Welding-economics:

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Welding-economics:

Is it important to a welder who runs a shop? You bet!

Without taking Welding Economics into account?

How could you do otherwise?

Plan your moves in a changing world?

Where your business health is affected by all sort of causes on which you have no control?

Why Welding-economics?

Welding-economics studies the complex interplay of factors affecting the production of items manufactured by welding.

The profitability is assessed by evaluating the prevailing selling prices achievable in a given market at a certain time.

Even the most technically oriented people involved in production cannot dissociate themselves from the Welding-economic constraints imposed on the shop in which they operate.

Therefore a basic understanding of Welding-economics is essential to a successful business.


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The health of any activity, no matter how small and simple a shop is, depends on its standing successfully.

There is a continuing struggle between the expenses needed to run the shop and the conditions of the market that allow a sound level of revenues.

It is therefore important to the well being of any enterprise to be able to consider all the factors that influence Welding-economics.

These include all the expenses involved in setting up and running a Welding Shop and also those connected to specific manufacturing and production runs.

For a short introduction see the following page dedicated to the issues relative to Starting a Welding Shop.

Note: a young welder, having only a minimal experience with simple processes, asked recently how could he start a welding business from his own garage.

The compelling advice we have to offer is that one should first learn and practice as many processes on as many materials as practical, for as long as necessary.

One should appreciate that the day to day survival in the cruel business world is comparable to that of a battle-ground.

Before jumping into it, one should know very well one's job.

Because there is no sympathy nor tolerance for inexperience.

It requires much more than being comfortable with the basics of some welding process or other.

There is an utmost need for a flair for business and an understanding of the specific market into which one intends to operate.

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Specialized markets are probably more rewarding than simple ones where no unique expertise is needed.

In another page we deal with the importance of Welding Cost Estimate, an essential tool for managing Welding-economics.

Here we wish to address more specifically the uses to which Management will put the accurate predictions of expenses.

Management is expected to control the Welding-economics of the business by using the Cost Estimate information presented to reach the following decisions:

  • Fix the selling price of a production unit for bidding or quotation,
  • Evaluate the profit obtainable in the given market,
  • Consider which portions of a contract are to be made in house or subcontracted to a vendor,
  • Authorize the expense needed for equipment and tooling, comparing different processes,
  • Select the most economical way to perform production,
  • Promote cost reduction programs to be realized by improving procedures,
  • Establish realistic production goals to be maintained.

Furthermore Management has to plan and decide on:

  • Recruiting, training and administering the required workforce
  • Establishing the quality policy and the means to assure it
  • Overseeing procurement of materials and supply of finished products in time.
  • Establishing procedures to compare actual expenses with projected ones, to correct the estimates and to update the methods used to predict costs.

An Article on Welding Cost Reduction was published in section (7) of Issue 44 of Practical Welding Letter for April 2007.
Click on PWL#044 to read it.

An Article on Business Software Benefits was published (2) of Issue 133 of Practical Welding Letter for September 2014.
Click on PWL#133 to see it.

Productivity improvement is an important subject to be considered with the increasing volume of items manufactured.

Usually these goals are addressed by committing financial resources to equipment and methods designed for higher production rates.

But also by reducing waste and by improving assets exploitation.

It is generally necessary to perform financial analysis to assess the economic gains potentially achievable by such a move, as opposed to the costs involved.

The cost/benefit analysis is intended to prove if the introduction of new mechanized or robotic means of production is indeed economically justifiable.

All the costs involved in the purchase, installation and running in of a new facility are easily predicted.

However effective performance of a new production line cannot be forecast with any precision.

A smooth running in period of training and bug chasing must be is taken into account.

Expert personnel properly trained, with process expertise, in charge of introducing such new and complex equipment into operation is of paramount importance to the success of any Welding-economics expansion plans.

It is not uncommon though to learn of complex and expensive robotic systems having been installed, which operate at a very low fraction of their potential capacity.

Or that were discarded at all, because of their inability to generate acceptable results, or because of equipment breakdown.

An Article on Learning from Experience was published (2) in Issue 135 of Practical Welding Letter for November 2014.
Click on PWL#135 to see it.

Conclusion

Welding-economics offers the tools necessary to monitor the profitability of a welding shop.

It permits to analyze the means and the methods that will assure continuous and healthy growth of the business.

It is too important a subject to be dismissed as uninteresting.

As stated in an interview of a successful businessman running a flourishing welding enterprise: "My most important personal contribution to the business is that I have both practical 'hands-on' welding skills/knowledge, as well as formal technical/business abilities."

See also:
Managing Welding
and
Welding Management.

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To reach a Guide to the collection of the most important Articles from Past Issues of Practical Welding Letter,
click on Welding Topics.

NEW RESOURCES

Find some interesting links in a special Mid Month Bulletin Page of our PRACTICAL WELDING LETTER, designed offer you, our interested readers, the opportunity to search the web quickly and effectively on the subject of Welding Economics and related Subjects

We urge you to explore this rich source of essential knowledge.

Online Resources on Welding Economics Costs, Expenditures, Reducing Waste, presenting Articles, Downloads, Links and Information is now available by clicking on PWL#051B.

Looking for more Online Reference Links? Click on Welding Resources

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Managing Welding
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Monitoring Structures
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Outsource Welding
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Welding-economics methods help in planning and monitoring the business of a welding shop to assure continuing profitability and growth.