Understanding the tempering line costs and payback

A tempering line investment is usually one of the biggest investments a glass processing factory can make. However, the costs related to the investment are more than just the machine alone. The calculation may seem simple, however, different companies value different factors in a very different way.

The methods of calculation might vary, but one thing remains: once the full scope of calculations is done and over with, you’ll see that the reliability and quality of the end product are far more important than just the price at the purchasing moment. Anybody can check this by just eliminating a certain amount of sold products. This will have a drastic effect on the payback, since fixed costs are running, but no revenue is coming in.

The investment

It is important to understand that the tempering line investment includes different utilities that are needed to operate the line. In order to get the whole picture, we have collected a list of the cost components that you should consider in your calculations.

If you want more in-depth cost structure instructions, please, download our eBook on the topic! Please note! It doesn’t cost you anything.

The business case

The cost structure of a tempering process gives you a framework. However, the main decision factor is the business case as a whole. The reasons for investing in a tempering line may vary a lot. Still, here are some questions you should ask yourself anyway when considering such investment.

Investment project related questions:

  • Will you be able to provide more value to your customers after the investment? What is the extra value you can provide?
  • Will you be able to serve more customers after the investment? How will you acquire more customers to fill the new capacity?
  • Will the investment give you competitive a edge in the market? How will you leverage this competitive edge?
  • How do you want to position yourself in the market and does the investment support this positioning?

Utility related questions:

  • Will you have the manpower to operate the new glass tempering line? If not, how will you acquire that?
  • Do you have the electrical power needed for the tempering line?
  • Do you have the space required for the new line? How will the new line affect your factory layout?

Machine/supplier comparison related questions:

  • Will you get less downtime with any of the solutions that could affect your top line?
  • Will any of the machines provide you with brand support that increases your pricing power?
  • Can the supplier support your maintenance processes or even provide you with the maintenance service?
  • Can the supplier support you in solving any possible production issues?
  • Are any of the solutions easier to use or could minimize the need for well-trained personnel?

Conclusion:

The answers to these questions will be different for everyone. And the list is not even complete. Even though quantifying the answers will be somewhat difficult, we hope that you give it a try regardless. The value you provide to your customers is the key to your future success – and returns.

After completing your analysis, you will be able to make your best guesstimate on the forecasted profits. By comparing future profits with the cost structure, you will get the machine’s payback time. After you have done your calculation, you can most likely confirm Benjamin Franklin’s famous saying:

“The bitterness of poor quality remains long after the sweetness of a low price is forgotten.”  

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Miika Äppelqvist

Encourages transparent solutions in buildings and ways of working. Seven years of experience from being a glass-man in product management, sales and projects with a focus on glass heat treatment. Believes helping is the best marketing any company can do. Father of two toddlers and a wannabe sportsman with an internal love of ice hockey.