Saturday, August 26, 2006

Welding End Prep Tool works with hard-to-machine materials

Prepzilla MILLHOG[R] pipe milling end prep tool features one mandrel and 8 sets of interchangeable clamps to cover 11/2 in. ID to 8 5/8 in. OD operating range. Designed for materials such as stainless steel and P-91, tool has 23/4 hp pneumatic motor, generates 1,500 lb-ft of torque at cutter blade, and pulls thick chip without cutting fluids. It uses EscoLock(TM) blade lock system and TiN coated cutter blades and is capable of beveling and facing or boring in one operation.

An I.D. clamping pipe milling welding end prep tool that covers a broad range of tube and pipe with one mandrel and eight sets of easily inter-changeable clamps is available from ESCO Tool of Medfield, Massachusetts.

The Esco Prepzilla MILLHOG[R] pipe milling end prep tool features one mandrel and eight sets of easily interchangeable clamps to cover the full 11/2" I.D. to 8 5/8" O.D. operating range of the tool. Designed for hard-to-machine materials such as stainless steel and P-91, this tool has a 23/4 HP pneumatic motor, a rugged gear head design, generates 1,500 ft.-lbs. of torque at the cutter blade and pulls a thick chip without cutting fluids.

Capable of beveling and facing or beveling and boring in one operation, the Esco Prepzilla MILLHOG[R] pipe milling end prep tool uses the EscoLock(TM) blade lock system and TiN coated cutter blades. An optional cross-feed attachment that advances another blade in .003" increments to sever the heat affected zone (HAZ) and permits flange facing and grooving for couplings is offered.

The Esco Prepzilla MILLHOG[R] is priced at $7,995.00 and the optional cross- feed attachment is $2,400. This tool is also available for rent in the continental U.S. Literature is provide upon request.

VMC Design Turned Upside Down - YCI Supermax breaks from convention with new machine tool design

Is there room for improvement in the fundamental design of a vertical machining center? At least one machine tool builder thinks the answer is yes. For its larger-travel VMCs, YCI Supermax (Santa Fe Springs, California) has broken from design convention to place the Y axis on top of the X axis. Improved precision is the reason for the change.

A conventional VMC has X atop Y. This means that support for the work remains near the middle of the machine no matter where the work is located in X. As the work moves toward extreme positions in X, overhang increases. Some machine tool builders address this problem with non-integral supports located on either side of the base. By contrast, placing the X axis on the bottom of the machine results in a one-piece base providing consistent support along the machine's travel.

There are tradeoffs. According to company executive vice president Bryan Chen, the design's one-piece, T-shaped base results in a machine that is more expensive both to manufacture and to ship.

However, for large, heavy jobs, the improved precision may justify the added cost. The one-piece design not only counters overhang, it also improves leveling accuracy.

It may also improve floorspace requirements. The footprint for one of these machines is 20 to 30 percent smaller than the footprint for comparable machines with the same travels, YCI says. This design is available for machines featuring X-axis travels of 59 or 82 inches.

Flexible Cable withstands rigors of machine tool use

Resistant to oils as well as cooling and cutting fluids found on machine tools, Chainflex[R] CF170 is designed as continuously flexing cable for use in cable carriers. Product, available from stock from 20-8 AWG and up to 30 conductors, is PVC- and halogen-free and conforms to DESINA standards.

EAST PROVIDENCE, R.I. - August 25,2005 - Igus[R] Inc., the industry-leading developer of Energy Chain[R] cable carriers, Chainflex[R] cables and iglide[R] plastic bearings, offers Chainflex CF170, a low-cost continuous-flex cable for machine tools. Chainflex CF170 is resistant to oils, cooling and cutting fluids found on machine tools. Like all Chainflex cables, it is designed specifically as a continuously flexing cable for use in cable carriers.

CF170 is available from stock from 20 AWG to 8 AWG and up to 30 conductors with no minimum purchase quantity. It is PVC-free, halogen-free and conforms to DESINA standards.

About igus

Igus Inc., founded in 1985 and based in East Providence, R.I., develops and manufactures industry-leading plastic cable carriers, continuous-flex cables, plastic bearings and linear guide systems. With more than 28,000 products available from stock, the company meets the motion control and machinery component needs of customers worldwide. Product lines include Energy Chain Systems[R] to protect and house moving cables, Chainflex continuous-flex cables, iglide self-lubricating, oil-free, plastic bearings, DryLin[R] linear guide systems and igubal[R] spherical bearings. For more information, contact igus at (800) 521-2747 or visit www.igus.com.

igus, Energy Chain, Chainflex iglide, Energy Chain Systems, DryLin and igubal are registered trademarks of igus Inc. All other company names and products are trademarks or registered trademarks of their respective companies.

Tuesday, August 22, 2006

Today's Options for Machine Tool Financing

How to pay for o new machine tool con be as complex on issue as deciding which machine tool to buy.

Do you remember what financing a machine tool was like in the mid-1980s? In those days, financing was a very slow and cumbersome process! Overnight deliveries and fax machines were hard to come by. Not only did it take days for the preparation and mailing of financial data, but it took even longer for an answer from the finance source in most cases. Once you received an approval and you agreed with the terms, even more days were lost while waiting for documents to be prepared. In addition, the basic products that were provided 15 years ago were usually a $1.00 purchase option, a 10-percent purchase option and the "dreaded" Fair Market purchase option. There simply were not the same financing options available then that there are today.

Imagine your company has decided to finance a piece of manufacturing equipment. It could be a five-axis machining center, a turn-mill machine or a creepfeed grinder. Do you lease it, buy it or rent it? Are there tax implications? Does it really make a difference how you finance it?

The answer to these questions can only be determined after analyzing your company's particular circumstances. Let me illustrate how your company can acquire the same piece of equipment using several different finance structures and at the same time have the "cost" to you be identical.

(Assume an equipment cost of $250,000 with a 10-percent yield (APR) over 60 months with no up-front payments or money down.)

Structure #1: A loan or $1.00 purchase option lease. Payment amount is $5,311.76. Total of payments equals $318,705.60.

Structure #2: A finance lease with a 10-percent purchase option. Payment Amount is $4,988.92. Residual due at end of lease is $25,000. Total of payments is $324,335.20.

Structure #3: A finance lease with a 20-percent purchase option. Payment amount is $4,666.08. Residual due at end of lease is $50,000. Total of payments is $329,964.80

Structure #4: A true lease (Fair Market Value purchase option). Payment Amount is $4,002.03. Total of payments is $240,121.80 The equipment is owned by the lender, and your company would expense the payments on the Profit and Loss statement. The purchase option is the Fair Market Value of the equipment at the end of the lease. You could purchase or return the equipment at the end of the lease term.

As you can see, the structures are all different in terms of the actual dollars paid by your company. However in terms of actual cost (yield), structures 1-3 above are identical! This is because of the timing of the payments made to the lender. Another factor that potentially impacts the true economic cost to your company is the accounting treatment given to the transaction. Your accountant may choose to "expense" the payments on the lease and not account for the depreciation and interest under a purchase scenario. This option will likely affect your tax rate.

Given the above, I would like to further illustrate and explain how many services and structures are available when purchasing equipment today. This will help your company decide what your best options are when it comes to financing an asset in the future.

What is A Lease?

A lease is a contract in which one party conveys the right to use an asset to another party for a specified period in exchange for a specified stream of payments. At the end of the lease term, the lessee usually either purchases the asset (by exercising the Purchase Option) or returns it to the lessor.

Leases can be structured in several different ways.

$1.00 Buyout Lease. This is the most commonly used leasing structure. It provides the rights of ownership to the lessee. The asset(s) will be capitalized on the lessee's books, allowing the lessee to expense the depreciation and interest on his or her profit-and-loss statement. This structure requires the highest monthly payment over the term, and the customer then "buys" the asset for $1.00.

Fixed Price Purchase Option (Finance Lease). This structure allows the lessee to purchase the equipment for a preset percentage of the original equipment cost (such as 10 percent, 15 percent and so on). Fixed price options are usually structured to give the lessee lower monthly payments (compared to a $1.00 buyout lease, for example) while still retaining the rights of ownership. At the end of term, the lessee can return the equipment, buy it for the preset amount or finance the option. The lessee depreciates the equipment and deducts interest payments in the same manner as the $1.00 buyout lease. It is generally believed that less than a 20-percent Fixed Price purchase option would allow for the lessee to retain ownership. However, you should always consult your tax advisor concerning the tax consequences of a lease with a Fixed Price purchase option.

Fair Market Value Lease (FMV or True Lease). Typically, an FMV lease product allows for the lowest monthly payment among the leases offered. The payments are usually fully tax-deductible (same as a rental). At the end of the term, the lessee would buy the equipment for its current Fair Market Value, return the equipment or renew the lease. Many companies utilize this structure to their advantage.

Machine Tool Status

A recent Association for Manufacturing Technology (AMT) (McLean, VA) publication shows that the US manufacturing technology industry is experiencing renewed growth in major markets, but continues to face tough global competition. Highlights include:

* The US machine-tool market finished 2004 with orders more than 40% above 2003 levels and shipments up 25%. But, consumption fell more than 60% from its peaks in 1998.

* While growth has been strong over the past two years, our manufacturing technology market is less than 60% of its peak in 1998.

* Optimists forecast double-digit growth in 2005, while forecasts for the following years diverge. Some sectors in the manufacturing technology markets will begin to slow as early as 2006.

* Consumer demand has slowed in recent months in key markets-such as autos, off-road and highway construction equipment, and appliances.

* Continuation of the capitalspending boom will depend upon the export markets for US-built capital goods and nontraditional, but expanding, domestic markets such as the medical equipment industry.

* The weakened dollar has made US products more attractive in Western Europe. Exports of both manufactured products and manufacturing technology equipment illustrate the temporary competitive advantages provided by exchange rate shifts. The weakened dollar, relative to Asian currencies, is likely to also lead to increased exports of US manufacturing technology.

* The US continues to excel in important categories, including: composite tape-laying machines; transfer lines and systems; small, medium, and large-size CNC machining centers; spar and skin mills for aircraft components; abrasive flow machining for difficult finishing problems, CNC turning centers, small assembly robots, and open-architecture controls.