By André Odermatt

Often times there are no specific or measurable goals to achieve for training.  Skill welding students in the Combination Structural and Pipe Welding Program at HIWT, however, must pass over thirty visual and destructive tests as prescribed by the American Welding Society as well as answer hundreds of questions in written tests.  Upon graduation, HIWT students (based on today’s scarcity of welders) earn salaries that provide for a respectable ROI (Return on Investment) in less than one year for their training expenses.  HIWT is considered one of the best welding schools in the country. When compared with the best business schools in the country, according to a recent business week article, it takes anywhere from 3.8 years to over 15 years for break even!  

There are thousands of welders who have not had the opportunity to be trained at a school such as HIWT.  It is likely that they have not learned how to identify and read the weld pool and take corrective actions to create a sound weld. While these welders perform valuable work for companies, they present an opportunity to reduce manufacturing costs if their skill is enhanced through training.  In order to determine the potential for cost reduction, one needs to first understand the cost of welding.

COST OF WELDING

In manufacturing, there are two types of cost:  visible and hidden. Visible costs are those that accountants capture.  Hidden costs are those that accountants do not capture. Every manufacturing process has visible cost and hidden cost. There are processes with just a few hidden costs and others with many hidden costs. Arc welding is one of those processes that contain high hidden costs. Strictly looking at a weld only, not as part of total manufacturing cost of a product, a traditional view of welding cost looks like this:

It is possible to identify factors that are influencing safety and health protection, power, shielding gas and filler metal cost. This article however, deals with factors involved in labor cost only. These are:

• Time for weld joint preparation

• Time for assembly positioning

• Time for tacking

• Time for welding

• Time for repositioning

• Time for changing tips, cleaning nozzles,

• Time for cleaning (spatter, etc)

• Time spent for weld inspection

• Time spent for weld repair, rework

• Time spent to weld new part due to scrap

Training should bring measurable improvement.

There are expressions: “What you cannot count, doesn’t count” or “Numbers talk, everything else walks.”  The most important factor in measuring the return-on-investment for training is the definition of what the training must achieve. Measuring the amount of money involved in weld repair, rework and scrap before and after the training and then comparing that improvement with the cost of training is the way to measure ROI.  If the cause of scrap and rework is determined to be welder skill, it is well worth spending the time to do an activity based costing on this process to establish a baseline for a before and after comparison. HIWT in its corporate skill training program can help establish this baseline.

Traditional accounting often uses a standard cost system which is worthless for our purpose of measuring improvements.  It lumps all the hidden cost together and calls it “overhead” or “manufacturing burden” and is allocated as a percentage of direct labor. It cannot be used as a tool to help companies manage the business, reduce cost and improve profitability. It is however a GAO accepted standard for financial accounting.

The expert staff at the Hobart Institute can assist companies in evaluating their hidden costs, which vary from company to company, and explain how specialized training can make your welding operation more productive and profitable.  We can work together with you to formulate and implement a plan which will identify how many days of training your welders may need to improve your company’s long-term financial health.