Closing a machine shop: customer programs, drawings and records

What does the shop own, and what belongs to customers?#

A machine shop typically owns its own operating history but not the designs it machined. Customer drawings, solid models and specifications arrive under NDAs, purchase order terms, quality agreements or supplier manuals that say how they must be handled when the relationship ends.

Part programs are the gray area. The G-code and CAM files your programmers wrote reflect shop skill, but they are built around a customer's part geometry, and many purchase terms treat anything derived from customer data as confidential. Read the terms and ask each active customer in writing rather than assuming.

Checklist: returning customer programs and drawings#

Returning customer programs and drawings is the step most likely to cause a dispute later if it is rushed. Customers resourcing parts need complete, current packages quickly, and customers who are not resourcing want proof their designs did not leave with the equipment.

Machine controls deserve special attention. Programs often sit in the memory of individual CNC machines, and a machine sold at auction takes that memory with it. Clear or back up each control, and record that you did, before the machine is tagged for sale.

• 1Pull a list from the ERP of every customer with active or recently shipped part numbers.
• 2Find the governing terms for each customer: NDA, purchase order conditions, quality agreement or supplier manual.
• 3Ask each customer in writing whether drawings, models, programs, fixtures and inspection data should be returned, sent to a new supplier or destroyed.
• 4Package transfers by part number with the current revision, the program, the setup sheet and the last inspection report.
• 5Destroy what customers ask you to destroy across the file server, CAM workstations, DNC system, email and machine controls, and log what was destroyed and when.
• 6Get a signed acknowledgment from each customer that the return or destruction is complete.

Which quality and tax records must the shop keep?#

Quality records such as first article inspections, certificates of conformance, material certs and CMM reports must usually be kept for the period set in each customer's quality terms. Aerospace and medical customers tend to set longer periods than general commercial work, and some require notice before a supplier destroys records or closes.

Tax and asset records run on their own clock. The IRS says records relating to property should be kept until the period of limitations expires for the year you dispose of the property, which matters when machines, tooling and the building are sold during the closing. Electronic ERP data counts as well: Rev. Proc. 98-25 treats records in a taxpayer's data processing system as records that must be kept while their contents may be material to tax administration.

Write the results into a simple retention schedule with the record type, the governing requirement, the holder after closing and the destruction date. Name who keeps records after the company dissolves, whether the former owner, the outside accountant or a records storage vendor.

How do you archive the ERP and CAM systems before shutting them off?#

Archiving the ERP before the subscription or maintenance contract ends is the step owners most often get wrong. Job shop systems such as JobBOSS, E2, ProShop, Global Shop Solutions or Epicor hold the shop's whole history of quotes, jobs, routings, labor tickets, shipments and invoices, and much of it cannot be rebuilt from paper.

Before giving notice, check the vendor contract for read-only access after cancellation and for data return terms. A hosted system may delete data on the vendor's schedule once the account closes, while an on-premises system can fail quietly once nobody maintains the server.

• 1Export full tables, not just reports: quotes, jobs, routings, operations, labor, materials, shipments, invoices, NCRs, and customer and vendor masters.
• 2Keep a copy of the database itself where the license allows, with a note of the software version.
• 3Export attachments and document links, which often point to a file server rather than living inside the ERP.
• 4Back up CAM files, post processors, tool libraries and setup sheets from every programming workstation.
• 5Save the DNC or program management library with its folder structure intact.
• 6Store two copies in different places, and test that one opens on a computer that never ran the shop.

Is the shop's history worth anything after it closes?#

A machine shop's history can have value when it shows how work was quoted, planned, run and corrected over years. Quote-to-actual comparisons, setup and cycle time history, NCRs with dispositions and maintenance logs capture decisions and outcomes, which is what AI developers building manufacturing and planning tools look for.

Customer designs have no place in that picture. Drawings, models and part programs stay out of scope, and so does anything under export controls: ITAR's definition of technical data includes blueprints, drawings, plans and instructions required to produce defense articles, so defense work is excluded entirely. Shops with 50 or more full-time employees at peak and several years of connected records are the typical fit, and a smaller specialized shop may be reviewed for a specific buyer request.

Illustrative example: a retiring owner with no successor#

Illustrative: the fictional founder of a precision machining company plans to retire with no family successor after decades serving industrial equipment and medical device customers. An auctioneer is booked for the machines, and the ERP and CAM licenses come up for renewal at the end of the quarter.

The wind-down officer, the owner's longtime controller, works the checklist in order. Each medical customer receives its drawings, programs and inspection files with a signed acknowledgment, and two customers ask for destruction instead. Machine controls are cleared before auction tagging, and the ERP database, attachments and CAM libraries are exported, tested on a spare laptop and stored in two places.

With customer material handled, what remains is the shop's own record of quotes, jobs, labor, NCRs and maintenance. The owner runs a metadata-only fit check on that history before the ERP subscription lapses and keeps the archive until a decision is made.

How SourceX looks at a closing shop's records#

SourceX assesses a closing shop's records through the SourceX five-step transaction, starting with a Supply check that uses metadata only: the ERP name, years of job history and which record families exist. Customer drawings, models and programs are excluded at the Rights step, before any Preparation work begins.

If the shop's own history proceeds, the SourceX Enterprise Data Value Framework explains what drives its value, such as domain expertise, human-generated signal, recency, data cleanliness and rights, and what reduces net value, such as preparation cost and privacy burden from employee and customer names.