The scars from the ’great recession’ are long lasting. Ten years since one of the worst economic downturns in history, business owners continue to take a cautious approach to new equipment purchases. They are scrutinising purchases more than ever to ensure the purchase is needed and will deliver the right return on investment. Often, it all comes down to productivity. Will the new equipment help increase productivity and lower operating costs?
Take your cutting equipment for example. A higher rate of productivity from faster cut speeds and fewer secondary operations impacts cash flow since you’ll have less of your own money tied up in inventory and more finished jobs you can invoice.
Productivity gains pay off quickly because labour costs are typically one of the largest operating expenses for any fabricator or manufacturer. As an added bonus, when a new cutting system replaces an older unit, you will also experience lower operating costs since improvements in technology can result in increased consumable life and energy efficiency, and improved ease of use. In addition to productivity, here are three questions to ask yourself.
1. Will the new equipment allow you to take on new business?
Take a look at the jobs you’ve done over the past several months. Have you had to turn down or outsource jobs because you didn’t have the right equipment. How often have you done so? What is it costing you? Are there other jobs you could do or markets you could enter if you could cut other metals, or achieve a better quality cut?
2. Can you increase customer loyalty with better service or a better quality product?
Your customers are scrutinising their purchases just as you are. They are looking for a company that can provide them with the best combination of product cost, quality, delivery time, and even customisation. If the right tool helps you meet delivery deadlines or improve the quality of your product, you will distinguish yourself from your competition and increase loyalty among your customers.
3. Will improved equipment help you retain good employees and lower training costs for new ones?
Hiring and keeping good employees continues to be one of the biggest challenges for businesses. Finding and training a new employee can easily double your yearly cost for that person. Good employees appreciate technologies that make their jobs easier and are loyal to companies that invest in their safety and productivity. Not only is that a cost savings in training time for the new employee, the time the experienced employee doesn’t have to spend providing training now is used for production. During boom times, it can be hard to find the time to learn new technology or improve processes. Companies that hesitate to train and try new techniques during slow periods may well find themselves behind the technology curve when business picks up.