Question
I’d like to try and tackle the issue of in-house cabinet door and drawer-front construction vs. outsourcing. What kind of economic justifications should we use when evaluating in-house door manufacturing systems? What kinds of situations make purchasing components more desirable?
Let’s hear from those shops that invest in equipment/labor and build doors (frame-and-panel and otherwise), those that buy doors from specialized component manufacturers, and those that do both. What kinds of considerations (economic or otherwise) inspire your decision whether to do it yourself or outsource?
Michael Poster, technical advisor
Forum Responses
I'm buying all door/drawer fronts as well as drawer boxes. Between costs of labor and workspace, it just doesn't pencil out to build in-house!
In northern California, we're in a building boom, with a lot of jobs in a dead rush, so much of my stuff goes out without faces and drawers just to keep the jobs rolling - I install those components on site as they arrive, which is a pain, but a necessary pain right now. Around here, skilled help is rare at any price, and I'm happy to let good suppliers take this load off my shoulders!
Cabinet components are a different story; we used to outsource these as well and ran into numerous quality problems. We purchased a sliding table saw and now we produce all our own casework and can control the cost, quality and lead times much better. I think casework components are still a good option for someone without a panel saw.
Since we began to manufacture our own doors about fifteen years ago, the tooling and machinery have improved considerably, making door manufacturing much easier and more precise than it was when we started. Still, I would caution that to compete successfully with the "big boys" you will need better-than-average machining skills and understanding of the properties of the woods with which you intend to work.
Obviously, your machinery and tooling budget will also dictate whether you will be able to make all the styles you need, and if you will be able to profit from your labor. The benefits of in-house doors include the ability (1) to re-make in a few minutes the doors that were measured or drilled wrong, or those that somehow got damaged (of course nobody knows how they got damaged!); (2) to modify styles to suit a customer's requirement; (3) to control your own quality (i.e. color and grain match); (4) to stain the panel raises and backs prior to assembly to eliminate shrinkage problems; and (5) to make a profit on half the labor in the cabinet rather than send it off to someone else. It's not for everybody, but it works great for us.
We have about six people in our door shop and make approximately 250 very high quality doors per day. Those numbers are based on a very well-equipped shop and should not be used as a beginning basis for your project.
The moulder is used to shape our door rail and stile stock. If the doors require cathedral or arched rails, the molder is used to provide surfaced-fours-sides (S4S) material for that. Door frame parts are cut up on an upcut saw with a Tiger Stop. Panel boards are straightline ripped on a Diehl rip saw with a Doucet return conveyor, laser, and a panel layup table of our own design, making that operation possible with only one man.
Glue is applied with a glue conveyor feeding a Taylor automatic (hydraulic) 40-section clamp carrier. Panels, when dry, are planed on two helical carbide-head planers, which can be operated by two men. The planers face opposite directions, so each man is the other's tailboy. In the past, we end-trimmed and ripped panels to final length on a sliding table saw in the panel room, but we are now putting on line a new Thermwood router which will shape, square, size, and profile panels, doors, and head rails. Up to now we've shaped our head rails and cathedral and arched panels on a Jenkins/Unique computer shaper, which has been a great machine.
All of our straight panel raises and door lip operations have been done on an SCMI CenterIII with a Doucet return conveyor. That combination allows an almost continuous cut on straight cuts with only one operator. The Center machine has a stacked spindle which is programmable in the vertical axis and is a pain to maintain and change profiles on, but it saves a lot of time in daily operation. The Center also has a linear sander on the third station, for our panel-raise profile.
We have used a number of machines for coping door rails, including shapers and the Jenkins/Unique. We finally built our own proprietary design, which has cut our coping time in half, but I can't really discuss much about that. Since we run one of a size or type, we needed something fast, accurate, and versatile. God willing, maybe we can sell you one someday.
Assembly is done in a Taylor door clamp, and finally we widebelt sand on a DMC Unisand four-head (another wonderful machine). I've never totaled the investment we have in our machinery but would ballpark it at about $350,000 to $400,000. Of course, we use much of that machinery for other purposes, and we didn't buy it all at once.
We started, like everyone else, with shapers, feeders, etc. If the Thermwood works out, I'll report that at a later time. The concept is dynamite.
I guess I also have to ask this: If you don't know your investment in machinery, how do you know it's a good decision? A minimum baseline: If I have $400K in equipment, and I could easily earn 8 percent a year or $32K in interest, which compounds over time, is it a good return to own the equipment?
If you took the space, overhead burden and labor and added that into the opportunity cost of the money (lost interest), there is your cost. If you considered how many additional jobs you could take in using the same space, labor and specialized/faster equipment, then you would know if it were worth it.
If you are doing 250 doors a day I'll bet the math works out, but for a smaller guy it probably would not; the reasons appear simple to me.
A five- to ten-man shop will not use enough hardwood to buy in the quantities that will get the best price. He will not have the efficient equipment that a dedicated door shop would. If he does have the equipment, it probably sits idle most of the time or has costly tooling changeover and setup from its other uses. Then there is the complexity of manufacture and availability of labor.
If that same guy buys from a door shop that has equipment similar to yours and does the volume to buy lumber efficiently and produce efficiently, then it starts to make sense to buy.
To give an outrageous example, I am sure you could make your own electricity. Does it make sense to? NO! The Ford River Rouge Complex (one of the largest industrial complexes around) makes its own electricity because it made financial sense at some point to start. If a small shop grows to a sufficient volume it may make sense to consider; I would still do the math.
I can only estimate what the potential of the machinery would be if each primary machine had a dedicated operator for eight hours a day. My best guess is that we could produce upwards of 1,000 to 1,500 doors a day on the machinery. As I stated earlier, we didn't start with the machinery we now have, and wouldn't advise that anyone else should capitalize at the $400,000 level either.
We have, as a result of our automation, become the source for a number of local shops who have decided to outsource, so I don't necessarily disagree with your premise.
As an aside, a number of years ago I had an employee quit in the middle of a job (sound familiar?). Rather than replace him at the time, I had our bookkeeper calculate his absolute cost per year including wage, insurance, workers' comp, holidays, vacation, unemployment, etc. and was surprised to find that, although he was an under-$10-an-hour employee, the monthly, out-of-pocket expense to the company was in the neighborhood of $2,200. A phone call to a leasing company confirmed that I could purchase $100,000 in machinery for the same monthly cost as replacing him, which is what we did.
I have known a good many shop owners and managers who would hire half a dozen employees without giving it much thought, but who would never spend a quarter million dollars on equipment or tooling. Fact is, the lease or payment represents a fixed cost, with the potential for future cash asset value, while the employee becomes more expensive with every passing year and every mandate from the government. Also, newer equipment (computerized) means that much of the skill of the operator is transposed to the machine, making the company less dependent on the whims of the employee.
The failure in this logic is that too many managers begin to see the machines as the asset and the employee as the liability, which is never true. The object of automation is not to eliminate all of the people, but to make current employees more productive, and to provide a safer, more enjoyable work environment. The net effect is that rates of pay can increase, and retention problems can be reduced.
Those companies that would rather not get on the technology treadmill with respect to machinery will make more money in the short term, but what is their advantage in the market? If I assemble and finish, and you assemble and finish, and we both source components from the same vendor at the same price, an advantage can only be gained by superior service and finish, which are good goals. But if I have taken the opportunity presented by a strong economy to purchase and pay for the machinery necessary to manufacture my own components, I can certainly gain the market advantage when things slow down. The risk is, if I gamble too much and increase my overhead beyond reasonable limits, when the inevitable slowdown occurs, I'll be gone -- and you win.
Comment from contributor A:
I worked in the cabinet industry for several years as a designer and fabricator. I by no means have as much experience as many of you, but in that short time I helped turn a company around from barely keeping its head above water to expanding to 10 times its size.
This company was competing with some of the biggest manufacturers around and just could not keep up. My input was Automation with a capitol “A”. First, we consulted the top mechanics in the shop about production streamlining (e.g. layout of the shop for assembly and milling, mobility and re-tooling scenarios, etc.). Then (also with input from the shop team) we researched automated cutting, milling and edging systems (not to mention drill press systems, sanding systems, spraying/gluing systems, etc.) with one key component that all had to meet - they had to have a CAD integration method. Then we looked into CAD/CAM systems that we could utilize to create shop drawings (for submittals) as well as cutsheets and CAM data sets. As you might have guessed, there are quite a bit, but we needed the flexibility of both design time input as well as a “mechanic override” feature. The system had to automate and work with 52 cutting/routing/drill/edgers/spraying systems as well as optimize the cuts and passes of materials. We found several that almost fit the bill, but we decided that we did not want to change our plan to accommodate software, so we developed our own, utilizing a combination of AutoCAD and custom code. After the first job run on the new system, we found that we could hire moderately skilled helpers to maintain and monitor the automated systems (clearing jambs, verifying long run production cuts and mills, etc.) while freeing up our lead mechanics for the more detailed millwork manufacturing. Bottom line - we increased production 200%, reduced production costs by 38% and tripled the companies profits in less than a year.
What’s the moral? Let’s just say that Henry Ford monopolized on the concept almost 100 years ago with the Model T and assembly line production. The same holds true today. Even if you can't afford the systems we developed, you can start with a basic assembly approach and make money. Find good raw material supplies that are consistent and plan, plan, plan, then plan again until you have a wel- oiled assembly system. It is also key to keep records of how the system worked and failed to make adjustments. A well-designed system is never complete and continually evolves, howeve,r don’t get caught up in changing the system every other day. Make small tweaks as you go (at the end of a small run of production cabinet doors, you move the hinge bore press to another position in the line to make better use of the edger on all 4 sides, for example).
If you figure your true cost of making more than two or three different stiles and rails and profiles then I believe you would find it more profitable to outsource. The other shop owner said he made 250 per day, well I would argue with him that he could not do that offering multiple stiles and rails, multiple center panel profiles or multiple door styles. He did not mention if they were routed MDF, or mitered, or applied molding.
In today's ever changing market having the ability to compete with the factory cabinet guys will require cabinet shops to offer more styles and wood species. Also when figuring cost he did not mention waste and dust removal cost, maintenance on equipment, electrical requirements, numerous other hidden costs, not to mention engineering time, purchasing of raw material, storage, and the employee who could not make it today because his wife was sick. This may be the reason you don't see too many rich cabinetmakers and way too many going out of business.
