Bearing prices, for shame

[Adam Glatt]

*whispers to scribe:*  "9.5"

Larry Diamond wrote:

> Capital Investment Vs Breakeven Point...
>  
> Many more things to consider...Possibly the bulk of the production 
> equipment will last awhile. Depending on the abuse it takes and how 
> well it's maintained is a factor in that.
>  
> Thus the conclusion is, the break even point must be considered up 
> front and profit targets established. The breakeven point is typically 
> the life of the equipment plus overheads plus profit. Part of the 
> formula is to insure you have the cash flow or assets to cover the 
> cost of the equipment when its beyond it's expected life.
>  
> The cost of the die is a big factor as well as the overhead of the 
> support staff to make the parts and maintain the equipment or 
> have equipment serviced...Costing gets very complicated in a 
> manufacturing business.
>  
> The replacement cost of equipment is the main concern as typically 
> it's either better to by new equipment for replacement or upgrade. The 
> cost of poor quality is unacceptable when trying to string out the 
> life of the equipment beyond it's usable life.
>  
> In summary, if a company is to survive long term in the manufacturing 
> industry, there is no breakeven point for the cost of equipment. The 
> capital investment is just that...investment... They have a planned 
> return for the investment, just as if they were to invest the money in 
> stocks and bonds.
>  
> See ya,
>  
> Larry
>
>     ----- Original Message -----
>     *From:* John Ferrell <mailto:johnferrell at earthlink.net>
>     *To:* discussion at nsrca.org <mailto:discussion at nsrca.org>
>     *Sent:* Wednesday, October 15, 2003 3:55 PM
>     *Subject:* Re: Bearing prices, for shame
>
>     RE:
>     "P.S. in the APC example: I would think that they have to reset
>     the equipment that sets the pitch and diameter of the props. The
>     time they spend doing that costs them money, and the time spent
>     makeing specialty props where they could be making 10x6 props also
>     costs them money so I can see charging a premium. "
>      
>     I am not sure of the reliability of my source, BUT it is my
>     understanding that the big cost in APC Props is in the cost of the
>     manufacturing equipment. I was told that cnc equipment produces
>     the dies and the injection molding equipment is the same on all
>     setups.
>      
>     When a business takes the risk on a capital investment there is a
>     break even point, then there is a period where the only costs are
>     supplies and labor. It is not unusual to see a markup of five or
>     ten times the current cost of goods sold.
>      
>     It is generally accepted that the risk justifies the reward. 
>      
>     The question arises :  "When is the reward excessive?"
>      
>     John Ferrell
>     6241 Phillippi Rd
>     Julian NC 27283
>     Phone: (336)685-9606
>     johnferrell at earthlink.net <mailto:johnferrell at earthlink.net>
>     Dixie Competition Products
>     NSRCA 479 AMA 4190  W8CCW
>     "My Competition is Not My Enemy"
>      
>
>         ----- Original Message -----
>         *From:* Anthony Abdullah <mailto:aabdu at sbcglobal.net>
>         *To:* discussion at nsrca.org <mailto:discussion at nsrca.org>
>         *Sent:* Wednesday, October 15, 2003 3:40 PM
>         *Subject:* Re: Bearing prices, for shame
>
>         I agree with you 100%. In fact, prospecting for margin, and
>         plugging profit leaks in our industrial chain is what I do
>         professionally. As tight as things have gotten, we have some
>         account reps that would love to get an order for two bearings
>         at 35% margin, specially if it is a no labor order where
>         someone called in with a part number. We've done a whole lot
>         more for less. Like going out and measuring and identifying
>         the failed part, picking it up from the SC, and returning it
>         to the customer within hours, all for 13% GP. Yes that is a
>         customer that buys a lot more than two a year, but there is
>         very little labor involved with turning a part number into a
>         part and accepting money. The staff is going to be at the
>         service center anyway. In addition, every unit we sell
>         strengthens our buying position with the manufacturer, and
>         factors into our strategic marketing credits (rebate and
>         incentive program).
>         I manage my severely limited resources the way pattern
>         builders manage weight (except for Mike Darr (you know I live
>         you bro <vbg>), I save a gram at a time and in the end it adds
>         up to a new engine, a digital servo, or a new airplane. If I
>         save five bucks a piece on bearings that I have to buy anyway
>         and can possibly help others do the same, why not.
>          
>         P.S. in the APC example: I would think that they have to reset
>         the equipment that sets the pitch and diameter of the props.
>         The time they spend doing that costs them money, and the time
>         spent makeing specialty props where they could be making 10x6
>         props also costs them money so I can see charging a premium.
>         But if NTN makes a million of the same bearing and an SC hands
>         you two of them out of a big drum or a box without all the
>         packaging then it makes sense to me that you should get to
>         enjoy a lower price. 
>
>         */Anthony Romano <anthonyr105 at hotmail.com>/* wrote:
>
>              
>


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