Maximizing waterjet cutting profit

WWW.THEFABRICATOR.COM APRIL 2008

April 15, 2008

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Achieving maximum profitability from your waterjet system requires knowing which operating methods are best-suited to your application. This article explores the costs associated with waterjet cutting and shows a method for maximizing the profit derived from the machine for various production scenarios. Specific examples are provided.

Maximizing waterjet cutting profit - TheFabricator

Figure A: An 8.75-in.-long electrical panel made from 1/8-in.-thick material

Modern machine controls for waterjet cutting allow you to switch between making a single part slowly at low cost or more quickly at a higher cost. The slower, low-cost method is more profitable for a shop in which the machine is not loaded to full capacity. When the machine is fully loaded, it is often, but not always, more profitable to make the same parts faster, even at a higher cost. When large quantities of the same part are to be made, it is more profitable to make them with multiple small nozzles rather than one large nozzle.

Waterjet Cutting Costs

Waterjet cutting involves two kinds of costs: fixed costs that remain the same no matter how long the machine is operated, and variable costs that rise in proportion to the time spent cutting. Fixed costs include lease payments or depreciation on the machine, building rent, telephone service, and even the amount you pay an accountant or lawyer. These fixed costs have no bearing on planning how to operate a machine, because they are not affected in any way by the machine's operation. The object of the business is to maximize the return from the machine to pay these fixed costs and have something left over as profit.

Table 1 lists the variable costs for operating the machine at three levels of pumping power, expressed in horsepower (HP), along with the parameters that provide the highest cutting performance within each of the power levels. The costs are expressed in dollars per hour and are summed to give a total hourly cost for each power level. In general, these costs are representative of typical operations in the continental U.S. In special cases, these costs can be much higher, as pointed out later, so you are urged to make your own analysis following the method illustrated here. Each variable cost and its relationship to pump power is explained.

Garnet has a wide price range that depends on shipping costs. The highest price I have heard of is $0.70 per pound in Hawaii, and the lowest is below $0.10 in China. A price of $0.20 is just on the low side for the continental U.S. Higher garnet prices favor using lower-power jets, because they consume fewer pounds of garnet per hour.

A mixing tube that costs $120 should last at least 60 hours, which results in a cost of $2 per hour for someone concerned about getting the best possible cutting performance with a 40-HP pump. Running more garnet at 80 HP or less at 20 HP will shorten and lengthen the life of the mixing tube, respectively, causing the hourly costs to change. Again, you are urged to use your own numbers.

Power often is considered to be an overhead cost like the telephone, but waterjet cutting consumes enough power that it should be included in the variable costs. Power costs vary, but $0.10 per kilowatt-hour (kWh) is a reasonable average across the U.S. The pumps assumed here are crank-drive pumps. If you are using an intensifier pump, add about 20 percent to the power costs to cover the additional cost attributed to the lower pumping efficiency.

Water is one of the lower costs of the operation, so whether you are paying one cent per gallon or it's free makes little difference in the outcome of the study. However, note that water is often used to cool intensifier pumps, and those costs could build to appreciable levels in an area with high water cost.

High-pressure equipment maintenance is one of the surprise costs for those new to waterjet cutting. For a 40-HP pump and nozzle, maintenance costs run about $10 an hour for the water nozzle, seals, check valve parts, high-pressure plungers, and occasional fatigue failures of pressure-carrying parts. Running at half or double power halves or doubles the maintenance costs. It has also been reported that operating at 87,000 PSI with a jet power of about 80 HP may triple the maintenance costs over those running at 50,000 PSI.

Finally, there is the labor cost associated with operating the machine. Normally, once the machine starts cutting a part, the operator is free to leave and do something else while the part finishes. When making one-of-a-kind parts, the operator may spend more than 25 percent of his time at the machine and less during longer production runs.

Table 1
Cost of Cutting at Various Power Levels
Cutting Conditions
Pump HP
80
40
20
Garnet Flow (lbs./min)
1.8
0.75
0.3
Water Orifice Diameter (inches)
0.02
0.014
0.01
Mixing Tube Diameter (inches)
0.042
0.03
0.021
Hourly Costs ($)
Garnet at $0.20/lb.
21.60
9.00
3.60
Mix tube at $120 each
3.00
2.00
1.20
Power at $0.10/kWh
5.97
2.98
1.49
Water at .$0.01/gal
1.08
0.54
0.27
Maintenance
20.00
10.00
5.00
Labor 1/4 man at $20/hr.
5.00
5.00
5.00
Total $/hr.
56.65
29.52
16.56

Now that the costs per hour for operating at various power levels have been estimated, the next step is to find the amount of time associated with making various parts at each of these power levels.

Maximizing waterjet cutting profit - TheFabricator

Figure B: A 5.25-in.-wide exhaust manifold made from ½-in.-thick material

Sample Parts With Times and Prime Costs

Figures A and B show the sample parts considered in this analysis. Part A is an electrical panel about 8.75 in. long containing various cutouts for mounting hardware. It is made from 1/8-in.-thick material. Part B is a flange about 5.25 in. wide for an exhaust manifold made from ½-in.-thick material. The time study is done for making the parts from both steel and aluminum.

Calculated using OMAX Corp. software, Table 2 lists the times it takes to cut a part at 50,000 PSI using various materials and power. These calculations reportedly are accurate to better than 1 percent and can be used to bid jobs. Note that the part times are uniformly shorter for higher pumping power, but this does not mean that the costs are lower for high power.

Table 2
Time Per Part (Minutes)
Part A
Part A
Part B
Part B
Power
1/8-in. Aluminum
1/8-in. Steel
1/2-in. Aluminum
1/2-in. Steel
20 HP
2.878
6.617
4.458
11.062
40 HP
1.966
3.808
3.056
6.795
80 HP
1.743
2.979
2.721
4.936

Table 3 shows the part costs associated with the conditions listed in Table 2. The cost is found by multiplying the part time by the cost per minute calculated from Table 1. These costs are hereafter called the prime cost to emphasize that any overhead costs are not included. Note that the prime cost per part is uniformly lower for the lower-power jets.

Table 3
Prime Cost per Part ($)
Part A
Part A
Part B
Part B
Power
1/8-in. Aluminum
1/8-in. Steel
1/2-in. Aluminum
1/2-in. Steel
20 HP
0.79
1.83
1.23
3.05
40 HP
0.97
1.87
1.50
3.34
80 HP
1.65
2.81
2.57
4.66

Part Pricing and Prime Margin per Part

The object of business is to sell parts at a price higher than the prime cost and maximize the total difference. The difference between price and prime cost is the prime margin. We can calculate the prime margin per part if we know the selling price. Shops calculate the selling price in different ways. Very successful shops with no next-door competition calculate the price as if the part were made normally by a more expensive technology and then discount by 10 percent or so to be sure to get the work. Others calculate on an hourly rate or a multiple of prime costs, sometimes adding a premium for rapid turnaround.

For this particular example, let's say that the price of the part is the prime cost for the 40-HP case times 5. If your shop uses a different pricing method, you can use that method and make your own calculation following the logic shown here. With the price known, we can calculate the prime margin per part. The results are shown in Table 4. These results are next discussed with respect to the work load for the machine.

Table 4
Prime Margin per Part ($)
Part A
Part A
Part B
Part B
1/8-in. Aluminum
1/8-in. Steel
1/2-in. Aluminum
1/2-in. Steel
Price
4.84
9.37
7.52
16.72
20 HP
4.04
7.54
6.29
13.66
40 HP
3.87
7.50
6.02
13.37
80 HP
3.19
6.56
4.95
12.06

Case 1: Partially Loaded Machine

Several factors can contribute to a partially loaded machine:

  • Business is bad.
  • The overall product contains only a small number of jet-cut parts.
  • The load is kept low on purpose to avoid queues and provide quick response for support of R&D or maintenance, or to charge a premium to impatient customers.
  • The machine is an element of a lean manufacturing cell.

If there is not enough work to completely fill the machine, then there is no need to hurry to make the parts as fast as possible. If the parts are finished in four hours and then the machine sits idle for the rest of the day, nothing has been gained. In fact, prime margin has been lost because the parts are made with the more expensive, higher-power cutting. As shown in Tables 3 and 4, the margin per part is uniformly lower with higher-power cutting, because the part costs are higher. The situation can be very different for a fully loaded machine.

Case 2: Fully Loaded Machine Many Part Types

If the machine productivity is limited to the number of parts that could or should be made, then maximizing the total prime margin generated by the machine might require operating it at higher power levels to achieve higher productivity. The deciding factor is the prime margin generated per unit time. In Table 5, the prime margin per part has been divided by the time per part of Table 2. The results show that, in some cases, the prime margin per minute is maximized with the highest power cutting. See the results for both parts in steel. However, for the aluminum parts, the best results are achieved with the lower power of 40 HP.

Table 5
Prime Margin per Minute ($)
Part A
Part A
Part B
Part B
1/8-in. Aluminum
1/8-in. Steel
1/2-in. Aluminum
1/2-in. Steel
Price
4.84
9.37
7.52
16.72
20 HP
1.40
1.14
1.41
1.24
40 HP
1.97
1.97
1.97
1.97
80 HP
1.83
2.20
1.82
2.44

These results for the prime margin generated per minute are sensitive to the part price. As the part price goes up, making them faster becomes dominant, and the high-power cutting becomes more beneficial. On the other hand, when the price is low, the margin is low, and the low production cost of lower-power cutting becomes dominant, and it is better to make the parts slowly at lower cost.

Case 3: Fully Loaded Machine, Single Part

If your operation requires producing large quantities of the same part so that a longer setup time can be justified, the poorer economics of high-power cutting can be completely reversed by spreading the power to multiple small nozzles. Imagine that the output of an 80-HP pump is split among four 20-HP nozzles. The hourly costs are easily obtained from Table 1, as shown in Table 6. Next, note that the time per part for the 20-HP case in Table 2 is now cut by 4 since four parts are being made at once. Then, in the same manner as Tables 2 through 5 were calculated, you can calculate the economics of using four small nozzles (Table 7). Note the very high prime margins per minute that are generated. These margins are achieved both by a lowered part cost and a very high production rate. Because the costs are lowered, this strategy is effective, even when prices are low.

Table 6
Cost of Cutting With Four Nozzles
Cutting Conditions
Pump HP
80
Garnet Flow (lbs./min.)
1.2
Water Orifice Diameter (in.)
0.01
Mixing Tube Diameter (in.)
0.021
Hourly Costs ($)
Garnet at $0.20/lb.
$14.40
Mix tube at $120 each
$4.80
Power at $0.10/kWh
$5.97
Water at $0.01/gal.
$1.08
Maintenance
$20.00
Labor 1/4 man at $20/hr.
$5.00
Total $/hr.
$51.25

Table 7
Four 20-HP Nozzles
Part A
Part A
Part B
Part B
1/8-in. Aluminum
1/8-in. Steel
1/2-in. Aluminum
1/2-in. Steel
Price$
4.84
9.37
7.52
16.72
Time (min.)
0.72
1.65
1.11
2.77
Prime Cost ($)
0.61
1.41
0.95
2.36
Prime Margin
4.22
7.96
6.57
14.36
Margin/Min.
5.87
4.81
5.89
5.19

The most profitable method for making parts depends on machine loading and the quantity of parts to be made. High quantities of the same part are best made by splitting the available power among multiple lower-powered nozzles. This strategy is correct, even if the machine is not fully loaded, because the net cost per part is lower.

If every part is different and the machine is not fully loaded, the proper strategy is to cut at low power to minimize the cost per part. If the machine is fully loaded, it might be beneficial to cut the parts quickly at high power, but analysis is required, because the conclusion is sensitive to the pricing of the parts. High price relative to cost moves the optimum toward higher-power cutting, whereas low pricing moves it toward low-power cutting.

Modern abrasive jet controls make it easy to switch from one strategy to the other because no part reprogramming is necessary. The controller chooses the speeds based on the cutting parameters chosen.



OMAX Corp.

Dr. John H. Olsen

Contributing Writer
OMAX Corp.
21409 72nd Ave. S.
Kent, WA 98032
Phone: 253-872-2300

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