Jul 1, 2020 | OPERATIONS

Business Operations

When doing engine build proposals for customers, be sure to add the option of all critical machining procedures, even if you do not do them in house. You will need a high-quality vendor that you can outsource these procedures to, all the while laying groundwork for your own growth and providing a better engine. Be upfront with your vendor about your plans. You’re not hurting his bottom-line, you’re only validating the importance of the procedures when you address them. Your plan is to add them in-house from the beginning and once you’re regularly sending these jobs out, you’ll eventually be able to purchase the equipment to do them yourself. You’ll have created your own market and it’ll take the risk out of that machine purchase. You’ve been providing customers with engines that have the best you can offer, even if you had to use another shop to achieve it. Don’t get too hung up on making big money off these jobs while you have to outsource them. Price them as you would if you did them in house, competitively. After a while do a simple “machine cost vs. labor revenue.” This analysis will tell you when the time is right to make the equipment purchase. In the end, you are raising your stock value and providing more critical services for your customers. Prime examples of outsourced labor include: flow bench testing, line boring/honing/cam tunnel work, lifter bore work, thermal cleaning, crankshaft balancing, and dyno testing. Many shops I know will not build an engine unless it is dyno tuned, even if it must be outsourced.

Ron Flood
Cedar Machine
North Branch, MN
July, 2020