Repair VS Replace During Times of Struggle

Recently we have been plagued with automation malfunction which sparks the question, “Repair VS Replace during times of struggle?”  Although there are many Pros and Cons for both ways (if thinking optimistically in regards to the economy), one must choose wisely.  While manufacturing has been relatively slow over the past 8 months, and the economy is still sluggish to regain strength, many questions are raised.

Although we believe the economy is going to slowly regain strength and retailers will begin investing back into capital improvements, at Interior WooDesigns we haven’t seen the increase in production that speculators have stated.  Having spoken with other manufacturers, they too are embracing similar issues.

While some automation equipment can range in replacement value from $100k to $250k or more, they come with a significant investment decision.  On the other hand, when a piece of automated equipment goes down, it could be as little as $500 to as much as $3000 or more in a single visit.  Although our occurrences for needing repair are not frequent, with several machines more than 10 years old, one must ask, “Is Replacement Needed?”  Although automation equipment when properly maintained can last a long time, when repairing at the tune of $3000 or more per visit, it can certainly add up quick. 

Although most machines are depreciated out over 6 years, with the replacement value so great and manufacturing having been so slow, justifying capital improvements VS repairing a machine is a brain battle, and a strategic decision that doesn’t come easy.

Many manufacturing plants are facing similar situations, and some that have chosen to purchase new machines instead of repairing are no longer in business.  Although having new automated machines could provide a strategic advantage and would likely allow additional benefits, during struggling times spending excess cash on capital improvements could be a “cut throat” decision causing a company collapse.  At Interior WooDesigns we are constantly re-investing profits back into the company, maintaining the machines we have to the best of our ability and praying they last for a while longer.  With the economy having remained relatively stable over the past 18 months with a  slow progression, we believe that the best choice is to maintain what we have, invest back into the company, hold cash, spend wisely, continue to produce top quality store fixtures for our clients, and wait for the recession to fade and the golden economy to emerge.

Even though this is our plan of action, with aging machines and a sluggish economy for manufacturing, big investments with little work are nightmare decisions I can only pray we are not forced to make.  For those manufacturing plants that do have to replace machines, I wish you the best for I know the challenge of relinquishing cash in order to continue company operations.

The decision of “Repair VS Replace During Times of Struggle”, is not an easy choice, but one that should be well thought out and administered with due care.

How Will The Drought Effect Manufacturing

Although manufacturing store fixtures isn’t directly effected by the severe drought throughout the United States, we certainly are impacted indirectly.  While the drought is causing havoc on corn farmers who supply corn crops for ethanol which supply’s about 10% to our U.S. Gas Supply, we soon will feel the ripple effects from the extremely dry conditions.  Using some basic economic principles I will show you how we too will be affected, and how consumers will be affected as well.

While sources suggest a spike of nearly 15 cents a gallon in the months to come, and currently recording record high prices for corn, consumers can anticipate paying more for many items that are derived from corn or need corn to be produced.  With the increase in costs for food along with fuel increases, it will decrease expendable income.  Since manufacturing store fixtures is based off of consumers expendable income in buying non necessity items from retailers, if retailers are negatively affected they too will pull back spending on capital improvements.

Since the Supply of corn is low, and the Demand is remaining constant, Price is bound to increase.  Unfortunately, when commodities increase in price and cost of living remains constant, unless someone strikes rich, the expendable income decreases, and consumer confidence often falls as well.  Since Consumer Confidence can quickly slide, with a slow trek back upward, it is crucial we pay close attention to this drought crisis.

With manufacturing having been hit hard over the past 5 years with the recession, this drought I fear could be a final blow to many.  Since many manufacturers have been holding on by threads for some period of time, it would be no surprise if the drought doesn’t cause some manufacturers to go out of business.

Since Manufacturing is a staple to the well being of our U.S. Economy we ALL should be concerned about the drought, and will be affected by its wrath.  Unlike a Hurricane, Tornado, Fire, Earthquake, Tsunami, etc, which occur leaving a disaster zone in a specific area, this drought will affect our entire nation and should be taken very seriously.

So, although Manufacturers won’t be directly affected by the drought, I hope you can now see how we will be affected indirectly and the severity of this natural disaster.  For the unforeseen rain storm I hope it floods the crops with the necessary water to help provide healthy corn crops, and that we bounce back quickly stabilizing commodity prices, which will help stimulate economic growth.                    

Source: Martha White – www.MSNBC.com -

http://bottomline.msnbc.msn.com/_news/2012/07/19/12834892-gas-prices-may-go-up-too-because-of-drought?lite

You Get What You Pay For

We have all heard the phrase "You Get What You Pay For", and we believe that statement to be TRUE.  While we are constantly monitoring our fixture quality compared to others, and after years of modifying to reduce costs we are confident that customers "Do get what they pay for".  While Store Fixtures years ago were manufactured with real wood, then went to Laminate Fixtures with Real Wood Trim accent, and now are primarily laminate fixtures, chrome fixtures, or cardboard fixtures.

Although some consumers may overlook the product display, I would argue the point that it is hard to sell a $20 pair of socks from a cardboard box, whereas if the product was displayed in a descent fixture, it may help persuade consumers to buy with the ideology that it must be of a higher quality than the other socks.  I truly believe that display of a product is crucial in order to maximize a retailer’s return on investment.

In addition to helping diversify your products from the competition, with the higher quality fixtures, the fixture life expectancy is extended dramatically and is one less burden for a human to constantly monitor.  Depending on the quality of the fixture you choose, durability and life expectancy are 2 characteristics that are diminished with the lesser quality a client chooses.  Having manufactured thousands of store fixtures to client specifications and needs, we have witnessed first hand the damage that is incurred when using the philosophy "Cheaper is Better".  While real wood fixtures can last for 12-15 years or more and be presentable, when we compare that to solid laminate fixtures we typically see them last 7-10 Years under normal operating conditions before needing to be replaced.

Another thing to check is the materials being used to make sure that a comparison of "Apples to Apples" is being made before ordering your store fixtures, no matter what level of quality you choose for your retail environment.  We often find when we are doing comparisons that other manufactures in order to win a bid will use less expensive materials such as .5mm Edgebanding as compared to 2mm or 3mm which will help protect the edges of the laminate from some damage.  Although it doesn't sound like much of a difference, it can help extend the life of a fixture dramatically under normal conditions.

Since many retailers often move fixtures around the store and change the appearance, it can be expected that they probably will bump into another fixture or be drug without casters under them, but as a fixture manufacturer it is our job to make them as durable as possible.  Since store fixtures are not indestructible, it is important when making a comparison that "Apples to Apples" are being made.

We make every effort to provide our clients with the Very Best products we can possibly produce meeting the criteria of our clients needs.  Although the product may not last as long as the higher end product would, it is the nature of the beast.  Since many clients often wonder why our fixtures last longer no matter the base material, it's because we at Interior WooDesigns use the best quality materials, craftsmanship, and take extra precautions to insure our products outlast our competitors.  Having been in business more than 25 years, and having an extensive background in the retail industry we know the use and the abuse that the store fixtures receive.   

So I ask, "Do You Get, What You Pay For?" Yes, you do get what you pay for and the longevity of a store fixture is heavily based on the materials and craftsmanship of each and every fixture produced.  I also would be cautious when making comparisons from one manufacturer to another that Quality isn’t being sacrificed to win the bid.  At Interior WooDesigns we are firm believers in Quality over Quantity, because “You Do Get What You Pay For.”