Negotiating Contract Manufacturing

Fang Bai left the Jiayu Processing Plant. At two in the afternoon, he returned to the workshop and saw that the two sets of fixture components were already finished, laid out on the floor.

He took a vernier caliper from his father-in-law, measured the fixture data, and found that everything met the drawing requirements.

Next came assembly. After more than ten minutes, Fang Bai had both fixtures fully assembled.

Once assembled, his father-in-law looked at the completed fixtures and roughly understood their purpose.

"Mr. Fang, they look pretty good. I never thought a fixture could be made this way."

"Boss Qin, the structure isn't complicated. Some key points just click once you see them." Fang Bai said with a smile. "If we cooperate, remember to keep it confidential."

"I understand that, don't worry." Qin Donghai thumped his chest in assurance.

Fang Bai didn't take it too seriously. Not only would his father-in-law use the fixtures, but the workers would too, and manufacturers would come to inspect. Keeping it secret for half a year would be good enough.

That said, without the drawings, reverse-engineering them would still be difficult. But if the idea leaked, others could still replicate them, since the structure wasn't complex and the precision requirements weren't high.

As long as Fang Bai had half a year, he could already earn enough initial capital in the valve industry.

Next, under Fang Bai's guidance, Qin Donghai first installed the face-turning fixture onto the lathe chuck. It took about ten minutes.

Once installed, without Fang Bai's instruction, he already knew how to mount the 2-inch globe valve onto the fixture. After a slight adjustment to center the valve, it was set in no time.

"Hey, this is really handy—saves time and effort. Let me test it with the workpiece you brought." Qin Donghai checked if the workpiece was loose, and after confirming it was fine, he started the lathe.

As the valve spun, the flange rotated at the exact center, ready for machining.

He moved the tool post, and the cutting edge approached the flange surface. The "ssss" sound of machining began, with no tool collision.

The most time-consuming part of face-turning was mounting the workpiece, requiring the flange to be as coaxial with the lathe spindle as possible. Turning three faces meant three mountings, which normally took over twenty minutes, while the actual machining time was very short.

Fang Bai's fixture set was incredibly efficient. Three mountings took at most three minutes, greatly improving installation speed, allowing six to eight valve bodies to be machined per hour.

A few minutes later, one valve body had its flange face finished.

"Impressive, really handy!" Qin Donghai gave Fang Bai a thumbs-up.

Then, the two installed the drill jig onto the drilling machine platform, mounted the finished valve body onto the jig, and ensured the drill bit was perpendicular to the machining surface. The driller working for Qin Donghai started drilling.

This worker was about thirty-something, named Zhang Dafu.

"Mr. Fang, no need to mark lines or punch centers?" Zhang Dafu asked.

Hearing this, Fang Bai knew the driller's skill level was average. Drill bushings weren't new to experienced drillers, but designing a custom bushing for a specific workpiece required some design ability and the insight to hit the key points.

"No need, just drill directly." Fang Bai said with a smile.

Zhang Dafu nodded, turned on the coolant as Fang Bai instructed, and began drilling.

Skipping the line-marking and center-punching steps, and with easier workpiece clamping, the drill bushing guided the bit, greatly improving drilling efficiency.

After drilling the four holes on one face, the fixture rotated to a fixed angle without needing to reclamp the workpiece, allowing direct drilling on the next face.

The hole diameter was 10 millimeters, with a thickness of about 15 millimeters. No tapping was needed. In a few minutes, all twelve holes were drilled and chamfered.

After drilling and chamfering, Qin Donghai removed the workpiece, picked up the vernier caliper, and measured the inner diameters. After checking all the holes, he said excitedly, "All within tolerance. This drill bushing fixture works great."

Fang Bai also breathed a sigh of relief and smiled contentedly. "Boss Qin, confident you can machine more than six per hour now?"

"If it stays stable, it should be no problem."

"But my machines and tools will wear out faster, and the labor intensity is higher. I pay my workers by piece rate, and people need rest—they can't keep up that efficiency forever. The unit price you're offering is too low." Qin Donghai frowned.

"How about this: nine yuan per piece. You process as many as you can, and I guarantee enough volume." Fang Bai said after a brief thought. That meant if he processed fifty pieces a day, it would be an extra fifty yuan—no big deal if it helped his father-in-law earn more.

If it turned out his daughter had been taken by him, and his father-in-law later remembered haggling over the price back then, who knew how he'd feel.

"Alright, no problem. As long as the volume is there, I'll add equipment and workers, and quality will be guaranteed." Qin Donghai was satisfied. With one line working overtime, he could handle sixty valve bodies a day. If volume increased, he could run two shifts.

One shift could earn him about four hundred yuan, matching several days' usual profit. Where else could he find such a good deal? Fang Bai was practically a god of wealth delivered to his doorstep.

What a great guy!

If he ran two shifts, profits would at least double. It would be hard not to get rich, as long as Fang Bai could bring in enough orders.

Fang Bai pulled his father-in-law aside and said, "Boss Qin, you can pay the workers a bit more.

These two fixture sets might only stay confidential for half a year at best. Try not to let the manufacturers know.

Don't worry about the orders. Besides the 2-inch globe valve, there are other specifications too—just need to make more fixtures.

Make sure quality is guaranteed. Everything must pass re-inspection, or I won't be able to explain myself."

Different valve specifications required different fixtures—these were called dedicated tooling.

"Got it, I understand. Don't worry about quality." Qin Donghai thumped his chest in assurance, beaming. "Please take care of me in the future, Mr. Fang."

"Alright, I'll take a sample first. If things go fast, I can bring the blanks over this afternoon." Fang Bai nodded and shook hands with his father-in-law.

Even if they were in-laws, quality issues had to be made clear.

If quality couldn't be guaranteed, it would be a one-time deal.

If a machining error wasted a blank, that was the subcontractor's problem—they'd have to compensate for the blank cost. The manufacturer wouldn't ask for more.

But if the blank itself was defective, it could be returned to the manufacturer, and the subcontractor bore no responsibility.

These were industry norms, no need for Fang Bai to explain further.

The finished samples were coated with oil and coolant. Fang Bai asked Zhang Dafu to help wipe both of them clean.

Once they were mostly dry, Fang Bai took the two samples and arrived at Hengli Company over ten minutes later, just as Wang Hengli was in.

He set the two workpieces lightly on the floor of Wang Hengli's office. Wang Hengli glanced at Fang Bai, then at the workpieces. "Both within spec?"

"Of course. You can have quality control measure them. We're just earning our keep."

"Take them downstairs, then. Let QC check them."

Wang Hengli waved his hand. Fang Bai picked up the two samples and headed to the first floor.

After a while, the inspection was complete. They did meet the drawing requirements, which left Wang Hengli a bit conflicted.

After a brief thought, he decided not to worry about how Fang Bai managed it—only the results mattered. "I can let you do the machining, but quality has to be guaranteed."

"Pleasure doing business!" Fang Bai said with a grin. "I'm just worried the volume won't be enough, or the payments will be slow, and I won't be able to pay my workers, which would hold up production."

"For the first batch of five hundred pieces, how soon can you deliver?"

"Within fifteen days," Fang Bai replied. "It really depends on the payment terms and speed."

Normally, subcontracting payments were settled in thirty, sixty, or one hundred eighty days, with no advance payment.

Given such a favorable processing price, Fang Bai certainly wouldn't agree to long payment terms—that would mean him fronting the workers' wages.

The biggest fear in subcontracting was slow payment. Fang Bai had run into plenty of that in his past life, including cases where payments were delayed for years or simply defaulted.

So if payment couldn't be settled within thirty days, he'd rather not take the order. The processing fee was already slim.

Next, Fang Bai and Wang Hengli returned to the office to negotiate payment terms. In the end, Wang Hengli agreed to Fang Bai's thirty-day settlement requirement, and they signed the subcontracting agreement.

The willingness to pay promptly was mainly due to the booming business and healthy profit margins these days. Otherwise, Wang Hengli wouldn't have been so agreeable.