There is always somebody who will do more for less…

I had a meeting with a CNCROi.com client on Friday regarding some custom work we’ll be doing for them and the conversation invariably led towards the manufacturing challenges they’ve had over the past 15 years. To sum it up, there is always somebody who will do more for less and it nearly cost them their business!

Boom to Bust

Here in the Niagara Region, I did a bit of an instant time travel when I established CNCROi.com last August. I ran my industrial 3D animation studio during the boom times leading-up to 2000, companies where relatively flush with cash, marketing was being healthily supported by growing sales and everybody was happy. A new technology called 3D animation was relatively unknown and I was selling our services around the world to manufacturers far and wide.

Two recessions and 9/11 wiped me out, everything I was doing RIGHT was producing zero results, decisions were stuck in endless meetings that only promised more meetings. Those who did survive a bit longer decided to go on the “cheaper is better” bandwagon and they went under shortly thereafter. I had gone from a boom to bust cycle and wow, that’s quite an education!

Niagara to Toronto, Canada to the USA… we can mark, etch, anneal, cut and produce awesome results for YOU!

Manufacturing Challenges

After a few years of ups and downs, I decided I had enough and left to travel the world for almost 10 years. When I came back with my expanded knowledge of the CNC field, the area had changed dramatically from how I remembered it. Most of the big players that were clients of mine back then were gone, both in Canada and the USA. The mantra that had caught-on before I left that cheaper is better cost most companies their livelihood.

Why buy something for 10$ when you can get two for 12$? Then, you’d have another company come along and offer you three for 14$ and so on went the game until everybody was busy running around with their head chopped off making NO MONEY. Busy making no money means your business is on a starvation diet and it’s only a matter of time before it dies.

The challenges with manufacturing are endless, from being nickel and dimed on unit prices with promises of future volumes where somehow you’ll be able to make more margins, government red tape and employee regulations that keep on getting longer and more onerous as times go by. Equipment is expensive, operating and maintenance only seem to go UP and the list goes on. There is always a valid excuse to spend more money to improve things, it’s managing the resources efficiently that’s the challenge for business.

There is always somebody who will do more for less…

I tell my customers that my goal with CNCROi.com isn’t to be the cheapest, that’s a zero sum game that I see too many businesses trying to adopt at their own peril. If I don’t make money on projects, that means I do my customer a disservice as I must cut corners (materials, equipment etc.) to make money and in the long-term, I won’t be able to service them in the future as we won’t be in business anymore!

If I widget costs 20$ to mark, doing it for 15$ might sound like an amazing deal but that 5$ difference, or 25% discount is huge. If that 15$ was my original cost, how does my company cover things like electricity,  wages, deductions… ? It means driving costs down to 10$ to make back that 5$.

Easiest way to do this is to use a CO2 tube at higher speed instead of using our fiber tube (or not getting a fiber tube to begin with). The results will not be as nice on say, anodized aluminium. It means not spending money on a specialized fiber lens… spares? Nope, no money for that either! Hope it doesn’t crack on a project that you need a few hours from now as otherwise, you aren’t getting your stuff until at least a day from now. Your customer is pissed that you missed their deadline and that comes back on us, our “optimistic” 14 day net becomes a 90 days payment term as a result!

There is always a way to drive down costs but that’s when you start sliding down instead of climbing up. Running a lean operation is one thing, running on fumes is quite another. I bought a top of the line Austrian Trotec CNC laser machine, for me to even consider competing against a company that bought a machine for a fraction of the price is foolish.

Find your niche and expand it

CNCROi.com has had incredible success since opening in August of 2014 but at the back of my mind is the horrible experience I went through with my 3D animation studio 15 years earlier. It’s a constant reminder that no matter how good things may seem, there is always a boogeyman hiding somewhere, getting closer and bigger the more success you have, more than ready to cause you some grief… and profit margins is the only way to keep it away for yet another day.