A success story
An example of re-tooling:
There was this cheese producer in the City of Industry in California. The owner had started it about 30 years ago. Now his son had graduated from university in agricultural food production and learned much about producing cheese. His father retired and transferred the factory to his son. The factory was very labor intensive; with large vats to boil the milk on open gas flame, then adding the culture, then molding it in wooden molds etc. Meanwhile the labor costs were high, therefore the owner was using undocumented aliens, and having problem with the US Immigration. The premises were not sanitary and were being visited by the Health Department quite often and large health violation fines were being paid.
The older son closed the plant. He packaged all the old equipment and sent to our destination for the younger brother and his father to start a new plant. Then he went to Switzerland, purchased a fully automatic machine almost the size of a double trailer. The premises were upgraded to the latest sanitary requirements. Now the milk tanker truck connects the hose to the machine and at the other end comes out packaged one pound blocks which are inserted in cardboard boxes and taken away by a fork lift. No human hand touches the raw or finished un-packaged product. No raw material is exposed to open air. Two technicians are in front of computerized panel guiding the machine. From 32 regular employees, he is down to two technicians and a forklift operator per work shift. It is now running 24/7 and showing net profits well over 32%
Although the father, prior to transferring it to his son had tried to sell the factory in 3 occasions, in a span of 5 years, with the traditional formula of so many times the gross or net sales multiplier or many other formulas. This happened to be the best formula for them to get rid of the old and become more profitable, by packaging the old equipment into one production unit and export it to overseas.
The factory of the future will have a man and a dog. The dog is there to prevent the man from touching the control buttons. The man is there to feed the dog.
Many local banks will lend against new equipment which can prove the expected high profits to pay off the loan. Your re-evaluated old equipment is already known to the lender for its maximum possible production. When a prospective buyer wants to buy your existing business can not get financing because existing equipment is not capable of servicing a new loan, and your selling price also includes good will. Such critical information is shared by a lender with a prospective buyer of your existing business when prospective buyer is searching for new financing to buy your business.
There are factories who build factories. If you have access to your competitor's equipment, maybe you could put together a package for sale. Maybe you can become a factory builder in your industry.
These are the successful businesses still here who took the time to sell the old and to re-tool:
A.W. L. STEEGO-MCKERLIE-Millen, ABEX Industries LTD., Algonquin Industries Intl. Inc. AVISCAR Inc., BENDIX Heavy Vehicle Systems, CANPARTS Friction Products, Certified Brakes-Allied Signal, Chief Automotive Systems Inc., Control Fire Systems Ltd., DISTEX Industries-Echlin Canada, Dominion American Sure Seal, Dover Corporation-Rotary Div., Dover Corporation-O.P.W. Div., First Brands Corp., Green & Ross Tire Co. Ltd., HAWKER SIDDLEY- Can Car, Forestry Equipment Div., INNOVAC Automotive Inc., K.D.N. Distribution & Warehousing, KOMATSU Canada Ltd., KWIK-WAY Mfg. Ltd., KIRSCH & GIDARO Marketing Ltd., MAREMOUNT Exhaust Products Inc., MCCLEAVE Truck Sales Ltd., MIDAS Inc., Nissan Automobile Co., PACCAR Parts Inc., R.N.G. Group Inc., Sherwin-Williams Automotive, Spartan Agencies (Eastern) Ltd., STACKPOLE Ltd., Volvo GM Heavy Truck Inc., WEGU Canada Inc., Western Star Trucks Inc., Wheel & Rim Co. Ltd., Yokohama Tire Inc.
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