Executives today are constantly challenged by the need to perform and drive financial metrics and to transform in order to drive growth and mitigate risks. We are no different at Jenfab. We pride ourselves on understanding your cleaning challenges and finding creative ways to help you solve them in today’s business environment. We understand that not every customer has the same challenges.
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High Cost of Capital and Interest Rates. What are my options
- Leasing options
- Product as a Service Options – Outcome based invoicing
High Cost of Capital and Interest Rates:
With elevated interest rates, the cost of financing a major purchase has increased significantly. Executives must ensure the return on investment (ROI) on the new equipment or facility significantly exceeds this higher cost of capital, making investments inherently riskier. You might be concerned about the certainty of value for the capital invested.
At a Northeastern battery component manufacturer, the cleaning machinery was aging and unable to keep up with ever-increasing order volumes. Our system was able to increase production by more than 50% in a comparable footprint, growing their daily production capacity from 11m pieces to 17m pieces and allowing them to eliminate weekend overtime for cleaning operations.
Current parts washers may not be keeping up with the increased production. The production demand might be temporary, or they may be long term.
You might not have the capital available to purchase a new parts washer when you need it. One solution is to shift from CapEx to OpEx. We offer leasing models and “as-a-service” agreements where invoices are based on measurable outcomes. This shifts the cost from a large, upfront capital expenditure (CapEx) to a more flexible operational expense (OpEx).
Consider our leasing options when you need a permanent solution and you want to operate and maintain the equipment and provide the chemicals to achieve part cleanliness. To learn more about this check out our Financing options page.
Economic Volatility and Demand Uncertainty:
Manufacturers worry about fluctuations in customer demand, which makes forecasting the necessary production capacity a challenge. A major CapEx commitment might result in underutilized assets if a recession or slowdown reduces sales.
Skilled Labor Shortage:
The return on advanced capital equipment (like automated parts washers) depends heavily on having a skilled workforce to operate and maintain it. Executives worry about the challenge and cost of acquiring and retaining the talent needed to maximize the efficiency of the new parts washers.
When you want to mitigate demand uncertainty, or when you want to outsource your cleaning needs, you might consider our parts washers as a service model where we clean parts for you and you are invoiced based on the parts that are cleaned. You don’t need to worry about chemistry, maintenance or operating the machine.
For example, we helped a Midwest egg producer keep up with demand when the bird flu provided an opportunity to gain market share. Their current egg tray washing equipment was not keeping up with demand. We provided the parts washers, chemistry and manpower to clean trays for them. To learn more check out our Parts Washers As A Service web page.
There may be many other drivers to your risk decision. We encounter the same risks as a US based manufacturer.
Rising Input and Operational Costs: Persistent inflation and rising costs for raw materials, energy, and labor put pressure on profit margins. Executives are concerned that these rising costs will erode the profitability of a new investment over its lifecycle
Trade Policy and Tariff Uncertainty: Changes and uncertainties in global trade policies, including new or threatened tariffs, can disrupt supply chains, increase the cost of imported equipment or components, and impact export sales, all of which directly affect the business case for a capital investment.
Tax Policy Uncertainty: Concerns over the potential expiration or amendment of tax provisions (like immediate expensing for capital equipment) can cause executives to delay purchases to see if tax benefits will be available.
Consider our maintenance service packages to manage Maintenance and Downtime Risk. Protecting a high-cost investment is crucial. Concerns include ensuring the right maintenance strategy (preventive, predictive) is in place to minimize unexpected unplanned downtime, which is a significant threat to productivity and revenue recognition. See our maintenance services page.
These concerns relate to the practical execution and successful integration of a new parts washer.
In summary, a capital purchase today is viewed through a lens of higher risk due to the cost of capital, and higher uncertainty due to economic volatility and trade policy, all while being a strategic necessity to compete in a rapidly evolving, technology-driven, and labor-constrained manufacturing landscape.
At Jenfab we will find the right solution to solve your cleaning needs and do it in a way to help you minimize risks.
