January 12, 2022
If you’re in the food and beverage industry, you’ll know better than anyone just how critical timing can be. Freshness is everything. And so when harvest time comes around, it’s all hands on deck and – quite literally – full steam ahead! But what about the rest of the year when the steam generators, boilers, feed and blowdown tanks, etc. you use for sterilization and/or blanching are just sitting around quietly depreciating? Chances are, when your usage is seasonal, you’re better off renting than owning.
Calculating the tipping point to rent or own
Cost vs. Rate of utilization
Beyond the financials
Naturally, everyone is looking to lower their operational costs and optimize their capital expenditure. But operational costs are just the tip of the iceberg. When you consider the very tangible and quantifiable value of flexibility, cash flow, speed, and efficiency, you end up with a very different picture:
5 key drivers
- Flexibility: harvests are not just seasonal but also prone to annual fluctuation. Thanks to the flexibility of renting, you can precisely dimension your utilities to take those fluctuations into account. For greater efficiency and control.
- Speed: rental solutions offer rapid response times not just in setting up but also shutting down. Ensuring a solution fully tailored to the specific needs of the moment. Rental contracts are also typically faster to validate internally, compared with purchasing decisions that require capital expenditure. For even bigger time savings!
- Cash flow: while it’s impossible to spread the harvest workload out over an extended period, renting your equipment does let you spread out the cost. Freeing up more of your working capital.
Not sure if renting is the way to go?
Let’s take a look together! Whether you are experiencing demand fluctuations due to seasonal harvesting or due to another cause, this example shows the importance of optimizing the agility of your business. We can go over the specifics of your operation and quantify the impact of various scenarios . So you can base your decision on the most complete picture.
Usership in action: how other companies optimized their balance sheets through usership.
Modular power plant for a brewery in full expansion
Our prospect, an industrial-scale brewery, had a big decision to make. Option 1: wait 3 years for upgrades to the local electricity grid so its newly completed glass plant could commence operations. Option 2: buy the four 1MW generators it needed to get the plant online ASAP. Option 3: rent the power generators instead. Option 1 simply wasn’t an option at all! And an initial feasibility study favoured buying over renting. But while that study took all kinds of factors into account from the capital expenditure and service contract to overhead, depreciation and administration costs, it was based on one blatant assumption: a rate of utilization of 100%. The reality, however, turned out to be a very different story!
A fast and seamless turnaround
Major back-up compressed air solution secures continuity for Singapore refinery. The ethylene cracker complex located on Singapore’s Bukom Island is not only an important part of our customer’s operations but also a critical link in the entire petrochemicals cluster. Which is why guaranteeing uptime during a major turnaround of their plant and instrument air systems was absolutely essential. Our fully customized and integrated solution demonstrated once again that no project is too large or too complex for Atlas Copco Rental!
