Weld Cost Analysis: Simplified perspective on Cost Components of GMAW

Ehsanullah Khan, International Expert – Welding & Cutting, Air Liquide India
Acknowledgements:
This study has been carried out over different profile of Welding companies using sheet metal to medium thickness plate components. The Industrial segments of the users were boilers, sugar machinery, agri machinery, construction equipments etc. The base materials used by these companies are mostly mild steel.
The research had been carried out by Air Liquide group for welding and cutting applications.
We wish to express our gratitude to all persons involved in this study.
Abstract:
The aim of this work was to propose, apply and evaluate a methodical approach to optimize welding processes in a usual welding company where GMAW is the main welding process.
Very basic and simplified approach was taken to understand the cause/s & concern/s of the cost components by the CFO, CEO, Owners, VP, etc.
Our extensive research and based on market requirements of Quality and Costs, the best way to categories cost around Labor, MIG Wire, Shielding Gas & Electric Power excluding the capex & infrastructure related investments. A case study was used, using one WPS and weld was performed at three different factories using GMAW. Welders and welding environment were the variable components to simulate different welding cost given the welding environment of each factory. For Quality analysis geometrical aspects of the beads were considered.
Costs evaluation was done, showing to be most obvious area of improvement while implementing optimization process in the factory. Pre / post weld treatments & NDT checks were also excluded.
Introduction
Generally speaking, there are two types of welding companies and their behavior is just opposites:

• Large Scale.
  • Design first, Cost Next
• Small Scale.
  • Cost First, Design Next

And there are three types of Costs involved in Welding:

• Direct Cost.
  • Raw Material Cost
    • Component / material to be welded
    • Mig Wire
    • Shielding Gas
  • Labour Cost

 (Normally overhead & admin cost = Welder Cost; i.e. Labor Cost = 2 x Welder’s salary)

• Welders / Operators (Direct)
• Over heads (Indirect)
  • Insurance, Allowances, safety, security etc
• Expense (Indirect)
  • Supervisor, foreman etc
• Expenses
  • Electric Power (Direct)
  • Welding machine, Depreciation etc (Indirect)
  • Accessories & Spares (Indirect)

In this Cost distribution, for ease of calculation & understanding we exclude Cost of component, Cost of welding machine & its depreciation as fixed costs. Also, excluded accessories & spares cost which follows the company environment, if process is optimized, this cost is also optimized.
After that we can sum up mainly four categories of weld cost:

• Mig Wire
• Labor (= 2 x Welder salary)
• Gas
• Power

Welder perception:“If little is Good, bigger is Better” Is this true for weld bead ?
Weld cost equation:
TWC   =    MC   +   GC   +   LC   +   EPC
 Where;
        TWC = Total weld Cost
        MC   = Mig wire cost
       GC    = Gas cost
       LC   = Labor & overhead cost
      EPC = Electrical Power Cost
Weld Cost Perspective:
Global Perspective:

  Source: Airgas USA (Although Equipment Cost is included in this case, and since it’s only 4%, if excluded it will not change much of the overall cost distribution.)

Source: https://www.thefabricator.com/article/automationrobotics/analyze-your-arc-welding-cost
Indian Perspective:

Although, Indian labor is quite economical compared to its counterparts in US, Europe etc, still it is the single biggest cost contributor in welding operation which is most neglected part in most of Indian metal fabrication companies.
Management Perspective:

Think & think twice before planning your cost reduction strategy, would you like to actually save or would like to be ‘penny wise pound foolish’
Case: 

• 3 welders at 3 different companies
• 5 meter of 5 mm fillet weld per welded part
• 250 amps & 26 Volts as per WPS