Y O U R MACH IN NG BU SINE C H MA R K I N G 2017 …...see at IMTS 2018 are these four co-located...

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2017 EXECUTIVE SUMMARY

BENCHMARKING YOUR MACHINING BUSINESS

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Produced by Modern Machine Shop magazine. August 2017

© Modern Machine Shop. All rights reserved. Cincinnati, OH 45244 USA No portion of this report may be reproduced in any form, by any means, without prior permission from Modern Machine Shop.

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EXECUTIVE SUMMARY

SPONSORED BY AMT amtonline.org | IMTS imts.com 1

Top Shops 2017 2

Shop Profiles 3

Machining Technology 5

Shopfloor Practices and Performance 10

Business Strategy and Performance 14

Human Resources 18

Survey Methodology 21

Top Shops Honors Program 21

2018 Top Shops Conference at IMTS 21

About Modern Machine Shop 21

TABLE OF CONTENTS


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2017 TOP SHOPS EXECUTIVE SUMMARY

INTRODUCTION

There are a couple of primary reasons hundreds of companies each year participate in our Top Shops benchmarking survey. One reason is because the survey highlights the technologies, processes and strategies that leading companies are applying, both on the shop floor and in the front office. Another is that the participation in the survey enables shops to see how their key performance metrics compare to industry leaders.

For this our program’s seventh edition, responses from 356 sur-veys were considered in the data calculations. The benchmarking

group we established (the top 20 percent of shops based on tallying scores of select survey questions) is what we call the “Top Shops.” The following pages compare responses from the Top Shops benchmarking group to other shops that partici-pated in the survey.

One survey question we ask each year that we don’t highlight in these Executive Summary is open-ended. Specifically:

What one new technology, machining strategy or strategic initia-tive has been most influential in contributing to the overall success of your business in recent years and why?

Responses to this question have been wide-ranging. However, one of the most common replies is the implementation of en-terprise resource planning (ERP) software. This software offers potential advantages with respect to costing, estimating, schedul-ing and job tracking. Having fully interactive access to process control software enables supervisors to stay close to activities on the shop floor so they can quickly access pertinent information and make changes on the spot.

Here are a few specific replies:

“ERP has greatly streamlined data collection and increased pro-ductivity by 120 percent.”

“Having access to our ERP software via an iPad enables schedul-ers and expediters to help make fast decisions on the shop floor.”

“Implementing ERP reveals actual costs and revenue where they happen.”

That third comment reminds me of an experi-ence that a shop owner once relayed to me. After running his shop for many years without ERP, he finally gave the software a go start-ing with the most commonly repeating jobs in his shop. After entering all information for two jobs with seemingly slim profit margins into the ERP software, the owner ultimately found that those jobs were actually his two biggest moneymakers. Conversely, a few other jobs that he believed were highly lucrative were found to be unprofitable when lot sizes were smaller than a certain amount. It often takes time to set up and implement ERP software, and versions vary in terms of their sophistica-tion. However, as some Top Shops survey participants point out, there are clear advan-tages to having a more concrete understand-ing of what’s actually happening on the shop floor, and this software tool seems as if it can help in that regard.

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Derek Korn, Executive EditorModern Machine [email protected]

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SHOP PROFILES

This year, survey submissions from more than 350 shop princi-pals (company owners, managers, etc.) were used in the calcu-lations for our sixth annual Top Shops benchmarking program. Their businesses break into the following three categories:

• Approximately 53 percent are job shops (independent shops that primarily perform short-run and other non-repeating work).

• Approximately 27 percent are contract shops (independent shops that primarily have contracts for repeating part numbers).

• Approximately 20 percent are captive shops in a manufactur-ing company.

HERE ARE SOME KEY TAKEAWAYS:

Top industries—The top industries served by this year’s Top Shops were aerospace (56 percent), machinery/equipment manu-facturing (53 percent), and automotive (45 percent). Other leading markets for Top Shops include medical, military and oil/gas.

Total parts produced—The median number of total part num-bers (SKUs) produced in 2016 was 1,080 for Top Shops and 500 for other shops.

Typical batch size—The median batch size for Top Shops is slightly higher than other shops (95 compared to 50). However, both values demonstrate the high-mix/low-volume nature of machining work that is common today.

INDUSTRY SPOTLIGHT:Top Shops Serving the Aerospace Industry

70%

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20%

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02013

56%

2014

56%

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44%45%

2012 2016

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PROFILE INFORMATION

What category below best describes your business’ relation to its customer base?

Captive shop (component of a larger company) 7.8% 22.6% 20%

Contract shop (independent shop-mostly contracts for repeating part numbers) 31.3% 26.0% 27%

Job shop (independent shop-mostly short-run and other non-repeating jobs) 60.9% 51.4% 53%

Approximately how many part numbers (SKUs) were produced in 2016?

Median 1,080 500 544

Average 5,146 3,139 3,545

80th Percentile 4,800 2,000 2,080

20th Percentile 310 100 150

Approximately how many total parts were produced in 2016?

Median 150,000 30,000 40,000

Average 14,206,042 3,166,638 5,345,938

80th Percentile 1,200,000 650,000 786,000

20th Percentile 11,713 2,600 3,000

Approximately what was the median batch size in 2016?Median 95 50 50

Average 1,768 914 1,085

80th Percentile 1,000 420 500


Which of the following industries does your business primarily serve?

Aerospace 56.3% 45.8% 47.8%

Appliances 14.1% 11.6% 12.0%

Automotive 45.3% 37.9% 39.3%

Die/mold 17.2% 19.9% 19.4%

Computer/telecommunications 29.7% 24.2% 25.2%

Forming & fabricating (not automotive) 18.8% 19.9% 19.6%

Furniture manufacturing 7.8% 7.2% 7.3%

Industrial motors, hydraulics & mechanical components 31.3% 27.1% 27.9%

Machinery/equipment manufacturing 53.1% 46.2% 47.5%

Medical 37.5% 32.5% 33.4%

Military 32.8% 36.5% 35.8%

Off-road & construction machinery 15.6% 24.2% 22.6%

Oil & gas-field & mining machinery 29.7% 26.0% 26.7%

Power generation 29.7% 20.9% 22.6%

Pumps, valves & plumbing products 23.4% 28.5% 27.6%




Screw-machine shops were the first to adopt multifunction CNC Swiss-type lathes. Today, an increasing number of “traditional” shops are considering this machining platform to, in some cases, produce complex parts complete, reducing setups, secondary operations and work-in-process. In fact, 32 percent of this year’s Top Shops use this equipment, up from 19 percent last year.

In addition, more than half of them use HMCs, which can offer higher spindle uptime than VMCs thanks to their dual-pallet design that enables a new job to be set up on one pallet while machining is performed on the other pallet. Other equipment Top Shops are more likely to use include five-axis machines and multiple-turret lathes, and they also are more likely to perform advanced operations such as hard milling, hard turning and high-speed machining.

Top Shops also tend to adopt more sophisticated tooling tech-nology and strategies compared to other shops. A higher per-centage use custom/specialty tools, balanced tool assemblies, and tools with internal coolant delivery. In addition, 71 percent of Top Shops, compared to 47 percent of other shops, have on-machine probing capability to automatically measure tools and/or check for tool breakage. Leading shops also use workholding equipment such as quick-change devices, multiple-workpiece fixturing, vacuum chucks and tombstones to maximize spindle utilization.

Key Performance Indicator—Top Shops report a spindle utilization of 72 percent compared to 60 percent for others, while

using newer equipment, too. Average age for CNC machines at Top Shops and other shops is 7 and 10 years, respectively. Top Practice—Nearly 60 percent of Top Shops use tool preset-ters compared to only 36 percent of other shops. This is one example of shopfloor automation that doesn’t involve a robot.

Trend—There was a considerable increase in the percentage of Top Shops that use additive manufacturing/3D printing equipment. This year, 37 percent of them reported having this equipment compared to 19 percent in last year’s survey. Virtually all of those shops use this capability for prototyping, but 74 percent of them also use it to 3D print tooling and fixturing for their own use on the shop floor.

MACHINING TECHNOLOGY

MACHINING TECHNOLOGY:Top Shops’ Use of Horizontal Machining Centers

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50%

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90%

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Which types of machining equipment does your business use?

Broaching machines 10.8% 18.9% 17.3%

Drilling machines 61.5% 63.0% 62.7%

Flexible manufacturing systems 15.4% 8.1% 9.6%

Gearcutting machines 3.1% 8.1% 7.2%

Grinding machines (for re-grinding cutting tools) 23.1% 33.7% 31.6%

Grinding machines (for workpieces) 52.3% 53.7% 53.4%

Honing machines 32.3% 26.3% 27.5%

Laser cutting machines 18.5% 14.8% 15.5%

Lathes (non-CNC) 61.5% 74.1% 71.6%

Machining centers, horizontal CNC 55.4% 48.1% 49.6%

Machining centers, vertical CNC 92.3% 78.9% 81.5%

Milling machines (non-CNC) 60.0% 76.3% 73.1%

Plasma or oxy-fuel CNC cutting machines 12.3% 11.1% 11.3%

Sawing machines 72.3% 68.9% 69.6%

Swiss-type lathes 32.3% 21.9% 23.9%

Turning centers, horizontal CNC 83.1% 65.9% 69.3%

Turning centers, vertical CNC 30.8% 26.3% 27.2%

Twin-turret CNC turning machines 32.3% 20.4% 22.7%

Waterjet machines 10.8% 7.8% 8.4%

Wire or sinker EDM 38.5% 26.7% 29.0%

Which of the following machining strategies does your business employ?

Five-axis machining (full contouring) 31.3% 24.4% 25.8%

Five-axis machining (positioning only) 43.8% 22.2% 26.4%

Four-axis machining (full contouring) 70.3% 40.6% 46.4%

Four-axis machining (positioning only) 59.4% 47.4% 49.7%

Hard milling 43.8% 43.2% 43.3%

Hard turning 54.7% 47.4% 48.8%

High-speed machining 65.6% 51.9% 54.5%

Large-part machining 31.3% 26.3% 27.3%

Lights-out machining 64.1% 34.2% 40.0%

Micromachining 21.9% 16.9% 17.9%

Prototyping 71.9% 62.4% 64.2%

Does your shop have 3D additive manufacturing/ part printing capability?

No we do not have this capability 63.1% 83.1% 79.2%

Yes, we have a 3D printer or additive manufacturing machine 36.9% 16.9% 20.8%



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Describe your 3D printer.Desktop 3D printer for plastic parts 62.5% 46.7% 52.2%

Standalone and/or industrial 3D printer for plastic parts 4.2% 8.9% 7.2%

Standalone additive manufacturing machine for metal parts 33.3% 44.4% 40.6%

Describe what you use your 3D printing or additive manufacturing capability to produce.

Look-and-feel prototypes to validate designs 95.7% 87.8% 90.6%

Functional prototypes to test parts prior to production 30.4% 43.9% 39.1%

Tooling and fixturing used internally 73.9% 65.9% 68.8%

Tooling and fixturing produced for customers 17.4% 9.8% 12.5%

Short-run initial production 13.0% 17.1% 15.6%

Full production of end-use parts 13.0% 17.1% 15.6%

Which tooling strategies does your business use?Carbide recycling program 83.1% 62.4% 66.5%

Coolant management system 73.8% 50.8% 55.3%

Custom/specialty tooling 72.3% 54.1% 57.7%

High-pressure coolant delivery 73.8% 48.9% 53.8%

Minimum quantity lubrication (MQL) 29.2% 10.2% 13.9%

On-machine probing for tool breakage/measurement 70.8% 47.0% 51.7%

Shopfloor tool vending systems 47.7% 32.3% 35.3%

Tool balancing 27.7% 9.8% 13.3%

Tool inventory management/usage tracking 58.5% 41.0% 44.4%

Tool presetting 58.5% 35.7% 40.2%

Tool regrinding 47.7% 49.2% 48.9%

Through-tool coolant delivery 81.5% 53.4% 58.9%

None of these 3.1% 10.5% 9.1%

Which workholding strategies does your business use?Hydraulic/pneumatic-actuated fixtures 52.3% 40.2% 42.6%

Indexers/rotary tables 76.9% 68.0% 69.8%

Magnetic chucks 49.2% 44.4% 45.3%

Multiple workpiece fixturing 75.4% 64.3% 66.5%

Pallet changers 47.7% 39.8% 41.4%

Quick-change devices 67.7% 45.1% 49.5%

Tombstones 52.3% 35.3% 38.7%

Vacuum chucks 33.8% 23.3% 25.4%

None of these 3.1% 8.3% 7.3%


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Which types of software does your business use?CAD systems—2D 53.8% 43.9% 45.9%

CAD systems—3D 92.3% 76.5% 79.6%

CAM programming software 58.5% 43.9% 46.8%

CMM programming software 76.9% 48.5% 54.1%

ERP/MRP software 83.1% 72.3% 74.5%

Job-estimating software 53.8% 31.8% 36.2%

PLM software 6.2% 6.8% 6.7%

SPC/quality management software 35.4% 28.0% 29.5%

Toolpath simulation/verification software 49.2% 48.9% 48.9%

None of these 1.5% 4.2% 3.6%

Which of the following inspection equipment are used?CMM (located in quality department) 74% 53% 57%

Laser trackers 8% 5% 6%

Microscopes 52% 43% 45%

On-machine probes for workpiece measurement 65% 43% 48%

Optical comparators 69% 60% 62%

Portable measuring arms 25% 18% 19%

Shopfloor CMMs 25% 15% 17%

Vision systems 35% 32% 33%

None of these 6% 14% 13%

Which of the following ancillary machining equipment/processes/software are used?

Ballbar calibration 39.1% 16.6% 21.1%

Barfeeders 65.6% 43.6% 48.0%

Bar pullers 45.3% 27.0% 30.7%

Chip handling equipment 71.9% 55.6% 58.8%

Finishing equipment (i.e. anodizing, passivation, plating, etc.) 18.8% 20.8% 20.4%

Heat treating equipment 29.7% 27.4% 27.9%

Machine condition monitoring (i.e. monitoring spindle, environmental conditions, etc.) 39.1% 12.0% 17.3%

Machine connectivity (Ethernet) 48.4% 34.7% 37.5%

Machine mist control units 62.5% 41.7% 45.8%

Marking/engraving equipment 62.5% 47.1% 50.2%

None of these 3.1% 10.0% 8.7%



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Which of the following metallic materials are machined?Aluminum 90.8% 87.1% 87.9%

Brass 81.5% 68.4% 71.0%

Bronze 56.9% 61.3% 60.4%

Cast iron 36.9% 43.8% 42.4%

Compacted graphite iron 12.3% 10.2% 10.6%

Copper 52.3% 52.0% 52.0%

High-temp alloys (not titanium) 50.8% 46.9% 47.7%

Mild steels 80.0% 81.3% 81.0%

Stainless steels 87.7% 86.3% 86.6%

Titanium 52.3% 43.8% 45.5%

Tool steel 69.2% 67.2% 67.6%

Which of the following non-metallic materials are machined?Carbon-fiber-reinforced plastic 30% 23% 24%

Ceramic 8% 14% 12%

General plastics 94% 84% 86%

Medical-grade plastics 40% 35% 36%

Wood 2% 15% 12%

How many CNC machine tools did the business have in production (non-tool room) in 2016?

Median 19 11 13

Average 25 20 21



What was your capacity utilization percentage in 2016?Median 75.0% 65.0% 65.0%

Average 73.2% 61.8% 64.3%

80th Percentile 85.0% 80.0% 80.0%

20th Percentile 63.0% 45.0% 50.0%

What is the average age (in years) of the CNC machine tools currently in use on your shop floor?

Median 7 10 9

Average 8 10 10




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SHOPFLOOR PRACTICES & PERFORMANCE

This year, there was a significant increase in the number of Top Shops using enterprise resource planning (ERP) software. In past surveys, this percentage has ranged from 50 to 60 percent, but 83 percent of this year’s Top Shops use it. This software offers a number of benefits, including estimating production time/cost, job scheduling, in-process job tracking, logging each step in a part’s progress through the shop and offering historical view of resourc-es used on prior jobs (which can be helpful in planning new work).

The use of machine-tending robots among Top Shops had steadily increased over the first three years we offered the survey, but it has seemed to plateau in recent years. This year, 26 percent of those shops use robots. It will be interesting to see if collabora-tive robot technology, which enables robots and humans to safely work in the same area, will push this percentage higher.

Key Performance Indicator—Top Shops turn jobs faster than other shops. Their order lead time (receipt of order to order deliv-ery) is 20 days compared to 25 days for other shops, and they re-port having a higher on-time delivery rate of 95 versus 90 percent.

Top Practice—Many shops start their lean manufacturing journey by implementing 5S workplace organization tactics. This year,

54 percent of Top Shops cite using this practice compared to 46 percent of other shops. Those higher-performing shops also tend to implement other lean initiatives more so than the others, such as value-stream mapping and cellular manufacturing.

Trend—In each of our seven surveys, a higher percentage of Top Shops reported having quality certifications, such as ISO, AS and NADCAP. This year was the highest report at 68 percent (compared to only 49 percent of other shops). That said, a certificate to ISO 9001:2008 will no longer be valid after the end of September 2018, and its ISO 9001:2015 replacement requires that shops establish procedures for comprehensive risk management. This means shops registered only to ISO 2001:2008 will have to address risk manage-ment as in their efforts to become certified to the new standard.

SHOPFLOOR PRACTICES:

Top Shops with Quality Certifications

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Which of the following improvement methodologies does your business use?

5S workplace organization 53.8% 46.2% 47.8%

Benchmarking 44.6% 27.7% 31.1%

Cellular manufacturing 40.0% 25.3% 28.3%

Continuous-improvement program 72.3% 61.7% 63.8%

Just-in-time (JIT) movement of material 40.0% 32.4% 34.0%

Kaizen events/blitzes 20.0% 20.9% 20.8%

Kanban and pull systems 40.0% 30.8% 32.7%

Overall equipment effectiveness (OEE) monitoring and analysis 21.5% 13.8% 15.4%

Poka yoke (error prevention) 30.8% 20.9% 23.0%

Quality certifications (e.g. ISO, NADCAP, etc.) 67.7% 47.8% 51.9%

Single-minute exchange of dies (SMED) 10.8% 5.1% 6.3%

Six sigma 23.1% 16.6% 17.9%

Theory of constraints 16.9% 9.1% 10.7%

Total productive maintenance 24.6% 13.0% 15.4%

Total quality management 38.5% 22.1% 25.5%

Value-stream mapping 35.4% 25.7% 27.7%

No formal methodology 13.8% 20.2% 18.9%

Do you use robots to perform part loading/unloading for any of your machine tools?

Yes 26% 18% 20%

No 74% 82% 80%

Please provide the following measures for your business in 2016:

Order lead time (receipt of order to delivery to customer in days)

Median 20.0 24.5 21.5

Average 24.9 31.1 29.6

80th Percentile 37.0 45.0 42.0


Machining-time percentage (% of order lead time that the product is being machined)

Median 30.0% 25.0% 30.0%

Average 35.3% 33.9% 34.2%

80th Percentile 60.0% 60.0% 42.0%

20th Percentile 10.0% 10.0% 10.0%


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Setup time (time in minutes it takes to prepare a new job for machining — i.e.-the time between the completion of the last good piece of the current run and the first good piece of the next run)

Median 90.0 60.0 65.0

Average 138.1 125.7 128.8

80th Percentile 204.0 180.0 180.0

20th Percentile 30.0 30.0 259.0

On-time delivery rate (% of goods delivered on time)

Median 95.0% 90.0% 92.0%

Average 92.6% 89.1% 89.9%

80th Percentile 99.0% 98.0% 98.0%

20th Percentile 85.8% 80.0% 81.8%

Finished-product first-pass quality yield (% of product that passes final inspection on first try)

Median 96.5% 95.0% 95.0%

Average 92.1% 88.6% 89.4%

80th Percentile 99.0% 99.0% 99.0%

20th Percentile 91.2% 85.0% 85.0%

Scrap and rework % (cost of scrap and rework as % of shop sales)

Median 1.0% 2.0% 2.0%

Average 1.8% 4.8% 4.1%

80th Percentile 2.5% 5.0% 5.0%


Scrap and rework % (number of scrapped or reworked parts as a % of total parts produced)

Median 1.0% 2.0% 2.0%

Average 1.5% 4.4% 3.7%



Machine usage (average hours machine is in production per 24-hour day)

Median 14.5 10.0 10.0

Average 14.4 11.4 12.1



Spindle utilization time (in-cut time as % of machine uptime)

Median 71.5% 60.0% 65.0%

Average 68.1% 54.4% 58.0%

80th Percentile 80.0% 80.0% 80.0%

20th Percentile 60.0% 20.0% 35.0%



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Installing a Web-enabled, shop-wide machine monitoring system has been suggested as the first and most important step toward data-driven manufacturing and Industrial Internet of Things/Industry 4.0 concepts. Describe your plans for machine monitoring.

We have a machine monitoring system in place for some or all machine tools. 22.4% 25.2% 24.4%

We have plans to install a machine monitoring system. 77.6% 74.8% 75.6%

We expect installation to begin:

First half of 2017 4% 5% 5%

Second half of 2017 20% 15% 16%

2018 or later 76% 80% 79%


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BUSINESS STRATEGY & PERFORMANCEThe primary industries this year’s Top Shops support include aerospace (56 percent), equipment manufacturing (53 percent) and automotive (45 percent). In serving those and other industries, Top Shops consistently invest more in new equipment than other shops. In 2016, their median investment in capital equipment was $388,500 versus $150,000 for other shops. This investment in new technology is one reason why they achieved a higher growth rate of 9 percent than other shops at 1.5 percent.

In addition, Top Shops were also able to achieve higher sales per machine last year, reporting a median value of $300,000 versus $160,000. Top Shops also get more value out of their shopfloor employees. Last year, their median sales per employee was $180,000 compared to $141,000 for other shops.

Key Performance Indicator—In every survey, Top Shops have reported a higher profit margin, which is the most significant indicator of overall business health. Top Shops reported a profit margin of 15 percent compared to 8 percent for other shops.

Top Practice—Adding engineering staff is becoming more impor-tant for Top Shops as more OEMs outsource their machining work. Shops that can offer design for manufacturability (DFM) advice can suggest design changes to simplify machining work and reduce production costs. This year, 45 percent of Top Shops said they offer DFM services to customers compared to 34 percent of other shops.

Trend—An increasing number of leading shops say social media is an effective sales and marketing tool. This year, 37 percent of Top Shops affirm this compared to 24 percent of other shops. The most common platforms used include Face-book, LinkedIn and Twitter, with growing interest being shown in Instagram.

60%

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BUSINESS STRATEGIES:

Top Shops Performing Design for Manufacturability (DFM)



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BUSINESS STRATEGY & PERFORMANCE

Which of the following supply chain practices does your business use?

Access to customers forecasts 58.5% 40.9% 44.9%

Certification of major suppliers 55.4% 35.5% 40.0%

Collaboration design with customers (DFM) 44.6% 34.1% 36.5%

Customer satisfaction surveys 60.0% 44.1% 47.7%

Just-in-time deliveries from suppliers 40.0% 30.5% 32.6%

Just-in-time deliveries to customers 60.0% 49.5% 51.9%

Sharing forecasts with suppliers 44.6% 27.7% 31.6%

Vendor-managed or -owned inventories 33.8% 26.4% 28.1%

Vendor-managed or -owned inventories for customers 23.1% 18.2% 19.3%

None of these 6.2% 19.1% 16.1%

Which of the following are effective sales/marketing tools for your business?

Blogs 15.4% 10.0% 11.2%

Brochures/catalogs 52.3% 46.8% 48.1%

Customer tours 76.9% 63.2% 66.3%

E-mail promotions 21.5% 17.3% 18.2%

Online — advertising 13.8% 23.2% 21.1%

Online — company website 56.9% 61.8% 60.7%

Print advertising (e.g., magazine) 21.5% 21.8% 21.8%

Sales personnel 70.8% 57.7% 60.7%

Social media (Facebook, Twitter, LinkedIn) 36.9% 24.1% 27.0%

Tradeshows/events 33.8% 43.6% 41.4%

Trades associations 29.2% 20.0% 22.1%

YouTube 23.1% 12.7% 15.1%

None of these 4.6% 10.9% 9.5%

If your company is actively using social media, please select which channels you use:

Facebook 82.5% 68.6% 72.5%

Twitter 30.0% 31.4% 31.0%

LinkedIn 62.5% 72.5% 69.7%

Instagram 7.5% 18.6% 15.5%

Pinterest 0.0% 7.8% 5.6%

Snapchat 0.0% 5.9% 4.2%

For independent shops, how many active customers (paid for work) did your business have in 2016?

Median 38 30 30

Average 118 108 110




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TOP SHOPS

OTHERSHOPS

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For independent shops, what was the customer retention rate for your business in 2016? (% of customers retained from the previous year)

Median 99.0% 98.0% 98.0%

Average 93.8% 90.3% 91.2%

80th Percentile 100.0% 100.0% 100.0%

20th Percentile 90.0% 85.8% 90.0%

What was your quote-to-book ratio in 2016? (business booked as a % of business quoted)

Median 50.0% 50.0% 50.0%

Average 52.1% 52.6% 52.5%

80th Percentile 80.0% 80.0% 80.0%

20th Percentile 25.2% 22.4% 25.0%

What were the following investments (in dollars) for your business in 2016?

Capital-equipment spending (not tooling)

Median $388,500 $150,000 $177,500

Average $793,782 $525,277 $547,945

80th Percentile $1,460,000 $894,000 $922,000

20th Percentile $132,000 $39,800 $12,800

Tooling spending

Median $95,000 $40,000 $60,000

Average $255,909 $109,249 $154,042

80th Percentile $480,000 $130,000 $189,600

20th Percentile $28,000 $7,500 $189,600

Employee costs (all wages, benefits, etc.)

Median $1,500,000 $581,225 $1,000,000

Average $3,391,155 $1,837,813 $2,338,618

80th Percentile $4,400,000 $2,275,764 $3,000,000

20th Percentile $412,000 $76,800 $150,000

Material and components

Median $600,000 $161,597 $335,000

Average $1,459,091 $1,346,732 $1,626,158

80th Percentile $2,700,000 $1,400,000 $2,000,000

20th Percentile $170,000 $13,988 $38,400



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Do you lease or own your own manufacturing facility?Own 57.8% 70.7% 67.6%

Lease 42.2% 29.3% 32.4%

What is the business’ sales per machine in 2016? (gross sales/# of machines)

Median $300,000 $160,321 $221,222

Average $587,305 $547,872 $566,138

80th Percentile $544,229 $396,241 $500,000

20th Percentile $155,200 $54,000 $97,296

What is the business’ sales per employee in 2016? (gross sales/# of employees)

Median $180,000 $141,050 $157,500

Average $211,875 $137,839 $174,250

80th Percentile $241,129 $181,400 $215,925

20th Percentile $139,700 $103,670 $111,209

What is the business’ profit margin in 2016? (net income/gross sales*100)

Median 15.0% 8.0% 11.0%

Average 16.0% 13.4% 14.6%

80th Percentile 20.0% 25.1% 25.0%


What is the business’ growth rate in 2016? (gross sales 2016-gross sales 2015/GS2015*100)

Median 9.0% 1.5% 5.0%

Average 16.1% 19.5% 18.0%

80th Percentile 23.8% 15.6% 20.0%

20th Percentile 1.5% -12.2% -2.0%

What is the business’ capital expenditures/ gross sales in 2016?

Median 5.0% 1.6% 3.0%

Average 8.1% 5.2% 7.0%




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HUMAN RESOURCESAlthough the hourly pay offered to shopfloor employees by Top Shops and other shops has historically been similar, this year’s Top Shops pay a dollar more per hour for operators and setup person-nel ($19) and $2 more per hour for CAM programmers ($28). That said, leading shops are more likely to offer other benefits to entice and retain good employees. One is a profit-sharing plan in which both the company and its employees can benefit, because it spurs the workforce to look for ways to improve efficiencies, thereby improving production rates and profits. Forty-five percent of Top Shops offer this compared to 33 percent of other shops.

In addition, 56 percent of Top Shops have developed some style of formal, in-house training program compared to 36 percent for other shops. In some cases, a general shop training curriculum is adequate, but sometimes customization is necessary for shops having specialized machining and manufacturing processes. This type of training also leads to standardize processes, eliminating any person-to-person variation from the way the tasks are sup-posed to be performed.

Key Performance Indicator—In terms of workforce develop-ment, Top Shops do a better job of preparing its future leaders,

given that 52 percent of them have a supervisor development program compared to 40 percent of other shops.

Top Practice—Top Shops are more likely to offer paid medical benefits than other shops (83 percent versus 68 percent). That said, the percentage of shops outside the benchmarking group that offer these benefits has increased recently, largely due to government-mandated health care laws.

Trend—The percentage of Top Shops offering educational re-imbursements continues to trend higher. In the 2016 survey, 61 percent of the Top Shops offered these reimbursements. For this year’s survey, that percentage is 78 percent.

HUMAN RESOURCES:

Top Shops Offering Education Reimbursements

80%

70%

60%

50%

40%

30%

20%

10%

02014

55%

2015

61%

2016

78%

52%

20132012

52%



TOP SHOPS

OTHERSHOPS

ALL SHOPS


HUMAN RESOURCES

How many total people did your business employ in 2016?Median 41 28 33

Average 97 131 122



How many employees were directly involved manufacturing at your business in 2016?

Median 29 18 21

Average 67 47 53



Which human-resource practices/programs does your business use?401(k) plan 81.3% 71.2% 73.9%

Annual review and raise program 84.4% 76.3% 78.4%

Apprenticeship program 34.4% 31.1% 32.0%

Bonus plan 60.9% 52.0% 54.4%

Education reimbursements 78.1% 54.8% 61.0%

Employee-ownership options 3.1% 8.5% 7.1%

Formal employee training program 56.3% 36.2% 41.5%

Formal safety/health program 68.8% 49.2% 54.4%

Leader/supervisor development 51.6% 39.5% 42.7%

Paid medical benefits 82.8% 68.4% 72.2%

Profit or revenue-sharing plan 45.3% 32.8% 36.1%

Teaming/team-building practices 42.2% 32.8% 35.3%

What is the approximate average wage rate for shopfloor personnel in 2016? (hourly rate without overtime)

Operators

Median $19.00 $18.00 $18.00

Average $19.08 $19.24 $19.00

80th Percentile $22.00 $24.00 $24.00

20th Percentile $15.00 $15.00 $15.00

Setup personnel

Median $19.00 $18.00 $22.00

Average $19.04 $22.71 $22.00

80th Percentile $22.80 $23.00 $27.00

20th Percentile $15.00 $15.00 $18.00

CAM programmers

Median $28.00 $26.00 $27.00

Average $27.95 $26.69 $27.00

80th Percentile $32.00 $34.00 $33.00

20th Percentile $23.00 $20.00 $22.00


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OTHERSHOPS

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HUMAN RESOURCES

What was the annual labor turnover rate for 2016? Median 5.4% 2.5% 4.0%

Average 7.7% 8.0% 8.0%

80th Percentile 12.0% 14.4% 12.0%


What is the average age of your shopfloor employees? Median 40 40 40

Average 40 41 41



What is the average years of experience for your shopfloor employees?

Median 15.0 15.0 15.0

Average 14.2 15.5 15.0



On average, how many hours per year of formal training did each full-time employee receive in 2016?

Less than 8 hours 39.1% 37.4% 37.9%

8 - 20 hours 45.3% 38.6% 40.4%

21 - 40 hours 6.3% 17.0% 14.0%

More than 40 hours 9.4% 7.0% 7.7%




SUMMARY

SURVEY METHODOLOGYThe tables in this Executive Summary for directive questions are presented with survey answers listed in descending order based on the number of responses. The tables for open-ended ques-tions include the number of responses as well as the median, average, 80th percentile and 20th percentile statistics. The 20th percentile is the value below which 20 percent of answers fall. The 80th percentile is the value below which 85 percent of answers fall. When looking for a mid-point figure, it’s often best to focus on

the median rather than the average. Unlike averages/means, the median better serves as the midpoint of the values because it is not distorted by a few unusually high or low values in a given sample. In a few instances, the median is 0, which indi-cates that more than half of participants for a particular ques-tion responded 0. When this is the case, it’s often better to refer to the average figure.

TOP SHOPS LINKEDIN GROUPTo complement our benchmarking program, Modern Machine Shop offers its Top Shops LinkedIn group. This exclusive group—now with nearly 2,000 members—is designed for decision-mak-ers in North American machining facilities. We’ve tried to keep the group solely for machine shop personnel by letting in only those

who to seem fit that description. The exclusivity is part of what makes this group different and valuable, but what really makes it valuable is your participation in it. Email [email protected] to join the group and add your insight.

Machining Technology X-L Machine— Three Rivers, Michigan

Shopfloor Practices Richards Industries— Cincinnati, Ohio

Business Strategies Land Sea Air Manufacturing— Westminster, Maryland

Human Resources MRS Machining— Augusta, Wisconsin

The Top Shops benchmarking initiative included an Honors Program to highlight select shops that performed well in each of the four main survey categories. These shops were vetted by Modern Machine Shop Executive Editor Derek Korn. Congratulations to the following Honors Program winners for 2017.

TOP SHOPS HONORS PROGRAM 2017 AWARD WINNERS:

ABOUT MODERN MACHINE SHOPMODERN MACHINE SHOP

6915 Valley Avenue • Cincinnati, Ohio 45244

Phone: 513-527-8800 • Fax: 513-527-8801

mmsonline.com

Modern Machine Shop is the flagship magazine of publisher Gardner Business Media located in Cincinnati, Ohio. Since 1928, the magazine has focused on the application of advanced ma-chining technologies by shops and manufacturers serving a wide range of industries.

2018 TOP SHOPS CONFERENCE AT IMTSThe second annual Top Shops Conference will be held during IMTS 2018 at McCormick Place in Chicago, Illinois, where industry leaders will present technology and business strategies aimed at growing your machining business. This event will also present findings from the 2018 Top Shops survey. Visit topshopsevent.com for more information about the conference.


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PRESENTED BY

Gardner Business Media6915 Valley Ave. Cincinnati, OH 45244Phone 513-527-8800 Fax 513-527-8801mmsonline.com

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Y O U R MACH IN NG BU SINE C H MA R K I N G 2017 …...see at IMTS 2018 are these four co-located...

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