Welding-economics:building ground for a sound shop.SOLUTIONS with Effective, Powerful AdviceIs it important to a welder who runs a shop? You bet! How could you otherwise, without taking Welding Economics into account, plan your moves in a changing world where your business health is affected by all sort of causes on which you have no control? Welding-economics studies the complex interplay of factors influencing the production of items manufactured by welding, and the profitability it can afford in view of 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 the matter 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 in the continuing struggle between the expenses needed to run the shop and the conditions of the market. It is therefore important to the well being of any enterprise to be able to consider all factors affecting 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, before jumping into the battle-ground of day to day survival in the cruel business world where there is no sympathy or tolerance for inexperience. It requires much more than being comfortable with the basics of some welding process or other. There is a need for a flair for business and an understanding of the specific market into which one intends to operate. 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:
Furthermore Management has to plan and decide on:
An Article on Welding Cost Reduction was published in section (7) of Issue 44 of Practical Welding Letter for April 2007. 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. It is usually 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 that the introduction of new mechanized or robotic means of production is indeed economically justifiable. While all the costs involved in the purchase, installation and running in of a new facility are easily predicted, the effective performance of a new production line cannot be forecast with any precision unless a smooth running in period of training and bug chasing 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 but operating at a very low fraction of their potential capacity, or having being discarded at all, because of inability to obtain acceptable results or because of equipment breakdown. Conclusion Welding-economics offers the tools necessary to monitor the profitability of a welding shop and permits to analyze the means and the methods that will assure continuous and healthy growth of the business. As stated in an interview of a successful businessman running a flourishing 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."
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Welding-economics methods help in planning and monitoring the business of a welding shop to assure continuing profitability and growth. -
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