A lot of times what we see with pricing, where we can offer very competitive pricing is with our technology we have the ability to nest a lot of different components from like materials together. About 40-50% of our costs come from raw material. If we have the ability to take several different sizes of material, pull them together and pull them into what we would call a nest on the same sheet of material, same thickness. This allows us the ability to offer competitive pricing to our customers from the same like material we are going to set up anyway.
So the more parts that are like material just allows us to reduce that set up time as well as the raw material usually. I will come to that second point in a moment but just back to Mikes point, it is so critical you will see as well a lot of times we will see a 5/16 part and a quarter inch part in the same order. From an engineering perspective maybe they have to be different, which we fully understand, but if you can produce a part out of the same thickness, there is tremendous benefit to that.
Secondly over tolerancing is a big issue and we get tolerances that are really tighter than the part demands for it’s use. It really drives costs up for us in terms of tighter bending operations, tighter welding tolerances all those things really drive costs up so we always try and talk as much as possible with our customer around. Are these tolerances that are requested on the prints really necessary? I think it is within our best interests to make sure we are quoting components properly and offering the most competitive price to talk to the customer and to understand not just the technical challenges but also understand the quantities, the releases. I think the more information we can pull up front, the more accurate we can offer a customer a price and ultimately the more competitive we can be.
So I think it is important to have that dialogue as early as we possibly can with all our customers. That is a really good point Tim, one of the core values of PCI is really long term partnering relationships with our customers and we feel a part of that is a being able to bring our manufacturing and engineering insight to our customers. Product insight and blend those together and that is where we can marry those skill sets we can end up with the most cost effective product we can and we see that as a vital part to an ongoing and long-term partnership with our customers. That is just core to our belief system here, it is really our obligation to work with our customers helping them to find the best manufacturing solution and that really leads to long term partnerships which is what we are really about here at PCI.
My biggest thing would be really communication and understanding the visibility of the component. So for example a customer might say I have an EAU of a certain number, understanding the releases, understanding what their intentions are for those products. As well as the technical side of things and what their requirements are I think if you can add those two things together it offers a more competitive solution.