Over the last month, I've been asked the same question three times by some of our valued partners who are also prominent suppliers to the British manufacturing sector: "Do you think what's happening over in the States will impact our business?"

 

The factory manager's reality

For factory managers—the professionals who drive our leasing business—daily operational challenges will always take precedence over global events. And this applies to all of us striving to meet our objectives.

Factory managers face constant demands: production targets must be met, quality control continually improved, and supplier and staff relationships effectively managed. Furthermore, everything needs to be done in a compliant and sustainable way that stays within budget—often their biggest challenge!

 

A seismic shift in equipment procurement

Suppliers to the manufacturing sector are well-accustomed to hearing about these challenges and meeting their clients' needs and timescales. However, over the last few years, we've witnessed a seismic shift in how vital factory equipment is being procured.

We've seen a surge in companies leasing equipment, and these companies are getting bigger and bigger. Interestingly, even global manufacturers who are cash-rich and unquestionably have the resources to buy outright are now opting to pay for equipment out of their OpEx budgets rather than their CapEx ones.

While we cannot divulge our clients' names, you'll find them in your cupboards, your freezer, your drinks cabinet, or even in the cars driving alongside you.

 

Why British factory managers choose leasing

For British factory managers, leasing vital factory equipment solves numerous problems:

  • They pay for equipment as they use it rather than before they use it
  • Machinery in a factory exists to do a job—they wouldn't pay a salary five years in advance, so why do the same with equipment that supports their production teams?

Buying equipment outright is one thing, but that equipment needs maintenance. As we collect lease payments monthly, we also collect the reseller's maintenance contract. This means factories receive a fully maintained managed solution with no capital outlay.

Today's cutting-edge equipment will inevitably become tomorrow's outdated dinosaur requiring replacement, removal, and disposal. Factory managers are therefore opting for five-year fully maintained solutions that include upgrades at the end of the term.

 

Benefits for equipment suppliers

For equipment suppliers, this approach offers numerous benefits that help our partners improve sales and make those sales more profitable.

As factory managers opt for fully maintained monthly payment options, a comprehensive maintenance agreement typically accompanies the lease.

 

Martin Bailey, Northern Europe Managing Director of Markem-Imaje Limited (the leading provider of traceability solutions), summarizes it perfectly:

"Whenever we win business on a lease, the Customer gets three main advantages —the first is they get the equipment they need without the Capital Outlay, Secondly they get the benefit of a maintained solution with a maintenance agreement that accompanies the lease, and finally the Customer can choose to upgrade the equipment after five years meaning that the client always has the most up to date and reliable technology. This maintains the longevity of the client relationship with a fully managed service that meets the client's short, medium, and long-term objectives."

 

Bryan Wingfield, Managing Director of Mil-Tek Recycling Solutions Limited (an international manufacturer of balers and compactors), adds:

"Leasing provides our clients with a simple solution, and the decision on a monthly amount out of an OpEx budget can often be made at a local level. We take the headache away from our clients at the end of the agreement by collecting the equipment and refurbishing it, while the customer receives new and updated machinery which aids their sustainability targets."

 

The future of manufacturing equipment procurement

As a leasing provider, we have always attracted quality resellers who use our funds as a sales aid. "Managed Services" has long been a buzz phrase, and in our subscription-based world, leasing offers far more benefits to larger companies today than ever before.

 

Answering the original question

Now to answer the original question: "Do you think what's happening over in the States will impact our business?" My stance is simple—production targets will always need to be met, equipment will always need updating, and suppliers will always need to sell equipment.

The only difference is that companies are increasingly reluctant to use vital capital reserves (the corporate "rainy day pot") when they're seeing so many benefits in leasing. In this unpredictable world, we never know what's around the corner—a lesson we learned from COVID, which is when the trend in British manufacturing leasing really took off in my experience.

 

If you would like to hear more—I'd welcome a chat about how we can help transform your business approach to equipment. No PowerPoints, no boring sales pitch—I just want to hear about your challenges and discuss how we can help over a cup of tea.