Jun 02 2007

A (true) China Price Story

Published by at 4:29 pm under Uncategorized

Why is it when a buyer will place a job offshore to save money, he’ll spend any amount of money to fix a mistake when the mold is in the US?  Here’s a true story.

The names in this article are hidden to protect the morons in middle management and purchasing who don’t have the combined IQ of room temperature. The company is more known by its initials than by its name.  It’s a biggy in the Fortune 500 and perpetually comes out with Corporate TechnoBabble as this month’s SMP- Supplier Management Program, TQP – tooling quality program, blah, blah.  If you don’t like this month’s multi-letter abbreviation of the way to do business, wait until next month and they’ll come out with another program to inflict on their suppliers.

Here’s the story:  They come to a friend of mine’s company with the design of an electronic instrument case about 6” wide 8” long and 2” high.  He estimated it at $32,000, promised the required CpK’s all the progress reports and such, sent in the quote, and went back to sleep.  The buyer calls a few weeks later and asks (demands) that he meet or beat the current ‘China Price’ of $14,500.  Since my friend’s company is both a For Profit company and doesn’t look at doing business from anyone as ‘being a privilege’, he turns it down and moves on with profitable projects from other companies.  The mold was built in China and the molding was done somewhere stateside.

The scene now shifts to several months later.  The same buyer calls and say’s he’s got a mold made in China and has been running in the USA but without much success and the market introduction date for the product is just over the horizon.  The cavities kept breaking and the Chinese mold builder (for the ‘China Price’) kept building replacements blaming the breakage on the molder.  Can my friend’s company evaluate the mold, quote/implement changes and then run the parts in time for the market introduction date?  The buyer sounded just a tad desperate because the product introduction date was fast approaching. He told my friend to “do whatever it takes” (financially) to put the product into production on time.

When the mold arrives, my friend who is a pack rat with a photographic memory quickly remembers his quote ($32,000) that went to China for this very part. They open the mold up for an initial inspection:

1. The ejector pins were hand cut (read: someone with a hack saw and a vice, not even a cutoff wheel).
2. The return pins were hand cut (hack saw) but one was hand ground/filed (rounded on what was probably the high side).
3. None of the ejector pins/return pins were either the right length or contour or even approximately identical where they should have been.
4. One of the return pins was about .150” longer than the other and had severely dented the cavity steel.
5. There were no water fittings on the ejector side, simply tapped holes.  Further inspection showed the waterlines were drilled through the return pins holes.  To avoid the problems of water leakage, the back half of the mold exploited the latest technology innovation from China – Air Cooled Molds.
6. The core while specified as hardened P-20 had cracked.
7. Both core and cavity plates proudly displayed a stamp “P-20” and the mold had an ID tag from a Chinese mold builder that routinely spams anyone with an e-mail address connected with the plastics industry.

OK, sanity-check time. (A little forensic engineering):
1. Ejector pins and return pins are normally through-hard steel (M-2, H-13 etc).  This means if they are of the proper metal you can’t cut them with a hack saw. They need to be this hard to take the compressive forces commonly seen in injection molding.
2. A hack saw, when used by hand, leaves specific artifacts:
a. The cut marks aren’t even.
b. The cut is NEVER at a right angle.
c. If you’re silly enough to think you can cut ejector pins/return pins by hand, you’ll defy the laws of probability to get them all the same length.
3. Working cooling lines are important. The only time I ever made a mold without cooling was when my production need never exceeded a dozen parts, the dimensions didn’t matter and I built the mold in an afternoon.
4. A crack in the cavity plates means the plate bent and wasn’t strong enough to spring back OR bent and finally fatigued so much that it began to break by cracking.  No amount of welding would help this basic fault.

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AN ASIDE
For a quick test without having to go to a heat-treater and use a spiffy tester; you can buy a set of Rockwell Files. (GOOGLE: Hardness Testing File Sets approx $110 USD six files 40Rc to 65 Rc). While the ‘file test’ is only a gross approximation, it will give you a feel for the hardness of the metal.  The files come with color coded handles.  You successively try to file the metal from the lowest Rc to the highest until you get a cut from the file.  This tells you the minimum hardness.

Since P-20’s hardness is 28-32 Rc you have two choices.  (1) For a little less than $800 (spendy!) you can buy a certified hand held spring loaded metal punch and mini-tube microscope where you measure the diameter of the ball dent you put into the steel. It’s reported to give from 20 – 60 Rc with an accuracy of 1.5 points.  (2) OR with a little cooperation from your local heat treater you can get a couple of mill files from the hardware store and with some experimenting, draw them down to an Rc of 28.  It will cost less than $800 for this engineering experiment but if your goal is to only see if the material is at P-20’s hardness, this custom made toy will do the job.

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They tested the “PreHardened“ cavity blocks that should have been in the 45-48 Rc range.  Even the 40Rc certified test file bit into it.  In their frustration they plopped the plates into a truck and took it to a heat-treater.  It tested (no kidding) at 1Rc which is below the realm of accuracy for a Rockwell test.  Even worse, you can’t even make P-20 that soft!  This means whatever metal it was made of was only stamped P-20 to give that ‘warm fuzzy’ somebody wanted when you specify something.  The pins tested out as soft as brass.

The waterlines were useless.  The dented cavity block and cracked plate were useless.  The ‘holder block’ steel was probably reprocessed I-beams / railroad rails with a few Honda body frames thrown into the smelter for good luck; BUT they were thick enough to accomplish the goal and thus salvageable.

They had to rebuild the core and cavity completely (using real P-20 this time) including real ejector pins, return pins and (dare I say it?) the incorporation of waterlines on both sides.  Cost? $21,000 and the customer was happy to pay it without objection or cross quoting to get into production before Marketing’s deadline. NOTE: In many cases of this type the product introduction date is late regardless of the amount of money thrown at it.

Let’s review:  The quoted US cost was originally $32,000 complete with inspections and qualifications.  The China Price was $14,500 for construction only, with the cost of qualifications etc. being billed by the state-side molder. The repair / rebuild cost was $21,000 bringing the total tooling cost to $35,500 plus the requalification cost etc. etc. to get this product ‘released for production’. Is there anything wrong with the math or tool placement logic?  For the moment, we’ll ignore the ‘vendor evaluation’ – trinket/souvenir-booze soaked-buying trip that oddly enough was only for managers and buyers while the engineers – weren’t they the guys who actually do the work? – stayed home.

Ask any buyer:  He’ll pay the China Price (even though he pulled the name of this shop off the internet or saw an ad but didn’t check any references) because in his wussy little brain he can buy two molds made in China for the price of one built in the USA. Yup, even middle management can figure that one out.  However when was the last time you heard of a buyer purchasing the notoriously superfluous second mold as a backup?

It’s interesting that when it comes to endangering sales revenue; magically the King’s Purse opens up with an unending stream of money for anybody who can fix the problem where the cost is ‘whatever it takes.’  In this instance the buyers and middle managers were polite enough to take the credit for finding a stateside supplier who ‘saved the day’ but never had the bad manners to mention their original inappropriate tooling decision and the cost to make things right.

In most cases choosing a tooling source off shore is about as logical as pulling a name out of a telephone book: You’re making a blind choice.  Are there excellent precision tooling sources in China/Asia?  Yup. But like everywhere else, you can’t tell who they are by their brochures or spammed e-mails.  You need to find who they are doing business with, call their customers directly, and hope you’ll get a straight answer. Telling others who their good tooling sources are sometimes has the effect of finding the shop overloaded when they need their job done.

If you don’t mind dealing with a culture that thinks what I’ve described is actually an acceptable good-business practice, I would wish you well.  If you’re looking for lower cost molds; have you ever heard of Italy, Spain, Portugal, or whatever they are calling the former Yugoslavia these days?  The great disconnect in using a supplier base that has just emerged from an agricultural culture is the lack of appreciation of the concepts of ‘precision’, ‘durability’ and ‘close tolerance’.

However when it finally comes down to the short strokes, if you’re making very low tolerance parts and want cheap molds, go off shore and stay there. Have the molds built and the production run off shore.  But if you’re in love with close tolerance high volume production and low maintenance molds; let the molder pick the mold builder, sit back and enjoy the profits, and think of the “US price” as the cost of the insurance policy that guaranteed your parts on time.

What’s the problem with US mold makers?  It’s a problem they’ve had for decades:  (1) They refuse to market themselves.  Look in the trade magazines and think of yourself as a buyer.  You see a lot of ads for off shore manufacturing but almost none from state-side tooling sources.
(2) Mold makers and molders are afraid of buyers.  They’ll lower the price of a tool to the point of losing money just to get the job – a dumb practice.  US mold makers are just beginning to understand the concepts of advertising and marketing.  They are also learning how to say “no”.

There have been successes using Asian mold makers, but interestingly enough the prices from those ships are continuing to rise.  In time their prices will become offset by freight costs then we’ll be back to local tooling sources for local molders regardless of what time-zone they’re in.

All of us and yes, even the purchasing agent are fighting for every penny we can, trying to do a good job for our perspective employers. But we must be realists. There is no free lunch. We all forget the total tool cost is probably less than a 10% savings. By the time you add in air freight, late delivery, stress, the modifications at a US mold builder, a pissed off customer and a failure for a product launch; the costs could be much higher. Poor decisions made by uninformed purchasing folks many times end up with new employment opportunities for them.   The lesson here is simple: If you pick your tooling source from the yellow pages or a magazine ad you fulfill the prophecy of “You Pay Cheap, You Get Cheap”.

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This article is virtual.  If it blasphemes your company’s Global Procurement Strategy (GPS – an interesting acronym yes?); I can only tell it as I’ve seen it.  Delete this article immediately and forget that logic is probably more important that corporate politics.  But, if you are part of the silent opposition, pass it on to be filed in the “I told you so” file to your fellow co-conspirators.

Don’t let a buyer or a middle manager read this.  It’s like telling a four year old there isn’t an Easter Bunny or Santa Claus.  Give a dinner talk to the local chapter of the Association of Purchasing Managers on this topic if you’re a molder or a mold maker.  While they won’t overtly (read: publicly) believe or agree with you, it’s always good to tell them who can help them in their hour of need. You’d be amazed who’ll quietly take your business card when they think nobody else is looking.

Your Choice.

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