Friday, December 20, 2013

#Manufacturers Must Know Their Facility

Reading this title, I’m sure that you rolled your eyes and thought, “why the heck is this guy talking about these three boring topics; Facilities, Utilities and Acquisition. The simple answer is that these three items are the least thought of in everyday operation of your business even though they may be the very basis of the expansion of your plant.

Facilities: Concrete, steel beams and roofs.This topic covers your building, property and storage facilities you use. Since your business has to be housed somewhere, you must concern yourself with the building in terms of its construction and maintenance. Don’t know much about concrete or steel beams?

 No problem, except that these matters may come up in the operation of your business. Let’s say that you
need to anchor a machine or cut a hole in the floor to put a pit for oil and chips to fall into. You’d better know how the concrete is constructed in your floor or you may make a mess when you start digging. Or how about when you go to hang an overhead crane on one of your vertical ceiling support beams. Can the beam handle the load? Digging out in the yard? Better know where the natural gas line is. See what I mean?

Utilities: Electricity is everything! (Natural gas is important too!) Speaking of utilities, without them you cannot run your business. No electricity and you got nothing but darkness and no computers. You'll have no telephone either, but that's not so bad since most people have cell phones. Incoming calls to your business will have to be re-routed though. No natural gas? Not so important here in Phoenix but in colder climates, a shop gets pretty cold fast with no heat. We take these for granted but they are the basis for any shop operation.

Acquisition: Grow or die! Acquisitions are probably the least concerning of these three areas since many companies may never consider buying another business. But my motto is ‘Grow or die’ and sometimes the easiest way to grow is to acquire something.  Even if you are a small business, you’ve got to be on the lookout for opportunities to purchase similar or complementary businesses, products or machines from machine dealers or at auctions.

Business Brokers. Feeling overwhelmed by all the details? There are many fine business brokers that can make this process easier should you come across something you want to buy. You may think that this kind of purchase is not what you want to get yourself into. Well, it has to be a good fit and add value to your company or product. While this is a simple explanation of the process, you cannot stick your head in the sand and ignore profitable opportunities.

Used Equipment. As far as buying used equipment, it may be the only way to get machines fast to accommodate a customer need.  My previous compnay once had a customer ask us to cut some splines on some parts for a new Air Force cargo plane. A new machine would have taken 6 months or more to get. Don’t even ask the price. We called a trusted machine dealer and bought a used machine that could handle the job. We had it up and running before the customer had parts to run at a fraction of the price of a new machine. Auctions can be a little tricky since you generally can’t run the machines before you buy and the only warranty you get is what I call 30-30. (30 feet or 30 seconds whichever comes first.) Caveat Emptor (buyer beware) is the phrase to keep in mind. Auctions can be a good place to buy IF you know what you are looking for and can keep your cool in the midst of an auction process.

And two steps you can take now

  1. Find or get your building plans, from the city or builder so you can be ready the next time you want to make improvements to your facility. These should include locations of electrical and natural gas lines in and outside the facility as well as a structural building plan with maximum loads specified for all beam members. Put the building plans in a clearly labeled folder and place it in an accessible but secure location (locked file cabinet next to your desk). You’ll be glad it’s handy when the next opportunity pops up!
  2. Check out our new "Exhaust Notes" video using the link under the picture of my 1967 Chevelle to the right. In this month's video, you'll come to understand why it is essential that you know your facility, the utilities feeding it and how to grow your business through timely acquisitions of other businesses or machines.

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