November 2004

Point-to-Point Purchasers Increase Demands

As point-to-point and CNC technology's capabilities drift toward each other, companies are demanding more out of their purchases. Among their requests are more fully automatic systems, a wider range of options, and speedy set-up times.

By Katie Coleman

In today's fast-paced world, a parent can shop for groceries at the same place he develops his film, gets his eyes examined, takes the annual family photo and eats a hot lunch. A middle class family can buy a personal computer that simultaneously helps manage the family business, runs the kids' computer games and connects them to the Worldwide Web.

The continued popularity of this so-called "one-stop-shopping" approach to life has not eluded the woodworking industry. In fact, innovations like the point-to-point boring machine and the CNC router only fostered the modern two-, three- and four-for-one mentality so prevalent in today's homes and businesses.

"At a lot of smaller shops, instead of buying the three machines you need to produce, let's say cabinets, they're buying a flat table or a nesting machine. It cuts down on floor space and capital expenditure, like having fewer operators," says Rob Howell, a product manager with SCM Group USA.

As the two technologies move closer and closer to convergence, with point-to-point machines taking on routing capabilities and vice versa, it's no surprise businesses are demanding even more from their large-machine - and large-dollar - purchases. Higher efficiency in manufacturing space and reduced material handling are among the considerations faced by companies looking to buy and sell point-to-point and CNC technology.

When advising customers on which kind of machine to purchase for their operation, many representatives used to suggest manufacturers choose the machine they will use most. In other words, if a business does more line drilling, that business should buy a point-to-point; more routing, purchase a router. The logic was that the function for which the machine was designed originally should be more durable. But companies in the business of selling these high-efficiency machines have long been saying that each machine is becoming more and more like the other: CNC routers have drilling capabilities and point-to-point machines have routing aggregates. What's more, as a shop's capabilities expand with their technology, what they "make more of" might not be an issue.

"What people commonly think of as a point-to-point is really a CNC machining center," says Bill Blackman of Delmac Machinery. "The two types of classes of machines are so close now that ... the two terms really don't apply anymore."

When it comes time to purchase a new machine, wood product manufacturers might feel much like an undecided voter in a swing state, not knowing which choice is right for them. While representatives from five machining manufacturers insist not much is new in the realm of point-to-point technology, the purchasing trends to which they allude seem to suggest other ways in which the products are becoming more and more competitive. A wider range of options, a more fully automatic system and increased interest in speedy set-up time are among the expectations machining center customers now demand.

More Options

"As people begin to accept this technology more and more, they require a wide range of work holding systems," says Michael Cassell, a CNC product manager at Holz-Her. "There's a wider range of vacuum pod sizes, which are now offered down to about 28mm in width. In the past, you were very limited as to the range of sizes offered," Cassell says, adding that past pod-size options were only available down to about 140mm in width.

Howell says a new option in drilling heads is also prevalent. "I'm seeing a lot of machines coming out with split-heads for drilling. Instead of having to do two drops, they do a single drop. That's becoming more and more popular, especially in the closet industry."

Tritec Associates' John Fawcett agrees, "The thing we're getting that we didn't get three to four years ago are multiple drills, multiple inserters. Dual drills and dual inserters, even though you're only adding one, actually speed up the machine by three times."

Cassell says more options are also available with regard to mechanical clamping systems. "They can range from fully automatic, where they are programmed by the CNC controller; semi-automatic, where they are activated by the operator; and manual. What this allows is a greater range of parts and also smaller parts," he says.

But what is arguably the biggest change recently is the proliferation of five-axis technology on machining centers. According to Blackman, the technology itself has existed for some time, but easy-to-use software became available only recently. "In the past, it's always been too complicated. It's taken years and months of training to learn how to operate it, which is only something a few larger companies were capable of doing," he says. "The smaller 15- to 20-man shops, which are so prevalent in our industry, can now afford to buy it and learn how to use it."

According to Blackman, a five-axis machine differs from the traditional four-axis machine because the spindle can rotate, whereas a four-axis machine must use an aggregate tool to do any type of horizontal work. "You can take the same tool and make a cut in the top of the part and then run around and work on any of the other edges of the part," he says. "It can make arch motions across the top. In theory, you can cut a hemisphere with a five-axis."

Blackman explains that the five-axis is also preferred because companies do not have to purchase extra aggregates.

More Automation

"The biggest thing that's come out here recently was the automatic set-up of the table and pods, and I think that's going to be the future for point-to-point machining," Howell says. "In the past, they'd bring up the program of a certain part and the operator then moves the tray and pods. Now, the machine sets itself up basically automatically. Cups and trays move automatically. They had this in the past, but it moved very slowly. They'd move one tray or pod at a time.

"What this does is stops the customer from ruining expensive cups and trays and damaging expensive equipment," he continues, noting that the machine's price probably increases as its automation efficiency improves.

Biesse America's product manager for machining centers, Casare Magnani, says that "automation is the key. A full concept of automation with a machine could use a feeding system like a robot." He refers to the new concept of a "through-feed" point-to-point machine, which allows users to machine one part after another without stopping.

Automation is also key to set-up time. Jeff Conger, a CNC product manager with Stiles Machinery, explains, "Reducing set-up and changeover times, as well as reducing overall machining times, have come to the forefront with some manufacturers. Advancements in the area of machines that set up automatically have greatly reduced the time required to set the machines up and change them over. As the run quantities in most shops continue to drop, this is at the top of most customers' list of requirements for new machines."

Less Set-Up Time, More Training

According to Magnani, "Customers are more and more interested in shortening the set-up time as much as possible. Going from design to production in as little time as possible, especially if production is only going to happen in small batches, is important to them.

"What is extremely important is the table set-up," Magnani says. "They are asking more and more for automatic set-up through EPS [electronic positioning system]. I see that as the big trend in terms of customers' interests."

But, as Howell points out, a ready-to-use machine physically does not equate to a machine that is ready for use mentally. Training is as important to "set-up" as any nut or bolt. "Basically, they learn what they have to get done, and that's it. They don't put the machine to its full use," he says. "I think a lot of it comes down to software and training on certain packages. I don't think they have the knowledge to program the different systems to get it out to the machine."

Blackman agrees, "A lot of our customers will come in for the introductory training course and never really get in-depth enough with the training to learn how to use it. I think training is a more common problem than software." With regard to the five-axis technology Blackman touts, training would take a minimum of approximately seven days, as opposed to three days of training for a three- or four-axis router.

But like good employee training, appropriate software also contributes to efficient setups.

"Software that links to the machine and the ease in which it integrates has also become as important in many purchase decisions as the machine itself," Conger says. "Companies that provide a single source responsibility for both software and hardware will be best prepared to meet customer's expectatiobns in the future."

Cassell also acknowledges the gap between the customer's desire for efficiency in something like a fast turnaround in set-up time and having the knowledge to get everything out of their machine possible. "I think people need to look beyond what they originally envisioned the machine being purchased for. I would encourage them to investigate other markets, like cabinets versus store fixtures. I think the CNC technology allows a customer to be successful in other markets that he has little experience in. The machine's going to do it, so why beat yourself up if there are 20 other shops in your area making boxes?"

A Matter of Cost

Maybe one reason CNC or point-to-point purchasers are demanding more out of their product is because prices have yet to drop due to usual improvements in design and manufacturing.

Cassell sums up some of the reasons manufacturers may be maintaining higher machine prices, "There is always an economy of scale as production increases. But I would say that's been offset by an increase in steel [prices]. Obviously, since most of us are providing machines from Europe, the exchange rate has had a dramatic effect as well. Even with the changes in the dollar, I'd say we're looking at a 25 percent increase from a year ago. Generally, we're also all paying higher transportation costs."

Howell agrees on all three fronts, adding, "We are looking to reduce the cost by coming out with some entry-level machines. Take away some features, like change the PC controller to a hand-held one to offer to a smaller-shop customer."

According to Conger, "With most mature technologies that are well into their product life cycles, even some of the most advanced capabilities are starting to trickle down to the smaller entry-level machines geared to the small shops."

However, Magnani says, "The machines today, in terms of value, are less expensive in comparison to the past. That is being driven by the technology more than anything else. They are being made in a smarter way, especially behind the electronics end of things."

"For a smaller shop, what is important is flexibility," Magnani says. "Today, the machines are extremely flexible, way more so than in the past. This is a way more convenient to our smaller customers. It opens up a new market for people, new possibilities for what they can create in the future."

Cassell says, "I can't envision anybody opening a shop these days and not making the initial investment in CNC technology. Having a 20-year background with CNC technology, I just see the opportunity and potential is really in its infancy."


'Bonus' Tax Break Ends Jan. 1

Time is running out to take advantage of the 50 percent depreciation bonus on capital equipment purchases that was created by the Jobs and Growth Tax Relief Reconciliation Act of 2003. In addition to increasing depreciation incentives, the act, which amended the Job Creation and Worker Assistance Act of 2002, offers larger allowances.

The catch is equipment must be purchased before Jan. 1, 2005 to qualify.

Stan Ragley, of Leasing Resources Inc. of Charlotte, NC, says the tax law allows the purchaser of a $150,000 machine to immediately write off an additional $24,000 in depreciation.

"This tax law has a major impact on the economics of buying a CNC machine or any machine," Ragley says.

Ragley provided the worksheet below to illustrate how his company explains the current tax laws to customers. "It is based on a typical shop and a machine cost of $150,000. That's the ballpark price of many CNC machines," he says. The worksheet enables a machinery buyer to fill in the blanks for a lower- or higher-cost machine."

Jobs & Growth Tax Relief Reconciliation Act of 2003

Tax relief package highlights:

I. The new tax relief package includes incentives for any depreciable property, including software.

II. Section 179, which allows for immediate write off of depreciable property, increased to $102,000.

* Effective for all machinery, equipment, furniture, fixtures, etc.

* For tax years beginning in 2003, 2004 & 2005

* Can be used with a lease utilizing a $1 purchase option

* Phases out on purchases totaling more than $400,000

III. First Year Bonus Deprecation increased from 30% to 50%.

* Allowed for both regular and alternative minimum tax purposes

* Deduction allowed for qualifying property acquired after May 5, 2003 and before Jan. 1, 2005

* "Used property" generally does not qualify

Here's how it works:

Year-One Income Tax Savings for a $150,000 Machinery Purchase

    Your Figures: Our Example:
1. Purchase Price   $150,000
2. Less Section 179 Allowance* $102,000 $102,000
3. Adjusted Cost    
  (Line 1 minus Line 2)   $48,000
4. New 50% Depreciation    
  (Multiply Line 3 by .50)   $24,000
5. Adjusted Cost for MACRS    
  (Line 3 minus Line 4)   $24,000
6. 1st Year MACRS Depreciation    
  (Multiply Line 5 by 14.29%)   $3,430
7. Total 1st Year Depreciation    
  (Line 2 + Line 4 + Line 6)   $129,430
8. First year write off as % of Purchase    
  (Divide Line 7 by Line 1)   86.3%
9. Your Income Tax Rate    
  (25%, 28%, 33% or 35% Tax Bracket)   33%
10. Your first year Income Tax Savings    
  (Multiply Line 7 by Line 9)   $42,711
* Consult a tax accountant to ensure these tax benefits apply to your business.

For more information, visit www.goleasing.com.

- Rich Christianson

                                                                                                                                                                                           

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