Buyer DEMANDS 15% PRICE DECREASE or Parts Get Outsourced! 

Sounds like that guy came to work for my company……. We got a new purchasing director and he had the corporate purchasing agents to send a letter to all of our suppliers demanding 15% cut across the board. Many vendors walked away and left us scrambling but the best one was a key fabricator for us, they sent back a letter stating that they had no idea that my company was in such dire financial condition and stopped all work in their shop until everything was paid for upfront. Genius, they used that opportunity to renegotiate the contract in their favor. Props to them!

Worked for a fab plant in California, this was just as the craze for outsourcing was picking up. A big defense customer decided to shake us down, and sent a letter wanting to renegotiate our contract an were seeking an across the board reduction of about 10-12%. The customer was almost 60% of our work, and rumor was they had outsourced most of the work. Our GM, a short Indian guy, wrote them a thank you letter, thanking them for all the years of partnership in which we provided precision top quality products which ended up in sophisticated defense assemblies. He then went on to say that it was his duty to inform the relevant government agencies, and other downstream companies that our US company was no longer providing the precision top quality products - he put the list of the products - as they were being sourced from outside the country by the defense contractor. He copied both the Senators for California. They took their letter back quickly. Some new VP had written the letter and he was fired.

Heres a little story from Finland. Theres a company here that makes mining machines. Around 5 years ago they thought that producing these machines in china would be cost effective. 1-2 years after making them in china, the customers demanded that they want machines made in finland because chinese machines broke too soon. These machines lifetime is around 5 years. So quality over price is also a good thing for your business.

Had that type of lowball offer once. Fixed it by agreeing, on the condition they were bottom on job priority. Full paid jobs first, and slack time is filled with the remainder of low offers. When due dates pass by over 30 days, reply with thanks for taking last place. Our other orders now don't miss due dates. It's a priority issue. No we don't do rush or overtime pay for lowball jobs.

Want 15% additional decrease? Easy enough. come pick up your material and go to another shop. In my 30 years of doing business I've never dropped my price because once you do you can't go back up. It's different when you provide excellent service vs crap service. My company has always prided itself on quality of product and services. And if you pull to go somewhere else now I'm charging double to fix your issues "IF" we take you back. Love the videos Titan. Much love and gratitude.

When I had my business I would occasionally get asked about discounts but I didn't have products that were pre-made. We had to make things for our customers and a discount would mean we would all agree to cut our pay. I read, in a trade magazine, that when you buy a labor saving machine you do that in order to keep your operating margin, not to increase your customer's profit. Otherwise, what's the point of investing in your own business?

I reject ALL over seas parts for re-work. I don't support companies like that. They can learn to fix their own crap parts, I'll train them for a 15% fee on each job.

I worked for a company that, for a while, taught us to view all clients and vendors as either competitive, cooperative, or collaborative. We were to constantly push them into collaborative relationships. It worked well until new managers came along (huge company, newbie’s were common) and they went for the jugular at every opportunity. Finance types were the worst, constantly sacrificing quality and service for more money. Once control shifts from a dedicated owner to bureaucracy and a Board of Directors, it all goes inevitably south.

One issue is the laser place would be asking for another reduction in a couple of months then outsource anyway. The greatest danger is a company saying " we will take 100% of your capability " , you drop other customers then the company holds you hostage knowing that you will fold without their jobs. At that point you are working for them at or below what you would be getting if you worked for another shop.

This happens with us all the time. We do custom fabrication for a lot of hotels and we made some very high end steak carts. Hotel wanted them cheaper so they took our drawing (which was our drawing and design) and got it made somewhere else for who knows how much. A year went by and all the ‘stainless’ was peeling and they asked us to fix it. We gave them a lesson and charged them more to fix it then the original quote was to make it from start.

I am tired of the race to the bottom mentality that seems to be so pervasive in this industry. I work for a megacorp and nearly every part we get is outsourced. My job is basically fix the outsourced parts defects, but I am constantly asked to let things slide, or to make miracles happen. We used to have 5x as many well paid, skilled workers. Now we have a skeleton crew. There are only so many corners that can be cut before the whole thing comes down.

Tech tip from an old audio engineer: Titan, create some distance between you and the microphone. Your big, booming voice is exceeding the dynamic range of the microphone, which causes a physical distortion that is audible in your recordings. Keep up the great storytelling and machining my friend! You are an inspiration to myself and many others!

Man, i remember having a contract we used to do outsourced We refused to fix those parts because the possible liability (the shop is in sweden, signing off on a fix means you own any fault with the piece) far exceeded the profit we would have gotten (the last offer before we fully refused was 250% of our original cost to manufacture those parts out of good, known, verifiable expensive tool steel) They had literally drilled holes, filled them with charcoal and then flame hardened the ~0.2 mm shell of these parts in what we believe was impure cast iron. Our parts made of properly (60 hrc throughout) heat treated swedish tool steel were to be replaced every 3 months, i cant imagine these holding out a week.

Sounds like they lost their 15% having you rework their Malaysian parts. One of the big customers at my last job tried to second source a critical part offshore. We figured it out when we were hit with a bunch of rejections for parts that didn't bear our source code (big defense contractor had no idea how to tell where their parts came from despite the source code being mandated by them). The second source could not make the part and they they couldn't fix their mistakes. We became the sole source again. Not to say that a shop should gouge the customer, but you are entitled to a profit. Companies need to learn the cost of quality.

I am old school German tool-and diemaker, lots of experience in the manufacturing industry, machining parts for assembly lines, we had good department managers who always kept parts on the shelf and ordered new ones accordingly, so no pressure, no overtime needed, everything went smooth and in orderly fashion, excellent quality parts that lasted, not to mention the endproduct, moved - unfortunately - to Canada where everybody knows everything better, especially in the energy sector ( oil and gas ), keeping parts in case something goes south does not work, costs apparently too much, so here comes the weekend, customer needs parts made asap - on shelf 30$ part plus max. time factor, now 300$ - , just one reason gas/diesel etc. is so expensive, a good machinist was making 30$ to 35$/hr., a no-skill driller 110$ to 150$/hr., parts outsourced to prc and here re-machined, part was 10$, after machining 110$ and still lasted only around 25% because of inferior material and managers, which couldn't be helped. CNC's are great for churning out high quality parts but will never replace experience - until AI is fully integrated and that will mean a totally new social re - think.

Your boss was right ,CNC /manual don't matter, once they get you to bite, they won't stop, they'll just keep pullin on that string. Fully automated shops with robotics get that same call every day, can't compete with a shop in Malaysia that pays $1.60hr.

Not the first time when some "manager" wants YOU to work for 15% less money so he can have 15% bonus to his salary for "cost optimization". Never agree to such deals or in time the some guy will "offer" YOU another 15% "cost reduction", because they never have enough.

Happens in companies all the time. I started with a full service restaurant chain in 1980. There were only 5 units. We started building 12 a year, then 24, then 36. We were a scratch kitchen and hired all managers from within. But when we got to about 400 units and started having sales of $2 Billion the lawyers took over. I spent more time with HR than with customers and employees. I was forced to buy substandard pre-made products. They started bringing in general managers from outside, pissing off those assistant managers that put in the work. They eventually got to 700+ units. And within a few years they went down to less than 300.

It’s the old saying you have it cheap, fast, and well done. Pick any two you like! The funny thing with his story is they took the machining away and outsourced it, then sent the outsourced parts to titan to fix? So they saved 15% on the part originally but add in the shipping and then added fixing time they probably lost the 15% and added an increase 2-5%

I’m a retired CNC machinist. I worked at the largest airplane manufacturer in the US, a global enterprise they called themselves. No matter how efficient, no matter the manufacturing principles of “just in time” etc that were applied to how we did business, the bean counters always outsourced more and more of our work and the company never learned the valuable lesson of doing it right the first time. Rework is costly and ate up all of that outsourced savings. Corporate only cares about one thing, profit and their millions if not billions in bonuses. They could care less about the little guy.

I was a machinist for Michelin for 11 years making tire molds , they held us to some crazy tight tolerances but we gave them what they required the bean counters had the bright idea to outsource some of the molds to China, and as you could expect we had to rework almost everything they did, one thing about machining is you can’t replace metal once removed !

While I was still working, the ONE thing that really bugged me was how the "suits" expect you to work as cheaply as possible, while they get huge bonuses, raises.... I`m SSSOOOOO glad I`ve retired and no more "hurrying".

Yep heard this story before. Don't Know if I would have tried to negotiate something with them but 15% hell no. Outsource it to China. They will come back. Saw that happen in my shop. Almost 45% of the product had to be scrapped and another 20% had to be reworked. Let him chew on that for a while

As a customer ordering small high priced batches and knowing what a part costs in the manufacturing, I've never forced a manufacturer to lower his offer when it was fair. One time I did also the opposite so he should increase the price because I knew the tooling costs would not be nice on a special material. But the parts have to be delivered in time and with defined quality! I try to keep in good touch with my manufacturers, so when I have a problem they will help me. And I'll pay it.

This holds true across all types of manufacturing. The fab shop I'm in specializes in small runs/difficult items and our customers expect similar pricing as if they ordered bulk from a mass manufacturer. We're constantly looking for new processes, tools, etc.. to put out products faster and cheaper while maintaining our quality standards.

When I make semiconductor parts the reason we hold 75% of the market, is because of american made quality , our shops parts got outsourced to China for a MUCH cheaper price, eventually they came back to us because 50% of the Chinese parts were no good out of spec , the profit margin we make is insane.. it has to be around 600% markup from Cost. I’m constantly trying to make improvements to increase productivity, but we never give that updated run time discount to them.. I want to keep jobs in America .

One of the biggest issues is some customers expect you to do parts at a much lower volume than they would from China at same price.

I'll do practically anything a customer wants, except work for free. I told them, you help me cut my expenses 15%, I'll cut your prices 15%. Crickets... They moved some parts, had them come in junk and paid me 50% more to remake them in half the lead-time. I told them, I'm your best value, not your lowest price. 100% good parts, on time, to schedule, with flexibility, and excellent customer service is what you get for my price. i finally got to get them to see the picture and the result was 5 year guaranteed LTA contracts...

This is why you set up contracts in a way that you anticipate the customer screwing you over. Price, labor, time.

Two observations (from a blue collar workers perspective): 1 - don't just give in when asked for a free 15% discount from your customers. If it's not backed with a justification you can agree with, you probably don't want them as a customer. You could at best agree to a price freeze for a length of time. Sacrificing your profits to ensure someone else has one is a losing pattern. 2 - always distribute your business so if your largest customer pulls out you are not left in ruin. Example: if 50% of your business is one company, that company effectively owns you. If your customer outsources your work and then asks you to 'fix' those parts, either decline the work or do the work for a massive profit (your profit) and put in terms that cover you from original parts defects (as in "not my fault you bought junk to start with"). Sad, but this is the way things have been most of my life. Kind of depressing. "Make money, just don't be a dick about it."

And today most shops won’t/can’t pay employees an actual living wage. I love machining but the wages are trash in my area.

ok Lets get straight to the point. I just bought a new top of the line sherline mill MADE IN USA I took care of the CNC electronics. I'm just starting doing CNC works and this is thanks to YOU Titan, I had the guts to take a decision and buy a 3000USD+ machine. so for now : BOOOOOM!

At best return a counter-offer of a few percent, but giving in to a 15% decrease across the board, because a _new manager_ just felt like it, no. If anything, letting that slide unchallenged will likely end up in more silly price negotiations. I work in the cable industry, and we've seen customers leave because we didn't comply to similar demands, just to have them come back a couple of months later groveling, because quality from cheap Asian manufacturers was anything but sufficient.

I worked for a vendor that did repairs at a GM/Delco plant. They sent us a request in 80’s to cut our price 10% as they were having issues. I sent back a letter saying I’d be happy to soon as they cut their car prices 10%.

I had this happen to my mechanic company. We told the customer no. They stoped using us. 3 months later they came back begging us to repair the stuff the new cheaper company couldn’t

I hope things are going to change with all this "Supply Chain" nonsense. We are reaping the fruits of the last two decades of out sourcing of machined parts to the PRC.

I think he was right. Because company's like this will ask for 15% today and 6 months later 15% more until they break you than move on.

You basically make the wage slave mentality out as something to strive for. "I must have the job so I'll bend over backwards to have it" This is the exact mentality that pushes down wages of skilled laborers and margins of tradesmen all over the world. The mentality of "If I don't do it for minimum wages at minimum profit margin for myself, someone else will" That 15% margin the company demanded is a 15% pay cut for everyone involved in making the parts. The material costs aren't going to change, the machine hour costs aren't going to change. The only thing that changes is how much you and the people working for you take home for their work. Pretty damn sad.

I understand Titan's business model of keeping the machines running 24/7 at a rate that generates a calculated, predictable profit is different and somewhat innovative in his own way (emblematic of a young, hungry entrepreneur) but I would not have agreed to rework the parts. I think your manager at the time, who was willing to work with them to negotiate cost-cuts, was probably fair and open-minded in his concession offers. That exec asking for the 15% cut on parts across the board who ended up outsourcing to Malaysia, only to then having to have them reworked is just another classic example of a sellout to this country's industrial, economic, sovereign self-sufficiency (i.e. in the vein of what the U.S. has been recently experiencing as a result of examples like its short-sighted lack of domestic chip and pharmaceutical manufacturing). Their savings were probably insignificant and/or possibly a loss/part. Summed up lead time was probably also worse for them. Another greedy, short-sighted weasel looking to make a big impression with quartertly/annual profits (that likely backfired) for a bonus/raise. Look at the statistics on how far C-suite salaries have diverged from average professionals. What benefits come from all those temporarily maximized (but significantly-diluted, when taking all aspects into account) profits? Nothing but more glut for the spoiled kids, mistresses, wives of those execs and boardmembers (and themselves) so they can have bigger villas on the Riviera and bigger yachts for bigger parties with more coke and bigger orgies, more Porches and Ferraris, etc. that sit in giant collection garages, hardly ever driven and millions that will never be spent sitting in bank accounts to spoil generations after generations of their descendants. For these things they all sell out their contemporary citizens, families of in their own sovereign countries. They'll spend millions on capital expenditures to set up plants and validate processes in those cheap labor markets, only to have those very plants run ghost shifts and sell clones of their very products at fractions of the prices, competing with very product those short-sighted, greedy "geniuses" completely funded the infrastructure to manufacture offshore at costs the outsourcing company itself cannot compete with because the offshore manufacturer never had spend a penny on the manufacturing facility or the process validations to manufacture the clones (and that's not even getting into the subject of the companies'/engineers' IP that gets outsourced in order to manufacture innovative products and undergoes the same theft, which is a whole other level). Great deal for the offshore manufacturer and the clone products' prices (which are really the exact same parts), a short-sighted and pointlessly greedy betrayal of their own sovereign citizens by the outsourcing company. Small minds with myopic foresight and greedy hearts.

I've heard this sort of thing many times over the years, and it always seems that the magic number is that "15%." I wonder if there's some consultant running around to all of those companies, telling them a story about how he got a 15% cut in price from someone one time, and that every buyer should do the same...

I worked for a company that had the same demands put on them back in 2008 at the beginning of the last recession. It was a large steel manufacturer with tons of contractors. They also went to payment in 60 days instead of 30. It was a tough time for a lot of shops. You need to always keep those bad days in back of your mind. A fair amount of parts were also sent to Asia. Made and shipped for almost a third of the price. The castings were good but the material was terrible. They did not last. 5 or 6 years later we got those jobs back but for a much reduced price. And we made it work. We ate soup and toast for a while but came out of it in good shape. Invest in equipment when times are good. Always update. Keep improving and hopefully you can ride out the next storm.

The correct response to this offer is "No." The customer is not entitled to free work or free metal. If they go to your competitor with that deal then that's a good thing. If your competitor has many customers like that they'll be out of the way soon enough. I mean I don't know what the margins are for your job, but discounting the inputs and the outputs for manufacturing multiplies the discount to be higher than 15% in reality. However, if you innovate and you get a higher margin, it's fine for you to decide to lower the price to be more competitive/get more business. Your customer doesn't know your input costs and your capital costs so don't let them tell you what your price is allowed to be. If the business plan is viable to your satisfaction then the price is what the price is.

Proper feeds and speeds can lower the price of anything. When I got my Advanced manufacturing degree about 10 years ago, we had a feeds and speeds instructor who is also an Iscar salesman. A customer of his was cutting two pockets into a stainless block approximately 6 1/2 by 5 by 4. It was taking up an hour and a half to cut it and a half an hour for it to cool down enough to even pick it up out of the machine. The salesman wrote him a proper feed and speed program had brought him to the school, cut the park in two-and-a-half minutes without coolant and handed the man the park right out of the machine. Had without the cooling the tools that he was selling him with last six times longer than if he applied coolant to them. This man never learn feeds and speeds and still didn't after that he used that program for that part only and several months later with still using the slow feeds and speeds as if you were still using high-speed steel tools when he was using the ceramic tool bits that get damaged if you are cutting steel with them and using coolant. Some people never learn.

Great story Titan. yes you did the right thing because items are never cheap enough. These people will have suppliers working for free if they could. The same thing is happening in ROAD TRANSPORT where truckers are basically working for nothing, Because they yielded to pressure.

You did right thing. If you'd have given the 15% they'd have wanted 35% later. They'd have kept pushing an problably outsourced it anyway once the current demand was met. You did the right thing.

I own a company that pretty much just supplies professional labor with some unique equipment. I was asked by one of my clients to lower my rates 25%. I said the fact that you actually think I make 25% on an invoice is totally out of touch with reality. I said "NO! Go back and sharpen you pencil and come at me with a realistic proposal and we'll talk." I used to work at this company for 14 years. Many times I'd cut a break on an invoice because I knew the Project Managers have approval limits. So I'd knock back overtime or per diem or not charge for material. Not anymore.

I'd say tell them to try outsourcing it for less. Continue making their part as you usually would, and have them ready when the company inevitably calls back after their cheaper option fails. Sell it to them as a rush order but you already have them done, so relax.

I've always been involved in providing services to clients. I have always believed in providing the best service I could regardless of the industry. That said, my Dad taught me not to give it away. If you provide a better service than your competitors, people who value good service and product will seek you out. Those who devalue your expertise, you don't need them as your customers anyway. Keep up the amazing work.

There is only one answer to that kind of demand : tell them to find someone else who will produce the same part, equally well, equally fast, 15% cheaper. When they can't, *raise your prices* by 15% and explain it as the price of trying to extort you. Seriously, 15% ? It doesn't matter the exact sum. Half a million or half a dollar, it's equally insulting.

G.M came to our company about 25 years ago and demanded similar terms but on an annual basis. I looked the Rep and asked him: so what you are saying is, you want us to give you the tools for free in about 7 years. We still supply tools to them but have had about 5 different Reps/ venders since then.

I worked at a shop that supplied parts to G.M. back in the 80's, when they started their cost cutting they would give you a 5 yr. contract but you had to reduce your price 1-2% each yr. They figured you should be able to come up with cost reductions over time when you are making 5000 parts a day.

Basically outsourcing is the first line of cost-cutting for basically any company involved in manufacturing. As an American I know it will upset many when I say that many Chinese or other foreign manufactured products are just as good and sometimes better than things produced domestically. When it comes to the question of jobs and helping workers put food on the table, however, that goal is diametrically opposed to the entire purpose of business in general: profit. Many people have been able to create decent incomes for themselves by doing small-scale machining and prototyping for small businesses and niche consumer goods. Realistically the demand for US-based manufacturing on industrial scale will only continue to decrease until wages around the world equalize. Technology improves all the time, and there are many facilities in China and elsewhere that use state-of-the-art equipment. There is definitely something to be said about dealing with people in your country who speak your language and have shared expectations for how business is done, as well as not having to wait 6-8 weeks for a boat from China or longer if you need something made.

Company I worked for started making parts locked the customer into a 5 year contract. A bit of digging before hand found that the parts had been made in the UK then out sourced to China. When a dozen shipping containers arrive and the parts are basically scrap, which is what happened and why we got the job, the customer still had to pay his staff to basically stand around,as there were no parts to assemble. PS a lot of the big Japanese car manufacturers have there mould tools made in China, The difference is they are literally watching there every move and are tested in Japan before being shipped world wide.

I've seen success in a bit of the opposite. "Why add wear to my machines unless I'm making money?" - Machine shop owner near me.

You boss is correct. Once you reduce price for such a demand, the company loses its standing in pricing for the future products too. Had the client said some parts as a negotiation, then there was a future. That company wanted to change to Asia, was searching for a reason. It was already decided. The concept of machine to run at costs is to cover the running costs scrap+ basic pricing.. it is a good strategy to beat competition in this hard times. Scorched earth tactics.. 👍

I'm a retired machinist. My last job I work for a company that makes electrical connectors. They were 100% American-made but after the new owner took over about 15 years ago they decided to outsource them to China. Of course the results were predictable. They were shipping hundreds of cases of connectors back to Southern California where the connectors all had to be reworked and 100% inspected. And then they were sent back to China because those connectors were actually for the Asian market. The funny thing I noticed was I was looking at the shipping labels. Those boxes were being FedEx'ed 24 hours from Shanghai to Southern California and they were moving multiple hundreds of the boxes everyday. Each box held 200 connectors. Each box weighed in at around 40 lbs. The management just chalked it off to "cost of business".

Great lesson in exercising your own set of rules to the benefit of everybody involved. Kudos.

The conversation being about buying the owner's kids a house, instead of paying employees more, really shows how much profit they make, and that the employees are getting screwed.

Having worked in the mold industry for a long time. I have had to setup and fix many molds that where made outside of a quality control system. Companies that outsource without verifying that the company even has a qc system. They have stepped over dollars to pickup cents.

I would have told that customer to pound salt. You're providing a quality product at a fair price. Period. Good luck with Malaysia. I've had many customers that say I charge more than the competition. And my reply is, "I offer better service, equal or better parts than the OEM manufacturer, and my warranty is no questions asked." Good luck with the cheaper guys. More often than not, they leave and a few months later, my phone is ringing asking if I can do their repairs again. Of course I take care of them and pick up where we left off. Cheaper is, more often than not, not as good.

I work for a large, well known company that assembles high quality products with many components. When the supplier screws up or they have a high scrap rate, we actually have our own team of people that try to help out instead of just "sticking it to them" and telling them they own the whole mess. There are two reasons for this. First, they are just going to charge you more next time (I've seen this dozens of times). Second, it's more expensive for both companies if the problem doesn't get fixed sooner. Often the price to fix it is peanuts compared to the impact of shutting down a big assembly line. Also, it's really bad when a supplier just stops producing because they are mad.

This goes back to Ignacio Lopez of the auto industry in the 90's. He forced multiple rounds of bidding from suppliers. Picked the lowest bid and expected all suppliers to match. Then, he expected 5% price reductions every year. Many suppliers quit bidding because the process was so time consuming and they knew what the result would be.

That can be a dangerous road to walk especially in these times. A lot of the time, there is built in margin for expected cost increases. If you set a contract price at a break even in overhead to keep machines on, and then next month the market swings and steel goes up 10% then you're in a tought position. Price is important to customers, but so is consistancy.

NOV in Edmonton thought they could do the same thing. So they bought two shops in S Korea and shut down a fine facility in Edmonton. They shipped a billion dollars of work to the new shops. When it came back, it was 80 percent NCR 50 percent was by eye, you could see it was NCR. The CEO lost his job over that one. And all the fine machinist let go were working elsewhere in a week. We do not miss them, but they miss us.

Best move would have been to agree to 15% discount in exchange for a guaranteed quarterly order volume significantly above current order volume. That would have put them in a position where they are the ones saying no to you. It was supposed to be a negotiation. It's quite possible they were willing to give you something in exchange.

I was a design Engineer, now retired. I was part of a team designing process modules incorporating components from many specialist suppliers who took time to help us choose the right model even before we had placed an order. When the purchase requisitions from the design team went to the purchasing agent he would come back and say that he'd found cheaper suppliers. Just a few dollars in some cases but clearly of lower quality. I would ask the agent if he would kindly speak to potential suppliers regarding technical issues of which he absolutely no clue himself for the next project because I would too embarrassed to do so myself. I also mentioned that the difference in cost between quality plus free technical advice and cheap would probably pay for one night's hotel stay for the Technician sent to replace the failed cheap part with the more expensive reliable part. Then there's the Technicians expenses for meals, air fare, car rental, more hotel, salary, loss of his services in the workshop whilst he's away

I started in machining back in 1996 and most everything except tooling/fixturing was CNC already. That was a huge change in the industry when you could make parts so much faster and consistent because the machines were automatic. Now 25 years later and yes the demand for cost is there, but quality is the big driver, at least in the medical industry. We have "lost" parts to competitors who promised the parts cheaper, but it almost never fails that we see orders for that part again in 6 months because they cannot deliver the quality necessary. In the example you gave, at least part of the cost savings could have been passed along to the customer. Showing your customer that you had improved efficiency and now had extra capacity because of the decreased production time may have won that company ever more profitable work than they previously had. Just my two cents worth.

It’s happening everywhere across the globe. I really like the attitude to work with the customer and personally find ways and methods to make your parts more cost effective and pass this saving to your clients and another thing is going out of the way to ensure your client get the parts done on time.

The Problem can be narowed down to managers , that never made something with there hands or even machines. Only pushing everybody to work harder for less pay ! Theres a limit to where people even machines can be pushed. Beyond that limit you only get trouble...poor quality more failure costs and personal conflict . A strong sign for change maybe having more respect , for machine an machinist. Peace ..goldmonkey☆ Grtzz from the Netherlands Johny geerts

I worked in a fab shop fee years ago, we had a 30% scrap rate built into the cost of business because they wanted the contracts and bid the tooling to +/- 0.010 vs 0.02. The amount we scrapped far outweighed the upfront cost and management complained that our scrap was to high. We need to get bean counters out of making all business decisions.

You have a fantastic work ethic and an operation that is laser-focused on keeping customers happy. I only wish that I had been privileged to work with someone like you in the past.

The owner of the company you were talking about moved his equipment and operations and process into a modern manufacturing facility , but his company philosophy was obsolete. The man didn’t understand strategic partnerships and customer relations. I had a forty year career as a computer engineer,so I’ve been in it since 1978. Worked on the first widely available large scale computer systems and operations. Worked on every type of machine through the different generations of architecture. The one thing that has remained consistent is “change”. Some managers understand automation, and some never will. I believe you do, and I really applaud you for sharing that very relevant story. Wishing the very best for Titan. I believe North America has the best minds and workers, and critical infrastructure tooling and manufacturing should and will happen in North America.

My costs are my costs, If you don't like it find some else to do the job. "Good work isn't cheap and cheap work isn't good"

Boy, I have seen this before, SOX, Sorbains-Oxley law often prevents a Publicly traded Company from cutting prices. Basically Your report to the SEC for next year on what your profits will be can not be deviated from.

Used to work in Australia's only domestic Automotive Transmission Manufacturing plant. We priced ourselves out of the market with labor costs, The older staff close to retirement kept pushing and pushing the Union and Company for EBA pay rises. Eventually we lost out, the company shuttered and was bought by the Chinese, the plant was shut up and all the machines shipped to China where labour costs were practically nothing.

I hate New leadership like that. I got a new owner at a mid sized shop (11 cnc machines, mix of V/H mills and lathes, 20 welders, break, laser etc.) and he told all the bidders he wanted all parts to be making 30% profit. If a part wasn't bringing that in it needed to be requoted and held to that price or let go. Many of our customers had a mix of part costs, one in particular we were basically making a few parts at cost but making bank on the rest. When the bidder tried to up the cost of the others it caused the customer to re-bid ALL their parts with other shops, we lost many that made a lot of profit and what little we kept we had to reinvent how we were running them just to keep them with minor profit. Across the board asks are stupid. As a customer if you want to lower your price have them re-bid the parts, if it doesn't improve bid them with other shops in the area if that still doesn't get you where you want to be try other areas. As a supplier if a customer asks for a re-bid it's probably time to look hard at their parts and see if there is another way to approach them or if there has been new advances that you can use to improve on.

CEO: I have a brilliant idea! I'm going to make cutting costs and productivity increases someone else's problem.

"My apologies my friend but we have a contract that requires you to a specific price, we can talk about the next contract price, However, you are bound by a contract for the current parts that we are producing and you will be responsible for where we are at if you decide not to continue." I hate to say it like that but NOBODY has the right to back out of a contract specifically because they want it to be a lower price. There are laws put into place that allow you to get your money out of them.

I would have told the guy on the phone to get rid of the new boss and be on the lookout for a new job because that's the kind of re tard who drives at night by staring at the oncoming headlights instead of the road.

Hello Titans, From Brazil here, and I'm mechanical turning 15 years ago . This Was the must emotional video from this Chanel 🤝

It sounds like you had the margins to work so I would say it just depends on how busy the shop currently is. If you are already running at capacity and have plenty of work then there is no reason to drop your prices. If you have a lot of machines sitting around doing nothing then it was a bad move to not adjust.

My brother started a welding company, he’s been doing stainless steel for 20+ years, a local brewery hired another company for a custom job (piping, fermenting tanks, pump couplings etc.) 2 weeks of work and after they were done, there were leaks all over the place, rust spots (cheap materials) and failed inspection. They called my brother to rework everything, with other welders they got it done in 3 days and passed inspection. He always told me that if you give the customer exactly what he wants at a cost for quality, they’ll always come back.

I would look at getting the times down, be it using different work holding and cutters to using a different machine and process. A 15%% decrease could mean more in the order book in months or years ahead, a customer sometimes needs to do this to compete in a world market. This is why you have to update machinery and process in a ever involving industry, look how many companies now have 5 axis and sliding head CNC lathes compared to 15 years back.

Our company lost a air conditioning part job to China. They had us make a 90 day surplus to let their new factory make and ship parts. I had my setup guy add a drilled divot to the back of the part. A few months later the tooling showed up and they wanted parts tomorrow. It seems the Chinese aluminum was porous and when heated the freon went right through it. They wanted a reimbursement for their bad parts that they said we're ours ...no divot...we didn't pay them

Agree 100% with your thought process in business, great story and everyone should learn from this.

A big mistake is that many good machinist think they are the only ones who could do a complicated part. There is always someone who could do it as same good. And if they are not good at the moment, they will work as hard as you did to make it done. Don't get me wrong, this is a complicated job if you look through all of it, but don't underestimate your competitors.

They were asking for two houses lol

Here is a little tidbit. I met with a VP at a very large global company. It was in February 2006. He told me their last fiscal year had been awesome. But this fiscal year - which started June 1st 2005 was terrible. He said he was asking his top 3 industrial suppliers to give them a 20% decrease in pricing retroactively back to June 1st. RETROACTIVE to the start of the previous fiscal year. He said my other two competitors had agreed (lie). I asked many questions to make sure I understood. I was polite and professional. I did told him that we didn’t even make 20% overall on his account PLUS we had already paid our people and paid our commissions. He said if I did this he would let us compete for an integrated supply contract.

So, let me make sure I'm hearing you correctly: You'll take considerably less money(that could be reinvested in the company and it's employees) to put more hours on your machines thus increasing your operational costs and accelerating depreciation, and make your employees work longer hours? Yikes. Definitely have to disagree with this approach. I hope the rework costs of the outsourced parts were not discounted so the customer understood the value of your business versus their new "supplier".

This sounds so familiar. We make parts for the aluminium industry and other branches. We also lost a couple of products to cheaper competition. Our boss got to visit their shops at some point and they were totally not taking care of their workers health. Barely any PPE, dirty AF etc. ( they were in eastern Europe where health doesn't matter ). One time we got a complaint about a product that were "done poorly". Our boss ofc went and searched for the reason and found out the product we got sent back was not ours. The parts were totally messy, broken and very crudely made. After the customer made a fool of themselves we got the products back for manufacturing. The reason we were able to keep them from lowering too much or at all was because we delivered quickly and our products were well made with better tolerances. When i started in 99 we were around 5 workers, 2 CNC lathes and a conventional one , 2 large CNC milling machines and a small one. Now we have around 15 workers, 3 CNC lathes, a small CNC milling machine and 7 big ones. We also went from 2D to 3D, from manual programming to post processing but still have to do manual programming at some point because the material won't always allow it.

Just how low do customers expect vendors to go in their prices. Do they expect them to lose money supplying them.

Man does this sound familiar... Just had a similar conversation recently... Owner of a service business (with really quite low overhead costs) would rather lose a large account, and risk not winning the business back in the future, than give a discount to keep the business. The logic of "why should I take a pay cut?" seems to outweigh the "is it worth losing this customer?" in the balance of "small" business ownership... an owner and their profits are hard to part.

This is what happens when you let accountants run your company. It's always a recipe for failure.

I worked for company once .all they worried about was shares. so you didn't always get a pay rise but didn't drop there shares. very nice indeed.all about the big money

I'd have converted to cnc without letting on and offer a 10% discount. Lol Nobody has to know.

I was a Tool and DIE maker. Bottom line you have to make a profit in the end or shut the doors. Those CNC machine are not cheap. Good materials are not cheap and good labor is not cheap. The EPA has also caused a lot to go out of business also. You get what you pay for in the end.

I hope when titan says he tries to run his machines at a rate 100% of the time, that he has some built in time to check machines/parts and fix/redo any errors because we all know no manufacturing process is 100% all the time.

We’ve just started getting our sheet metal products manufactured locally. In the end, when you total all factor’s into the equation, locally is more cost effective and deliveries more reliable than overseas!!! We also purchased an SMT line to manufacture our electronic boards in-house. We’ll sacrifice a little profit over Relability any day!

Great comments - great business attitude. Have a safe and nice day all. CHEERS from AUSTRALIA.

As my old mentor used to say, there are no friends in business. If they can get the same quality part 15% cheaper elsewhere they would of cut you loose in a hearbeat. Call their bluff and maybe even put your prices up, it'll give them something to whine and haggle over.