“Earn While You Learn” Or “Borrow Today, Pay Back Tomorrow?”

November 12, 2013

The Akron Beacon Journal front page story Sunday was titled More and More, Students Having Trouble Paying Back Their College Loans.

A few quick takeaways-

  • Borrowing over $100,000 to get psychology degrees did not create sufficient ROI to cover $900/month loans payment for one student, whose work using her degrees is paying near minimum wage;
  • Nationwide, 14.7 percent of borrowers defaulted on their federal student loans in their first three years of repayment;
  • Nationwide, students at for-profit colleges have the most trouble repaying their loans, with almost 22 percent not making payments for at least 270 days in the last three-year snapshot;
  • According to a new study by the University of Kansas, adults with student debt tend to show lower college graduation rates, delays in marriage and buying cars and homes, and lower net worth than those without debt.
  • According to a spokesperson from the Institute of Student Access and Success: “The loan is supposed to enable them to get an education to get a job and pay back the loan, when you see high default rates, you know something in that string of logic has broken down.”

Indeed.

Really? This is your plan?

Really? This is your plan?

Critical thinking is recognizing and challenging assumptions.

The assumption is that having a college degree, any college degree, will guarantee the graduate a well paying job able to pay off the student loan indebtedness.

For almost 15 percent of borrowers nationwide, this is NOT the case.

We strongly recommend college education if your plan  assures that you will earn a sufficient return on your college investment to allow you to repay the cost of college.

In the current economy, frankly, that is often NOT the case.

We urge you to look at college affordability and loan repayment terms up front- and make a decision- do you want to start your life in significant debt?

There is an alternative.

  • While many college graduates are unable to find work  that pays enough to allow them to pay back their student loans, getting a job in precision machining will enable you to earn while you learn, and avoid the huge student loan debt trap.
  • Many employers will provide tuition assistance.
  • The outlook for employment  in our industry has remained above 90%  (Very Positive) all year. CEO’s I speak with are always looking to find talented people.

Many of our industry’s top process engineers, managers, buyers and quality control personnel  started in operations and built their education as they built their career.

So you now have a choice- borrow loads of money today and hope that you can pay it back tomorrow. Or earn while you learn and build a career as you build an educational pathway to success without huge loans.

We’re really a fan of education of all kinds. We’re just not a fan of big debt.

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7 Reasons Why Cycle Time Isn’t The Cost Driver In Your Precision Machined Parts

October 25, 2011

In the old days, everybody knew that it was cycle time that won you the job over the other shops…

Everybody knows it's cycle time...

Cycle time is a major determinant of price per piece, but it may no longer be the main one. (I’m going to ignore the effect of setup time and order quantity in this discussion. These can also be a major influence in price per piece on smaller lot sizes.)

Here are 7 other determinants of piece cost:

Cleanliness– some parts require millipore tests to assure cleanliness on parts for sophisticated systems. Costs to obain this level of cleanliness can exceed the cost to whittle the part out of the barstock.

Surface finish– what the machine can deliver may be acceptable, but when the customer demands to see CPK for surface finish,  now you are talking about a secondary operation for grinding, honing or other surface finishing process- at an additional cost.

Certifications and paperwork– No I’m not talking about mill certs for raw material, I’m talking about customer required documentation that requires outside labwork, analysis, testing or validation.  In specialty areas like aviation, medical, and automotive, the cost to prepare paperwork submissions (especially first piece submissions) easily exceeds the value of the parts provided. Making aircaft parts? Something on the U.S. Munitions List? You know what I’m talking about.

Post process steps– Plating or heat treating costs can exceed the cost of the basic part depending on the process and application. Transportation to outside vendors also adds to this, as would the compliance costs if the shop is capable of doing these processes on site.

Packaging– In a day when supply chains span the globe, multiple time zones, and climate regions- where our metal products may be exposed to salt air on board ship or depressurized air cargo holds at 35,000 feet- packaging to preserve product integrity can be a cost driver. Especially if to Mil-spec and or the requirement mandates the  need to preserve integrity for a period of years.

Tolerances and capability– I have seen parts where a new engineer has decreased the tolerance so much  that the product can no longer be made on the economical machines that exceeded requirements for the past five years. Requiring Cpk that exceed normal manufacturing expectations “just for safety’s sake” can also result in moving a part off a multispindle automatic with short cycle times onto  several CNC machines (to maintain volume) just to get that extra “kick” of Cpk. The risk that was eliminated is now reflected in the new cost of the more expensive process.

Raw Materials– on tiny, high stock removal, highly engineered parts, the cost of machining probably does exceed the cost component of the raw material. Show me a part that looks essentially like the piece it was made from, and I’ll show you a part where raw material cost, not cycle time, is the primary cost driver.

Transportation, including premium freight for parts or paperwork, is another item to consider. The point of this post is not to whine about all of these additional requirements- it is to point out that they can be a frictional cost, a parasitic load that increases part costs, and yet are under the control of the Buyer. These costs, either separately or in combination, may be the main drivers of why that 15 second  part now costs so much.

Sales people and estimators- unless you actively review the real needs with your customer, your blind acceptance/compliance to all of these “Additional Requirements” may be the real reason that the customer comes back saying that “Your price is too high.”

I teach my students that critical thinking is recognizing and challenging assumptions. Critical sales and estimating, if they are to be successful, might share that definition of recognizing and challenging those assumptions that add cost, but not value, to our precision machined products.

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