Buying Equipment: Chapter 17
Penny wise pound foolish:Used machinery buyers come in all shapes and sizes. Each buyer has his own "system" of making the final decision.
If it's a really big company, the decision to buy a used piece of equipment is relegated to the division manager or the plant manager. The owner of a small company generally makes the final decision. A smart plant manager is worth his weight in gold. He can save a big company millions of dollars by making smart used equipment buys. I have seen companies spend millions of dollars in buying brand new equipment. A few months later this brand new machine is shoved into a corner to gather dust. It was the wrong machine for the job. I have seen this scene played out over and over again.
A few years ago, I had gentleman come over to see me. He had set up a unique binding operation. There was nothing on the market that could do what he wanted to do. Everything was done by hand. There were over 100 employees working 3 shifts at this plant. I spent about 2 weeks observing their operation. After thinking about this for a while, I came up with an idea to automate one aspect of his operation. To keep costs down, I suggested we make one unit....a small unit, to see ..how it played out. I started out with an old machine, stripped this machine down to bare bones and started adding the features that were needed. Even though this was a proto-type, I followed my usual operating procedures. All parts stripped to bare metal. These parts were then sent out to be primed and painted. All shafts, brackets etc were sent to the plater to be either nickel plated or chrome plated. When the machine was finally assembled it was a beauty.
This machine worked better than he expected. They could do 2,000 sets an hour compared to about a 1,000 sets a day by hand. It took 2 people to run the machine. One person could run the machine but he couldn't keep up with the output. Manually, they had 8 guys doing this job. You figure out the maths and savings. I was given an order for 6 more units. As a matter of fact just about every piece of equipment they had in that plant was retrofitted or custom made by us.
This plant was bought out by a giant corporation. The owner told me, he had an offer that he couldn't refuse. He retired.
This was a great customer and over the years we had developed a very good working relationship. If anything went wrong I would go service the machines.
Once the new company took over I stopped getting any calls from them. I called the plant manager and she explained to me that it was the new company's policy to do all service work in-house.
About a year and half later , I got an emergency call from this company. One of the machine was not working and the second one was acting up. The in-house service guys couldn't fix it. So, I went over. I knew every inch of this plant, since I was the one who had set-up all these machines. In the back room I had set up up a small area, where all critical parts for these machines were stored. Special relays, limit switches, sprockets, gears etc etc. I had suggested that all critical components should be on hand to reduce down-time to a minimum. The last owner thought that this was an excellent idea.
The problem turned out to be a worn out limit switch on one of the units. In addition the encoder was on its last legs on both the machines. No problem, I thought, I will just go in the spare room and get the parts. When I went back the whole "spare" room had been turned into a break area. I couldn't see the spares anywhere. Turns out that no one knew what all this "junk" was and it got thrown out. Sigh.
I had to order replacement parts. It was at this time that I suggested to the plant manager that she order extra limit switches. "How much are they" she asked. "About $16 dollars a piece" I replied. "16 dollars" she gasped...and said no.
Penny wise pound foolish
It took two days to get the parts in. I had to make 2 trips to fix these units. So with travel time etc my labor rate was twice what it would have been...had the parts been on hand. Don't forget the down time....One hour of my labor was equal to about 6 limit switches...
Oh, by the way, the service department turned out to be a 20 year old gal. She was a farm gal who knew more about milking cows than fixing machines.
