Friday, September 17, 2010

Automate or Stagnate

I was speaking with an owner of a bindery on the west coast who I have been in contact with for about fifteen years. Naturally he cried in his beer about how lousy business was, who hasn’t?

This bindery specializes in plastic coil binding and when the conversation turned towards equipment, he told me that he was standing pat. When I asked about automation he told me that he preferred to stick with his twenty table top coil inserters. Let us not forget that these twenty coilers must be operated by 20 people. I asked him how he could compete when commercial, and even on demand printers were purchasing automatic coil binders. He told me that he hasn’t seen a drop off of business do to that. Really?

Ten years ago this very same bindery owner told me that he bound 1,000,000 books per year in plastic coil. Perhaps he was exaggerating but this time he told me that he was binding about 100,000 books per year.

Back then I tried to convince him to make his own coil. He was buying his coil locally from a manufacturer that used our machine to make his coil. They were making money doing it, why couldn’t he? I told him that he could save a minimum of $100,000 per year making his own coil by purchasing a machine that, at the time, cost only $28,000. He said that he wasn’t interested in making his own coil.

This reminded me of another bindery owner, again on the west coast, who I told would save $100,000 per year and the machine at that time only cost $28,000. His reply to me was; “I’m not so much interested in saving money as making money.” This bindery does little to no plastic coil at all any more.

Cutting costs is more important now than ever. This year, 100% of your capital equipment can be written off, so it makes the pain of equipment purchases a little easier to take. Is it difficult to invest in automation during tough times? Absolutely. Is it worth staving off a 90% drop in business? Absolutely.

1 comment:

  1. Makes sense. Wish they could see it this way before it's too late.