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Best Practices for West Texas Machine Shops: Machine Parts Right, the First Time

Texas has a long history of crude oil production as far back as 1543, but West Texas and the Permian Basin have steadily yielded large quantities of oil since the early 1920s. One of the biggest discoveries for Texas happened in 1936 just west of Lubbock in Cochran County and was later named Slaughter Field. Since then, an entire industry has sprung up to support the needs of the oil industry, supplying everything from nuts and bolts to precision parts and instruments used in exploration, drilling, extracting, production and refinement.

Our local machine shops here in West Texas help the oil and gas industry run smoothly. Combine the tight schedules companies keep with even tighter turnaround expectations, and machine shops are under the gun to deliver the goods fast and accurately. That’s why machining parts correctly the first time around is so critical to staying on budget and retaining customers.

Consider the cutting tools you use.

Using an inferior or poorly spec’d cutting tool results in increased machining time and cost. It can also dramatically increase material passes and the load you put on your tooling, requiring replacement more often. Cheaper tools not only have a shorter lifespan, but they can damage workpieces causing you to start over. Talk to your cutting tool supplier and schedule an on-site consultation to determine what specific tooling requirements your operation requires for optimum performance.

Consider the machinability of certain material.

The higher the machinability, the faster and less costly the material can be machined. That depends on the physical attributes of the material. Often, the softer the metal the easier it is to machine. For plastics, stiffer material is often better for accuracy and low friction. Minimize redo’s by assessing your material usage regularly and adjusting tooling and machinery to match.

Don’t underestimate the cost of machine downtime.

Even a few short hours of machine downtime can have catastrophic effect on revenue. Invest the time to evaluate your machines’ performance, regularly schedule maintenance and replace when necessary. Many shops try to make do with outdated or underperforming machines, thinking that it’s saving them money. That line of thinking rarely pays off and can be costly. You have limited floor space and that real estate should be home to machines that are generating money. Evaluate your facility and try to optimize your floorplan to get the most bang for your buck.

Hire smart and train machinists regularly.

The more machines you have in your facility, the more machinists you need to run them. Not only is equipment failure a major contributor to revenue loss, so is operator error. That’s why it’s critical to have knowledgeable machinists on staff. Today’s growing labor shortage may make that seem impossible, but there is another way to secure good talent. Look for potential employees that show initiative and a willingness to learn. Then train them on your processes. Not only is it sometimes easier to mold a less experienced worker to your specific processes, but investing in workplace training and development is linked to increased employee longevity and satisfaction.

Whether you’re creating a one-off piece or looking to produce large-scale volume, the accuracy and effectiveness of your machined parts can make or break your operation. The longer it takes to machine a part, the more money it costs you. Not only do you need to look at machining time, material costs, start-up costs, but you also need to consider the special cutting tooling you need. Getting it right the first time saves you time, money and unnecessary machining steps.

Are you a machine shop in West Texas or beyond? Do you have a part that is difficult to make or struggling to turn a profit? M&M Sales & Equipment has technical experts on staff to help you choose the right cutting tools so that you can machine parts right the first time. They understand the technical nature of the work you do because they’ve been there. Stop in or call one of our four Texas locations, and let us help you maximize output and profitability in your shop.

Related Reading: What’s Machine Downtime Really Costing You? (And How to Avoid It)

Tariffs Give Cause for Concern in Texas Manufacturing

If you were to thumb through some accounts of how tariffs are impacting the Texas economy, many would point to continued expansion and growth. According to the Texas Manufacturing Outlook Survey for June of this year, it would appear that Texas factory activity continued to expand and the production index went from 6.3 to 8.9. The increase marks favorable manufacturing conditions, yet the survey also indicated a significant drop in general business activity and positive company outlook. In fact, the company outlook index fell from –1.7 to –5.5, marking a new three-year low. The uncertainty index rose to 21.6, the highest it’s ever been since the metric was added to the survey in early 2018.

According to Emily Kerr, senior business economist at the Federal Reserve Bank of Dallas, “Tariffs are certainly a factor that’s driving up uncertainty and now we have explicit proof of that.”

What impact could we expect this uncertainty to have? Any uncertainty could lead to decreased customer demand, project delays and a sharp tightening of spending budgets, with fears of ultimately hitting manufacturing employment numbers square in the jaw.

While overall unemployment numbers are looking good, manufacturing employment fell 0.7 percent in May. Let’s take a look at what 115 Texas manufacturers had to say about the impact of U.S. and foreign tariffs.

  • 45 percent said tariffs aren’t affecting them
  • 41 percent said tariffs are already hurting their bottom line
  • 32 percent said they expect negative long-term impact
  • 30 percent said future costs are unclear
  • 21 percent said they don’t expect an impact
  • 18 percent said tariffs will give them a boost

Of those who answered “negative” to Current 2019 impacts, 54 percent reported passing those additional costs onto customers. Other answers included finding new domestic suppliers (17%) or bringing production or process back in-house (17%).

After digesting all those facts and figures, what does the future of manufacturing hold for Texas? Regardless of the actual impact tariffs are having on local manufacturers, the consensus appears to lean toward increased caution in the future regarding hiring, expansion and various expenditures.

What do you expect in the longer term and how will you prepare for the future? Let us know in the comments below. And, as always, if you need help finding the cutting tools and products you need for better productivity and profitability, contact us today. The pros here at M&M Sales & Equipment are happy to help.

What’s Machine Downtime Really Costing You? (And How to Avoid It)

Manufacturers often spend a lot of time focused on machine uptime and not nearly enough time monitoring downtime. Uptime, otherwise known as Overall Equipment Effectiveness (OEE), is comprised of three important components:Quality, Availability and Performance, according to SensrTrx. When any of these three are disrupted for any reason, machine downtime occurs. Machine downtime can be due to a number of reasons including regular maintenance and servicing, cleaning, changeovers, repair or unexpected equipment failure. Sometimes, companies have no control over downtime such as in the cases of extreme weather or power outages.

Regardless of the cause, unplanned downtime can mean a major financial impact on your company. Downtime can cost companies tens of thousands of dollars in lost production, if not more. Think about your production capacity. For simple math purposes, let’s say you produce 500 units an hour at a cost of $50 a unit. That’s $25,000 per hour. If your equipment is down for 4 hours, that’s a loss of $100,000 in potential revenue. That doesn’t even take into account decreased staff productivity, rescheduling costs and equipment replacement costs, not to mention decreased customer trust, according to Machine Metrics.

While an average cost of downtime is often factored into the price of manufactured goods, most companies often underestimate the cost of downtime and are surprised by their losses. Machine downtime is an unpleasant fact of life in manufacturing, but here’s what you can do to minimize loss.

Reduce Machine Downtime for Maximum Performance with These Tips:

  1. Perform a Risk Audit. Evaluate your current processes and equipment to spot potential problems before they lead to a downtime event. Ask yourself questions such as: How old is current equipment? How often is equipment serviced and maintained? Are parts reasonably available or do they take weeks to arrive? This regular audit will help you make more informed maintenance decisions and avoid costly repairs down the road, according to the blog BusinessTech.

  2. Create a Preventative Maintenance Schedule. Every piece of equipment needs to be repaired or replaced at some point. Without regular preventative maintenance, those unavoidable repairs and replacements will come at the most inopportune time. Instead of leaving it up to chance, be sure to schedule regular maintenance on integral pieces of equipment before they break.

  3. Use Quality Tools. To ensure maximum performance, use the right tools for the job. Using cheaper cutting tools or equipment may seem like a bargain at first, but those lesser-quality tools will result in more changeouts costing you time and money. The old saying of “you get what you pay for” has never been more accurate than when it comes to tools of the trade.

  4. Install Sensor Technology. When profit depends on your equipment running smoothly, you’ll want to be alerted the minute something is wrong with that machine. Sensor technology is available that can detect changes in vibration, temperature, heat and light and may offer you just enough time to address the issue before it leads to equipment failure, according to Sage Automation.

  5. Re-evaluate Data Collection Systems. Are you accurately tracking your operational data? Data is great for helping to make better business decisions, but only if that data is reliable and available. Uptime and downtime data are pretty arbitrary if your data isn’t accurate and timely. Consider implementing software that can help you collect and analyze data for real-time reporting, helping you make reduce production downtime.
     
  6. Regularly Train Operators. Even with the best maintenance program, human error is unavoidable. While it would be great to be able to blame equipment failure on a system breakdown, sometimes it’s all operator error. Avoid unnecessary downtime by investing time into a regular training program for all employees, both new and veteran workers. Successful programs should include operational training, as well as education on how to safely and effectively perform lockout tagout procedures before repair or maintenance. Training should be available to all affected and authorized employees for maximum safety and performance.

In your facility, work doesn’t stop. That’s why you need a company that can keep your operations running smoothly, both day and night. You need a partner that can help improve productivity and reduce downtime, so that you can focus on doing what you do best. M&M Sales & Equipment can audit your current processes and uncover opportunities that can not only help you do more for your customers, but run more efficiently and profitability as well.

Contact us by phone, visit our website or stop in one of our four locations to learn more.

U.S. and Texas Economic News Roundup

We think it’s important to stay up to speed on the news that impacts us all. It’s easy to get tied up in the daily grind and not notice what’s happening in the world around us. That’s why we check the headlines every day and when we come across interesting stories, we’ll share them with you. Plus, we want to hear from you. Feel free to drop a comment below.

We hope you’ll be able to leverage this economic and trend information to your advantage. Here’s a bit of what’s happening here in Texas and the U.S right now.

U.S. Cutting Tool Consumption

Earlier this month, the U.S. Cutting Tool Institute (USCTI) and AMT — The Association for Manufacturing Technology announced cutting tool consumption in the U.S. was up 1.3 percent in April, totaling $206.3 million. The number is down 1.9 percent from March’s numbers and includes data reported by companies that participate in the Cutting Tool Market Report. The report is a good representation of cutting tool consumption, and the analysis is a leading indicator of upturns and downturns in our manufacturing industry at home. There’s reason to believe the growth rate is slowing and reduced Boeing 737 production rates and unsettled trade agreements could be to blame. According to Mark Killion, Director of U.S Industries at Oxford Economics, although numbers are remaining above last year’s, new orders decreased in April. This aligns with slowing business investments and weakness in the motor vehicle sector.

Texas Employment Trends: Oil & Gas Trend Down

Employment is ramping up and unemployment falling in Texas. That’s pretty good news. According to recent data from the Federal Reserve Bank of Dallas, the Texas employment rate has seen an increase of 2.1 percent in May, following a 3.1 percent increase in April. And gains were pretty widespread in May, but manufacturing, hospitality, and oil and gas employment did fall, and shops are beginning to cut overtime. Texas lost four rigs, bringing total rig counts to 463. This may be why we are seeing some softening in the local economy. Interestingly, the information sector has been the only one to cut jobs this year. Employment gains were also spread throughout Texas’s major metro areas with the exception of San Antonio. Austin led the charge with 7 percent growth. 

Overall, unemployment numbers are down to a new record low of 3.5 percent in May, which aligns with the U.S. unemployment rate of 3.6 percent. Let’s hope those numbers hold on long term.

Texas Population Growth

Texas has some of the fastest growing cities in the United States. According to reports in late May from the United States Census Bureau, the largest population growth regions for the state include San Antonio (20,824), Fort Worth (19,552), Austin (12,504) and Frisco (10,884). Back in 2018, San Angelo surpassed the 100,000-population mark. Texas was also one of the four states that gained more than 50,000 housing units, with a whopping 172,000 new units added between 2017 and 2018. With population growth comes industry opportunity, and we’re seeing a surge here at home, as the Permian Basin has some of the best energy resources in the nation. While the outlook remains somewhat positive overall, it’s critical to remain cautious here at home as the economical terrain is starting to become a little rocky.

Energy Outlook

Pioneer Natural Resources is a company well known for drawing oil and gas from the Permian Basin using hydraulic fracturing. Back in 2014, it was projected that Pioneer could produce a million barrels per day by 2024. Today, Scott Sheffield, CEO of the company, says those numbers are doubtful due to their loss of investors. Investors know there are large amounts of gas in the shale formations; the question is how affordably can it be extracted. The company has already spent more than budgeted in order to meet that lofty goal and is in the midst of layoffs themselves.  We don’t have a crystal ball and can’t predict the future, but this certainly gives cause for concern of the future of fracking.

Texas Manufacturing Industry News

We happened upon some interesting news in The Texas Tribune. In April 2019, Senate Bill 649 passed the Senate and aims to increase the number of Texas plastic and paper manufacturers using recyclables as industrial feedstock to produce goods. It requires the Texas Commission on Environmental Quality and the Texas Economic Development and Tourism Office to increase demand for recyclable materials in the manufacturing industry. The bill won the endorsement of over 60 businesses, even the Texas Chemical Council. There have been talks about how to increase the use of recyclables in manufacturing; one idea is to place plants right at the source of the materials. This will obviously take more discussion and the plan will likely come from a third-party administrator. We’re interested to see how this pans out.

West Texas in the News

We pay close attention to state and national economic issues, but M&M Sales & Equipment has a soft spot for our hometown of Odessa. With abundant energy resources, infrastructure and a skilled workforce, Odessa is an ideal place for machinery, metal and chemical manufacturing facilities. Just recently, we read in the online publication Manufacturing.net that Facebook is planning a massive solar farm just north of Odessa. Called the Prospero Solar project, it will be Facebook’s first direct investment in renewable energy for its data centers and will have the capacity for 379 megawatts. You may be wondering why the social media giant is investing in solar. CEO Mark Zuckerberg says, “We set a goal for all our data centers and offices to use 100% renewable energy by 2020. These new solar projects will help us reach that goal.” Shell Energy North America and Facebook plan to share the power. As always, if you have questions and need expert advice on the cutting tools and supplies you need, just ask. M&M Sales & Equipment is here to help.

Oil and the State of Small Business

    As oil prices struggle to climb above $50/barrel and price stability seems to be anything but a reality, how do we plan for success in the current economic environment? The article below, published on FoxBusiness.com points to optimism in the market due to the lowering of crude inventories and the expectation that OPEC will extend their production cuts through the end of the year. But, is optimism enough to keep a business afloat? After 2 years of being hammered by poor oil production and now going into a third year of marginal growth now is the time to step back from your business, take the 20,000 ft. view and decide what you need to do to become or stay profitable! If you have already done this, great!! you are ahead of the pack. If you are sitting around waiting for the economy to right itself I’ve got 3 quick “projects” that you can tackle to start being proactive instead of reactive in your business.

 

  1. Read “Simple Numbers, Straight Talk, Big Profits” by Greg Crabtree. If you are new to P&L statements or business finance this short, easy to read book will get you up to speed quickly so you can make decisions on facts and your gut instead of your gut alone. (I’ll give a copy of this book to the first 2 people who comment asking for a copy.)
  2. Set SMART (Specific, Measurable, Achievable, Relevant, Time Bound) goals and keep them in front of you daily!!
  3. Find one or two KPI’s(Key Performance Indicator) and start measuring your performance. I would highly suggest using Revenue per Full Time Equivalent or Labor ROI as one of your indicators if you have more than a couple employees.

I’ve pasted the FoxBusiness article below. It’s a pretty interesting read as well. Reach out and let me know what you think of the article or anything in this post.

Oil Gains on More Support for OPEC Cuts, Optimism About U.S. Crude Draw

Markets Reuters

Oil prices rose for a second day on Thursday, closing more than 1 percent higher as support grew for OPEC output cuts a day after the U.S. government reported a big draw in crude inventories, boosting confidence that a global glut might diminish.

On Wednesday, the U.S. Energy Department reported that U.S. crude stockpiles posted their biggest weekly drawdown since December as imports dropped sharply. Inventories of refined products also fell.

“People are hinging the optimism today on the recent drawdown in inventories and I think that might last as long as we don’t have another inventory build,” said Stewart Glickman, head of energy research at CFRA Research in New York.

In recent days major producers like Iraq, Algeria and Kuwait have voiced support for extending last year’s deal from the Organization of the Petroleum Exporting Countries and other producers to cut supply by almost 1.8 million barrels per day (bpd).

On Thursday, non-members Turkmenistan and Equatorial Guinea said they would also join the cuts, though they are smaller producers.

On May 25, OPEC will meet to determine policy for the second half of 2017. Most analysts expect the group to extend cuts until at least year-end. If they don’t, Glickman said, “they’ll take the floor out from oil prices.”

OPEC said Thursday that group production fell in April. Despite the reduction, there are few signs that supply has fallen significantly as other producers have continued to supply key customers, especially in Asia.

OPEC also said it sees more supply coming from non-member countries such as the United States. The cartel raised its estimate of total oil supply growth from non-OPEC producers this year to 950,000 bpd from a previous forecast of 580,000 bpd.

U.S. oil production <C-OUT-T-EIA> rose to more than 9.3 million bpd last week, highest since August 2015. Even with this week’s drawdown in U.S. crude stocks, Glickman said the country has a way to go to reduce oversupply.

“You’re going to have to have a few weeks of 5 million-barrel draws just to get back to square one,” he said.