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<DIV>
<DIV>Capital Investment Vs Breakeven Point...</DIV>
<DIV> </DIV>
<DIV>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.</DIV>
<DIV> </DIV>
<DIV>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.</DIV>
<DIV> </DIV>
<DIV>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.</DIV>
<DIV> </DIV>
<DIV>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.</DIV>
<DIV> </DIV>
<DIV>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.</DIV>
<DIV> </DIV>
<DIV>See ya,</DIV>
<DIV> </DIV>
<DIV>Larry</DIV>
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<DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV style="FONT: 10pt arial"><B>From:</B> <A
href="mailto:johnferrell@earthlink.net">John Ferrell</A> </DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A
href="mailto:discussion@nsrca.org">discussion@nsrca.org</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Wednesday, October 15, 2003 3:55
PM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> Re: Bearing prices, for
shame</DIV>
<DIV><BR></DIV>
<DIV><FONT size=2>RE:</FONT></DIV>
<DIV>"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. "</DIV>
<DIV> </DIV>
<DIV><FONT size=2>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. </FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>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. </FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>It is generally accepted that the risk justifies the
reward. </FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>The question arises : "When is the reward
excessive?"</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV>John Ferrell<BR>6241 Phillippi Rd<BR>Julian NC 27283<BR>Phone:
(336)685-9606<BR><A
href="mailto:johnferrell@earthlink.net">johnferrell@earthlink.net</A><BR>Dixie
Competition Products<BR>NSRCA 479 AMA 4190 W8CCW<BR>"My Competition is
Not My Enemy"<BR> <BR></DIV>
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<DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B>
<A href="mailto:aabdu@sbcglobal.net">Anthony Abdullah</A> </DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A
href="mailto:discussion@nsrca.org">discussion@nsrca.org</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Wednesday, October 15, 2003 3:40
PM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> Re: Bearing prices, for
shame</DIV>
<DIV><FONT size=2></FONT><BR></DIV>
<DIV>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).</DIV>
<DIV>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.</DIV>
<DIV> </DIV>
<DIV>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. <BR><BR><B><I>Anthony Romano
<anthonyr105@hotmail.com></I></B> wrote:</DIV>
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