Chapter 10 of 10 · 10 min read
Cost per metre and the job record
Build the cost of a metre of weld from labour, consumables, power and equipment, compare stick and wire welding on the same basis, and keep a job record others can trust.
Every chapter of this book has produced a number that feeds the cost of welding: arc power and supply efficiency, electrode use and deposition, weld metal, arc time and the welder’s time around it. This chapter puts them together into a cost per metre of weld for the conveyor frames, by manual metal arc welding and by gas metal arc welding, and shows which numbers matter most. It ends with the record that makes the welding trustworthy, because a weld that cannot be shown to meet its requirements is worth less to the customer than one that can.
How the 1921 shops costed welding
Wanamaker and Pennington suggested costing arc welding from each machine’s measured energy use per pound of metal, together with a record of the hours worked and the weight of metal laid down. Their weighed test in Chapter 4 gave about 2.37 kWh per pound deposited, about 5.2 kWh per kilogram. They also gave a simple example of cost per unit from railway boiler work: tubes welded at 15 an hour, with labour at 77 cents an hour and electrodes and electricity together at 25 cents an hour, cost (0.77 + 0.25) ÷ 15 ≈ 6.8 cents a tube; at only 3 tubes an hour, the same costs gave 34 cents a tube.
That example contains the main lesson of welding costs. The hourly cost was almost fixed; the rate of work decided the cost per unit. A fivefold difference in output made a fivefold difference in cost. Modern costing has more lines, but the same structure.
The cost elements
The cost of welding a job is the sum of:
- labour and overheads: the welder’s total time on the job, from Chapter 6, times an hourly rate that includes wages, on-costs, supervision, floor space and equipment overheads;
- consumables: electrodes, or wire and shielding gas, from the weld metal and deposition efficiency in Chapters 4 and 5;
- power: arc energy divided by the power source’s efficiency, from Chapters 1 to 3;
- additional equipment: any new equipment needed for the job or process, spread over the work it will do;
- inspection and rework, which this chapter treats separately because they depend on the quality system rather than the process.
This is an illustration. All costs are excluding GST, because they are business inputs for which GST is claimed back as an input tax credit. The shop charges welding labour at A$90 an hour including overheads, buys its low-hydrogen electrodes at A$14 a kilogram, pays 30 cents a kilowatt-hour for electricity, and for the gas metal arc option would buy 1.2 mm solid wire at A$5.50 a kilogram and shielding gas at about A$9 a cubic metre.
What the hourly rate contains
The A$90 an hour does most of the work in this chapter, so it is worth knowing what is in it. It is not the welder’s wage. It includes the wage, superannuation, workers’ compensation insurance, leave and other on-costs; a share of supervision and the inspector’s time; the welding bay’s floor space, lighting and extraction; the depreciation and maintenance of the machines, fixtures, crane and positioner; and a share of the shop’s general overheads. Those costs are divided by the hours actually worked on jobs, not the hours paid, because time spent on training, maintenance and waiting has to be recovered from the jobs too.
Two consequences follow. A shop with idle welders has a higher effective hourly rate than one that is busy, because the same overheads are spread over fewer job hours. And equipment that saves time does not reduce the hourly rate; it reduces the hours, which is why the positioner and fixture appear in this chapter as savings in hours rather than as changes to the rate. The shop reviews its rate each year from its accounts, rather than using a figure from an industry survey.
Manual metal arc: cost per frame
From earlier chapters, each conveyor frame takes 6.91 hours of welder time, 6.0 kg of electrodes and 2.07 hours of arc at 4.42 kW.
- Labour: 6.91 × 90 ≈ A$622.
- Electrodes: 6.0 × 14 = A$84.
- Power: 4.42 ÷ 0.85 ≈ 5.2 kW of input for 2.07 hours is about 10.8 kWh, which at 30 cents is about A$3.23.
- Additional equipment: none; the shop already owns the machines.
The total is about A$709 per frame, or about A$35.46 per metre of weld. Labour is about 88% of it.
Gas metal arc: cost per frame
This is an illustration. From Chapter 6, the activity-based time with gas metal arc welding is 4.61 hours per frame, with 0.89 hours of arc time at a deposition rate of 3.5 kg an hour. The shop’s trial settings were about 260 A at 26 V, and the wire deposits about 95% of what is fed, because there is no stub or coating and spatter losses are small.
- Labour: 4.61 × 90 ≈ A$415.
- Wire: 3.109 ÷ 0.95 ≈ 3.27 kg, at A$5.50 a kilogram, about A$18.00.
- Gas: at a flow of 15 litres a minute for 53 minutes of arc time, about 0.80 m³, about A$7.19.
- Power: 26 × 260 = 6.76 kW of arc power, about 7.95 kW of input, for 0.89 hours is about 7.1 kWh, about A$2.12.
- Additional equipment: a wire feeder, gun and gas supply costing about A$8,000, spread over three years of 280 frames a year, about A$9.52 a frame.
The total is about A$452 per frame, about A$22.58 per metre. Labour is about 92% of it.
| Manual metal arc | Gas metal arc | |
|---|---|---|
| Welder time | 6.91 h | 4.61 h |
| Labour at A$90/h | A$622 | A$415 |
| Electrodes or wire | A$84 | A$18 |
| Shielding gas | none | A$7 |
| Electricity | A$3 | A$2 |
| Additional equipment | none | A$10 |
| Total per frame | A$709 | A$452 |
| Cost per metre of weld | A$35.46 | A$22.58 |
The gas metal arc process saves about A$258 a frame, about A$72,000 a year at 280 frames, excluding GST. Most of the saving comes from labour: fewer electrode changes, no slag removal and a faster arc. Consumables also cost less, mainly because almost all the wire becomes weld metal while about half the mass of the electrodes does not.
Which numbers matter
Because labour is around 90% of the cost, the numbers that move the total are the ones that change the welder’s time: weld size, deposition rate, operator factor, fit-up and handling. Electricity hardly matters. The shop’s figures show:
- the 6 mm frame’s electricity cost is about A$3, less than 1% of the total;
- an oversize 7 mm fillet would add 36% to arc time and electrodes (Chapter 5), about A$97 on a manual metal arc frame;
- the positioner in Chapter 6 saves 0.77 hours, about A$69 a frame;
- the fixture in Chapter 8 saved 0.40 hours, about A$36 a frame.
The 1921 equipment used about 5.2 kWh per kilogram deposited; the shop’s modern inverter uses about 10.8 ÷ 3.109 ≈ 3.5 kWh per kilogram. That improvement is real, but at 30 cents a kilowatt-hour it is worth about A$1.70 a frame. The improvement that matters is in the welder’s time.
Inspection and rework
Inspection and rework were left out of the comparison above because they depend on the quality system more than on the process, but they are real costs. This is an illustration. Repairing a defective 300 mm length of fillet weld on a frame, by grinding it out, rewelding it to the procedure and re-inspecting it, takes the shop about 0.75 hours of welder time and 0.25 hours of inspector time, about A$90 at A$90 an hour, before any delay to delivery. A frame with two such repairs costs about A$180 more, a quarter of the welding cost of a manual metal arc frame.
That is why the controls in earlier chapters pay for themselves. The arc voltage measurement that caught the long-arc porosity in Chapter 1, the fit-up check that catches root gaps in Chapters 5 and 8, the mode check in Chapter 2 and the clamp check in Chapter 7 each take a minute or two and each prevents a repair that costs an hour or more. The shop tracks its repair rate as a percentage of weld length, and treats a rise as a signal to look for a cause rather than as a cost of doing business.
From cost to price
The cost per frame is not the price. This is an illustration. If the shop adds a 20% margin to the manual metal arc welding cost of about A$709, the welding component of the price is about A$851 excluding GST. GST at 10% adds about A$85, so the customer is invoiced about A$936 including GST for the welding on each frame, along with materials, cutting, painting and delivery priced in the same way. Quotes to business customers in Australia normally show prices excluding GST with the GST stated separately, and the shop’s quotes do so.
A cost model like this one also tells the estimator which assumptions to check before quoting a new job: the weld length and size from the drawings, the positions, the fit-up and handling, the process, and the labour rate. A change in any of those moves the price far more than a change in consumable or power prices.
The job record
The customer for the conveyor frames does not only want frames; it wants evidence that the welding meets the specification. For structural welding in Australia that specification will usually refer to the AS/NZS 1554 series, which sets requirements for welding procedures, welder qualification, inspection and records. The shop’s job record for each batch of frames contains:
- Weld map: a drawing identifying every weld, its size and type, with a reference to the welding procedure used.
- Welding procedure specifications and the records of their qualification.
- Welder qualifications: who welded which frames, and evidence that each was qualified for the process and position.
- Consumables: electrode or wire classification, brand and batch numbers, and storage and holding-oven records for low-hydrogen electrodes.
- Fit-up and dimensional checks: the fit-up check, diagonals and bow measurements from Chapter 8.
- Inspection results: visual inspection of all welds, weld size measurements, and any non-destructive testing the specification requires.
- Non-conformances and repairs: what was found, how it was repaired, by which procedure, and the re-inspection result.
A failure: frames held at the gate
This is an illustration. A batch of twelve frames reached the customer’s site and was held at the gate by the customer’s quality inspector, who asked for the welder qualification records and consumable batch numbers for the batch. The welding was sound, but the shop could not show it: one welder’s qualification certificate had lapsed during the batch and been renewed late, and the electrode batch numbers had not been recorded for two days of production.
The frames sat on the customer’s site for nine days while the shop reconstructed the record, re-inspected a sample of welds with the customer’s inspector present, and qualified the welder’s work on the affected frames by additional inspection. The direct cost of the delay, the re-inspection and the inspector’s time was several thousand dollars, far more than the cost of keeping the record properly in the first place.
The shop moved its records from paper to a simple job database, in which a frame cannot be marked complete until its welder, procedure, consumable batch and inspection entries are filled in, and set reminders for welder qualification renewals. The lesson matches the one at the end of every chapter in this book: the numbers and the evidence are part of the weld.
Exercise: a higher labour rate
The shop’s labour rate including overheads rises to A$100 an hour. Keeping all other costs and times the same, calculate the cost per metre for manual metal arc and gas metal arc welding, and the saving per frame from switching. How does the higher rate change the case for the switch?
For manual metal arc welding, labour becomes 6.91 × 100 ≈ A$691, so the total is about 691 + 84 + 3.23 ≈ A$778 per frame, about A$38.92 per metre. For gas metal arc welding, labour becomes 4.61 × 100 ≈ A$461, so the total is about 461 + 18.00 + 7.19 + 2.12 + 9.52 ≈ A$498 per frame, about A$24.88 per metre.
The saving per frame rises from about A$258 to about A$281. Because the gas metal arc process saves labour, every increase in the labour rate strengthens the case for it, while changes in electricity or gas prices barely affect the comparison. The same reasoning applies to every improvement in this book that saves the welder’s time.
