^{Machine Shop Tips} 2013 European Manufacturing Trends: My Personal Experience and Insight

Labor in Europe is expensive, so they are continually looking for ways to decrease the cost of labor per dollar (or euro) of output. They factor in all labor when they look at machining a component. This includes everything from preparation of materials, to shipping. They have invested a lot of money into automation and consider it to be the key to global competitiveness. This high level of automation has allowed them to become competitive in other areas of the world as well. This automation has enabled many European manufacturers to run 24 hours a day, 7 days a week with a great portion of that time devoted to unattended manufacturing, or what is called “Lights Out Manufacturing”.

During my visit, I noticed that the manufacturing companies were having some pretty lively debates amongst themselves. The one that stood out the most was going on between a couple of the machine shops I visited. The debate was over the preparation of materials for the machining process. One shop believed that materials should be prepared outside of the machine that was going to make the part, and the other believed it should be done inside the machine. By preparation I am referring to the preliminary machining operation that allows the material to be held in a work holding fixture for the finish machining.

The machine shop planning to do the preparation operation outside of the main machining center argued that, if they did the preparation inside the machine, it would increase the cycle time and therefore increase the cost of machining. They claimed that the machine’s charge out rate is higher than the prep operation in a cheaper machine. The other shop argued that if the expensive machine is not working 24 hours a day, 7 days a week then why add extra labor into the part by doing it in a separate operation outside of the machine. The outside preparation operation also created inventory and didn’t fit current lean manufacturing concepts in the industry.

I believe that North American manufacturers can learn a lot from this inside peek at the European manufacturing industry. Many North American manufacturers rely on accounting departments to evaluate the cost of equipment and determine the hourly rate. I, however, think this model needs to be reexamined and believe that many European manufacturers are on the right track. Why use extra labor when our machines are not running 24 hours, 7 days a week? Why not use automation to get more out of our fixed costs, so we can save the added cost of labor and work in process that occurs when we unnecessarily move an operation to another machine?

The key part to this equation is that it’s only possible to operate this way in an automated manufacturing scenario. In my opinion, similar to what European manufacturers have already discovered, automation is the key to making Western companies competitive in today’s global economy, especially when we’re up against nations with much lower labor costs.