How Small Machine Shops Gain Competitive Edge

You’ve been in business for several decades or recently purchased an older, established machine shop from another proprietor and you’re sensing a squeeze from more competition and smaller margins.  Long-standing clients brought their prototyping in-house and are looking for ways to shave costs on manufacturing runs, pushing your prices lower to retain their business.  Is now really the best time to make large capital expenditures?  In short, yes.

Increase Your Flexibility

Advances in manufacturing technology have allowed once purpose-built equipment to become more versatile, reducing the space required and increasing the diversity of product types you can manufacture with minimal retooling.  Whether it’s one piece of machinery handling multiple steps or the capability of a system to route products through different channels based on product specifications.  Increasing your shop’s ability to deliver a range of products within a given shift enables you to serve more clients concurrently.

Reduce Down Time

One of the greatest expenses we encounter as manufacturers is labor dedicated to retooling and/or equipment maintenance.  The vacuum consumes both payroll and creates downtime where revenue isn’t generated.  Investing in new, advanced machine tools through either a sensible lease or loan can help keep your shop running client work throughout the shift, allowing you to generate more revenue.  The monthly expense is a pittance when compared to the loss in revenue for downtime.

Tax Benefits Are A No-Brainer

Thanks to the addition of Section 179, equipment purchase depreciation helps reduce the impact to your bottom line, allowing businesses to write off a large portion of the expense in year 1, and for larger purchases, a generous depreciation over several years is available.  For more information on what Section 179 means for the industry, talk to your Engs Industrial Equipment Financing representative, or for information specific to your situation, consult with your accountant.

In a competitive market, differentiation and flexibility are key.  Investing in new manufacturing and machine tool equipment may be what your business needs to give you an edge, helping you deliver faster, enjoy higher productivity, and improve your businesses financial stability over the long haul.