[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]

Re: How much $ do firms borrow for P2?



I have had extensive success and failure in getting clients to implement P2
projects with a less than one-year payback period.  Generally, the failures
had to do with one of two things.  First, some people just don't want to
change, and if the plant owner, manager or engineer is one of those, it is
very difficult to get anything done.

Second, capital expenditures are very hard to get approved in many
companies, regardless of where the money actually comes from.  Many
companies have a totally separate approval process for cap expenditures.
Many times outside parties, such as investors or existing lenders have some
say in decisions regarding capital expenditures.  One plating operation
turned down a project which in which the cap cost of $100,000 would have
resulted in $30,000 per month in operational savings, aka a 3.3 month
payback period resulting in an additional net profit of over $200,000 in the
first year and $300,000 per year thereafter, because the cap expenditures
budget for the next several years was already committed to other projects.
BTW, it would have increased productivity and quality, while reducing waste
streams to CESQG status.

I would suggest that Ohio look at leasing rather than lending.  Had I had
the capital to make the changes myself and had financed it for half the
savings, I would be netting $150,000 per year today, but I couldn't borrow
the money without the plant as collateral and I didn't own the plant.

This was long before law school BTW.

RC

Ralph E. Cooper, Ph.D., J.D.
14139 Woodstream
San Antonio, TX 78231
210-479-5490