Invest in a More Secure Future
Why Investing in New Equipment During Difficult Times Makes Sense
Investing in new equipment at a time of financial uncertainty may not at first sight appear to make commercial sense; but according to assembly equipment manufacturer Modular Automation International that’s exactly what many British manufacturers should be doing if they are to survive in an increasingly competitive world economy.
Using manual labour to perform repetitive labour intensive tasks just doesn’t make economic sense in modern industry and those companies who don’t adapt to new technology will be wiped out by fierce competition coming from Eastern Europe and the Far East. British manufacturers must become more efficient if they are to counter the threat from cheap labour economies.
There is of course an alternative: find an overseas manufacturer and simply subcontract the work to them. But there are major risks in doing this. How do you find a reliable manufacturer in a foreign country? How much time will your engineers have to spend with them to get things started? How do you monitor the quality of their output and what happens when things go wrong? The list goes on, and there have been many high profile cases in the news recently where major companies have been let down by their suppliers and suffered the consequences, both financially and in damage to their reputation.
Remember, it’s your name on the box and your company that will get the blame if a bought-in component fails, even though it’s not your fault. To make things worse, litigation could follow, especially if the part was safety critical, and it is unlikely that you will be able to launch a successful legal claim against a supplier if they are on the other side of the world. Keeping production in house is definitely the preferred option; the challenge is to make sure you don’t go out of business in the process.
Modular Automation’s sales manager Mark Hendry said, “There’s no doubt it’s getting tough out there and manufacturers need to look carefully at how they do things and look for ways to do them better. I think it’s the duty of every manufacturer to do that. Automating some of the operations can mean the difference between life and death for companies that still rely heavily on manual labour for volume production. Yes, it may mean fewer people in the workforce, but that’s better than everyone losing their jobs to foreign competition.”
Using conveyors rather than trolleys to move items around the factory floor is one simple and relatively inexpensive way of reducing labour costs, while assembly cells can be equipped to perform operations quickly and accurately in a fraction of the time taken by a manual operator. That is not to say that human beings no longer have a place on the shop floor, but it is important that they are employed in roles that add value to the operation. Pushing a trolley full of bolts from one side of the factory to another is not a sensible use of labour, whereas employing someone to do jobs that require a high degree of flexibility and intelligence obviously is. In other words, if a human being can add value to the task in hand that’s fine, if not it would be better performed by a machine.
Acquiring new production equipment, which often needs to be designed specially for each customer, usually requires a considerable capital investment, but recent moves by Modular to introduce leasing facilities for customers will make it much easier to afford. As an example, a piece of equipment with a capital value of £250,000 would cost around £1,270 per week to lease. Working a two shift system of 80 hours five days a week, that’s just £15.88 per hour. Another advantage of leasing is that lease payments are regarded by HM Revenue & Customs as a business expense and are fully allowable against corporation tax liability. Whereas with outright purchase the annual tax allowance is only 25% on a figure which diminishes each year.
To use an Americanism, the case for automation really is a ‘no brainer’ and must not be ignored. In this turbulent economic climate one thing is certain, our foreign competitors are hell-bent on taking manufacturing business away from
All business enquiries to:
Mark Hendry
Modular Automation International Ltd.
Talbot Way
Small heath Business Park
Birmingham B10 0HJ
Tel: 0121 766 7979 Fax: 0121 766 6385
Email: Hendry@modular.co.uk
Web: www.modular.co.uk
Photo caption: Modular Automation
High resolution images are available from enquiries@thewordsworkshop.co.uk
