not on purpose. Like, which is true. And, and I mean, it’s kind of the, I mean, that’s true. Right. None of us were trying to do this for break even. But I think there’s this, I don’t know, like not around my circles too much, but there’s this idea that like, if you’re just chasing profit, you’re this like evil capitalist who doesn’t want to take care of people. But no, like. That’s how I take care of people. That’s exactly. That’s how, if there’s no, if there’s nothing in the bottom line at the end of the day, like where do bonuses come from? Right. Right. You know, how do you do something charitable for the community? For sure. It all relies on that. Right. We have a responsibility to go make as many chips as possible and be as profitable as possible and, and help each other out, you know, let’s help everybody be more profitable. And that’s a huge part of what making chips is and buy the numbers and lights out and everything that we do. Yep. Yep. Yeah, no, that’s, I think that is the kindest thing we can do is, is be a good profitable business and all this stuff all plays a role in that. Yeah. And it’s, it’s like everybody’s got their own formula for what works and you just got to find what works for you. And, you know, I mean, we, we’ve heard a story this week and I mean, there’s nothing wrong with this.

[51:14] You know, there’s, there’s somebody here looking at a workflow because they want to spend more time with their family. Yeah. But, but he still needs to make the profit. I can’t wait to tell that story. Yeah. That’ll be a, that’ll be a great story. Cause it’s like, what’s your time worth in dollars and what’s your time worth in memories or death, the deathbed thing. Yeah. You know, and this particular customer that we’ll probably talk about a lot more in the near future. His son is like the number one ranked high school prospect in all of Wisconsin. Yeah. He’s got full ride offers as a junior. D1. And, you know, he’s going to play his senior year and get more offers and we don’t know where he’ll, he’ll end up, but we know like he’s going to want to be the shop owner. The dad is going to want to be watching him play baseball, not being a doorman. Right. So hopefully automation can help him do that. Yeah. Yeah, absolutely. Well, as we wrap this up, Mike, we got to get back out there and look at more machines and talk to more people. Thank you to DN Solutions for everything. Thanks for having me on Lights Out. And thanks for having me on By the Numbers for this collab. But seriously, like you could see who’s, who’s making moves and who’s making things happen. And DN is at the top of my list there. Yeah. I just remember back like the early days of Doosan and stuff.

[52:29] And then what we see today is elite. This is elite. Yeah. Even just the facility itself. I mean, it’s elite. Yeah. It’s very impressive. So how do you sign off on By the Numbers? I don’t. You don’t? Nope. I tell people how to get a hold of my guests, but everybody knows how to get a hold of you. Well, we always say like, you know, take a, let’s turn the lights out on this episode. But instead, because we’re both from making chips, why don’t we just say if you’re not making chips. You’re not making money. Bam!