Electronics in Metalforming & Assembly

Tooling Electronics & Cost Justification

Something is in the air. Lately I have been approached more often about how to justify the cost of electronics in tooling and dies. Perhaps there has been a greater turnover in the ranks of the accounting offices of our metalforming firms or maybe its simply time to go over the delicate nature of cost justifications in general for newly hired shop floor personnel. I am an unswerving supporter of progress through high tech and shop floor training. But how do you justify the expenses involved in such an approach? How do you speak the language of accounting when you only know how to speak the language of tooling?

We have heard it many times before. The toolmakers and/or designers come up with a brilliant design for in-die welding, part dimensioning, riveting, staking of dynamic form station modifiers or even basic die protection using electronic sensors, controllers and actuators. With proper development, the company will make thousands, perhaps hundreds of thousands of dollars with the new thinking. There is ample talent in-house to develop and bring the concept to fruition. The toolroom is staffed with skilled and talented operators. The design team has the capability and the confidence to pull it off.

The stamping, toolroom and maintenance supervisors have bought into the plan and are fired up about the technical possibilities of achieving value-added operations on par with the best shops worldwide. The plant manager looks over the proposal and, he too, signs on and offers strong encouragement and praise to those responsible for the conceptual phase.

But then, the excitement stops. All involved realize the difficulty that lays before them -- not the technical difficulties -- the task of undergoing the cost justification phase with the next layer of management.

Call them accountants, cost justifiers, financial experts or even bean counters, they have an enormous amount of power within the domestic manufacturing world, much more so, in my experience, than their counterparts overseas. Who are these people and why are they such a present force within domestic manufacturing?

In order to appreciate the role of accounting and cost justifications, we need to start from a good solid position. I want to make it clear that in my opinion, these people are not evil, stupid or dense. In my domestic travels I have found them to be well schooled, intelligent, polite, good listeners and good company. They are under constant pressure to maximize the bottom line and are tightly focused on quarterly or 90-day visions. Buy why? Do they write the rules? No, Wall Street does.

The environment, the institution and the larger picture of finance pressures companies, and in turn their financial people, to continually improve their profits or else swift punishment via stock value declines and loan availability dry ups follow. America once had much more patient capital and capitalists.

In the heyday of domestic manufacturing, enormous investments in infrastructure, apprenticeships and new technologies was the norm. How do you think Western Electric, General Electric, GM, Ford, Chrysler, Boeing and IBM became worldwide manufacturing powerhouses in that era? Today, tight budgets, seemingly endless cost justifications, distant corporate financial decision making and the nearsightedness of short-term cost cutting have evolved well beyond anything that existed in the past.

So, how does a technical expert speak to a financial expert? How does one translate electronics in tooling, a new electronic servo feed, a new press or press control into the language of accounting? I have seen it done successfully and I wish to share my observations:

1. First, the toolmaker, the designer, the shop floor supervisor and the plant manager have to accept the realities of the modern domestic manufacturing scene and not try to fight it. The source of cost justifications goes well beyond the walls of your factory. It is simply here to stay for the foreseeable future and probably beyond. Don't fight it -- accept it and move on.
2. Secondly, learn the language of accounting. If you were to travel overseas, it would be pure arrogance to expect that those you encounter on the streets will be fluent in English. Some basic knowledge of the local language would be very useful. Now imagine that you will be permanently living in this other country. Would you not make all efforts within reason to learn this language in order to function and survive in your new home? So it is with the new realities of domestic manufacturing and short-term and impatient capital. You, the toolmaker, the designer, the shop floor supervisor and all who deal with the front office, must become fluent to varying degrees in the language of spreadsheets, cost justification reports, charts, financial presentations, return-on-investment, etc.
3. Thirdly, translate your wonderful engineering concept into the language of accounting. When making your presentation, be sure that you repeatedly emphasize the cost savings, improved productivity and eliminated downtime in dollars and not engineering units! In many cases the people who will be reading your proposal are schooled in a different, nonengineering and nontechnical way. By technical, I mean the world of tooling and subsequent production. Use actual dollar figures based on what it now costs to be without the technology (die crashes, idle press time, toolroom die repair costs, idle secondaries, angry customers, etc.) based on the first half of the year. Go back to the toolroom, the pressroom and the secondary departments and flesh out the dollar amounts that have been thrown away by not having the technology.

I think that those of us with technical backgrounds have a tendency to assume that our descriptions and visions are as clear to those around us as they are within our own minds. This simply is not so. Once you step outside of our technical circles, no matter how schooled, smart and intelligent a person with whom you are trying to share your vision may be, they simply cannot grasp as matter of fact the "obvious" need for this new technology.

It behooves you to translate your technical vision into the language of finance. It really works, I have seen it with my own eyes and have practiced it myself. Speak the language of finance and your world of technology becomes easier to share with non-technical management.

George Keremedjiev, Metalforming Automation & Strategic Planning Consultant, Tecknow Education Services, Inc.
Mr. Keremedjiev conducts worldwide in-house and regularly scheduled two-day seminars and consultancies on the modern uses of electronics in the stamping industry covering such topics as in-die part dimensioning, in-die welding, modern die protection and strategic management. For information on his services, contact Tecknow Education Services, Inc., P.O. Box 6448, Bozeman, MT 59771 or phone 406/587-4751; fax 406/587-9620
Home page: www.mistake-proof-mfg.com Email: Bitenbyte@aol.com