Metalworking operations are often faced with unavoidable costs that are beyond their control. Two of the largest this year have been tariffs, and the cost of cutting fluids. Fortunately, there are many back-end solutions to help offset these costs that will add more value to metal scrap and spend fluids, and move profit margins in a positive direction.
Machine manufacturer Gosiger cited a study conducted by Gardner Research to better understand the difference between high-performance shops and average ones. The study found that in the areas of income, profit, and growth better-performing shops consistently invest in new equipment to maintain their current manufacturing environment.
The 2014 “Top Shops Report” — provided by Modern Machine Shop— indicated that the median profit margin of top-performing shops was 13.5%, compared to 8% for others. In 2017, the number was 15%, compared to 8%.
One way metalworking operations can attain the largest profit margin possible appears to be investing in capital equipment—not to be limited to production equipment. Back-end processes like scrap and fluid management can significantly minimize the impact of costs.
When budgets are tight, financial decisions related to purchasing capital equipment tend to favor front-line systems such as CNC machines, mills, lathes, and band saws. But systems that handle the back-end of the process, like scrap metal and spent fluid, are equally important.
Implementing these systems can save money, generate revenue, and increase the value of the business. In many cases, prioritizing these kinds of systems can be difficult, but ultimately it is a worthwhile decision when you consider the fast ROI and increased value and efficiency a metal scrap processing and fluid recycling solution can bring to a metalworking operation.
Whether it’s a largely unforeseen circumstance like an industry-wide implementation of a new international trade policy or a somewhat expected occurrence like an increase in the price of coolant the costs of doing business are a fact of life for every metalworking operation. Fortunately, there are many scrap metal processing and fluid recycling solutions available that can help.
Metal chip processing systems offer the dual benefit of reducing small to medium volumes of turnings and bushy wads to flowable metal chips while also separating chips from fluid. This increases the value of the machining scrap and allows for cutting fluid to be reused.
Compacting dry, loose chips into smaller, denser briquettes is one way an operation can dramatically increase the value of its metal scrap. Briquetting machines compress metal chips, loose turnings, and swarf into near solid, dry briquettes for feeding to furnace or to send for recycling. Briquettes optimize container fill and bring higher value from the recycler.
Centralized coolant recycling systems remove tramp oils and suspended solids from contaminated coolant, control bacteria, and can adjust fluid concentration for fluid recovery. The benefits to the bottom line by adding a centralized system include reducing new fluid purchase costs by up to 75% and reducing hazardous waste disposal costs by up to 90%. By using PRAB’s ROI Calculator, you can see how much your shop could save.
In this paper, we examine some of the factors that can significantly impact profit margins for metalworking shops. Additionally, we will make the case for minimizing that impact with metal scrap processing equipment and fluid recycling systems Read our white paper