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.