Does CNC Machine Automation Really Equal More Profit?

2 January 2021

Automation already revolutionized modern manufacturing industries, including CNC machining. It solved the most prominent areas for innovation for medium and large-sized companies. By reducing the costs of operations and improving efficiency, your business can benefit from automation, too, so let us discuss how you can benefit from CNC machine automation.

Is Automation Beneficial In the First Place?

Here are some studies conducted by authority companies, which prove that automation can bring in profits.

WorkMarket conducted research involving industry leaders who look to modernize their workforce. According to their 2020 In(Sight) Report, 54% of their employees believe that automation can potentially save 240 hours annually.

Forbes elaborated on this data to analyze how profitable it is to an average fortune 500 company. They claimed that a potential $4.7 million annual savings are possible after implementing automation.

EY also published an article telling how Zurich achieved its goal of $1 billion for cost improvements in 2018. They started their proof-of-concept in the first quarter of 2015, benefiting their employees in the long run.

Benefits Of CNC Machine Automation

We already knew that automation could provide tangible results to companies worldwide, but to elaborate further, here is a list of benefits that automation can provide to your CNC machining business.

  • Perform repetitive tasks such as loading unloading tools and workpiece

  • Scale up the process and speed by performing simultaneous tasks

  • Perform calculations better than humans, such as counting the output

  • Validate data with precision such as positioning tools and workpiece

  • Integrate several significant parameters simultaneously, which is near impossible for humans

Calculating The Benefits Of Automation

Before deciding to automate, let us consider the adage, “You can improve what you can measure.” Let us discuss which parameters to consider helping us become aware of the improvements.

When talking about business decisions, everything revolves around your return on investment (ROI). According to Investopedia, the return of investment is the ratio of return compared to its cost.

CNC machine automation equipment like loading robots doesn't cost a few dollars. It will pay for itself eventually, so there is a potential ROI for CNC loading robots. However, investing in robots does not provide an immediate return, so let's take account of a definite time and compute annualized ROI for automation.

Calculating the ROI of automation needs these two factors to consider: cost and profit. Lower costs and higher profit improve the ROI, so let us discuss how to measure the improvements of automating the loading and unloading processes for CNC machines.

Recent Customer’s Annual ROI Computation

My operators typically run in the 80-90% for earned hours which is how we base everything. (An earned hour is a quoted hour of work the customer is paying for, doesn’t include breaks, vacation training  etc..….). When we have the operator running another machine and also running the Halter their earned hours run well above the 160% range. We figure an operator costs us $35 per hour with bennies, most of our machines cost us in the $7-15 per hour range so we tend to have excess equipment vs. labor.

Cap Ex cost

$200k machine running 4000 hours a year for 5 years =  ~$10 per hour cost,  (actual life is 10+ years, we keep longer than 7 years and run 3 shifts, Cost is actually less). 

Robot, ~$110k running 4000 hours a year for 5 years =  ~$5 per hour cost,  (actual life of robot is in the 50,000 hour range, Cost is actually less).

So as an example of a quick calculation

No Halter Robot in equation

Figure $70 charge rate for 1 hour, operator typically produces 85% x $70 = $59.50/hour - $35 (hourly cost of operator) - $10 (Hourly cost of machine) = $14.50 per hour profit x  2000hrs per year = $29,000

Halter Robot in equation

Figure $70 charge rate for 1 hour, now operator produces, 165% x $70 = $115.5/hour - $35 for Guy - $20 for 2 machines - $5 for Halter = $55.5 per hour profit x  2000hrs per year = $111,000

 Per operator $ difference in a year = $111k - $29k = $82k per year. 

  • 1 operator (1shift) = $110k for Halter/$82k (per Year Difference) = 1.341 years pay back ~16 months.

  • 2 operators (2nd shift) = $110k for Halter/$164k (per Year Difference) = .67 years pay back ~8 months.

  • 3 operators (2nd and 3rd shift) = $110k for Halter/$246k = .45 years pay back ~5 months.                                                       

 These are rough numbers but I would say they are low estimates.

Other “Real” benefits we see but I’m not calculating.

  • Operator can be setting up next job while running.

  • Operator is happier with his job since he isn’t just a button pusher.

  • Operator gains a skill and is proud of his occupation.

  • Less fatigue, work comp, etc.

Start Analyzing The Benefits Of Automation To Your Business

Automation can significantly improve the cost-efficiency of the CNC loading process. It can also help your employees remain in control and utilize their skills for higher-value tasks. So, if your CNC machining company has a dynamic environment, we encourage you to contact Halter CNC to help you start automating your processes today!

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