Being an innovator in Equipment Management with over 40 years of experience with electric motors & powertrains, it’s kind of in our blood to talk about how we do things. In conversations with perspective clients on our approach to equipment management we often hear “my motors are stored by my repair shop for free”. We have all heard the old saying “that nothing is free” and “you get what you pay for” so let’s think about “free” and what you are getting.
Having those old sayings in mind we start asking questions. Questions like, do they periodically test your motors? Do they spin the shafts? Are all of the motors in their warehouse ready for service? Have they ever sent you a motor from their warehouse that did not run or only lasted a short time? Have you ever visited their warehouse and checked on the conditions? People can spend $40,000 on a car and know exactly where their car is and its condition at all times but don’t really know where and under what conditions their $750,000 motor is stored. Oh, and another point, your $40,000 car is insured. Is your $750,000 motor insured in the “free guys” warehouse? You might want to ask.
Let’s first break down the part about it being “free”. We always ask if perspective clients are getting competitive bids on motor repairs and almost always, we hear that they do not because someone is storing their motors for free and we just send everything to them. Sometimes we are fortunate enough that someone will allow us to quote some sample motors so a price comparison can be made. This almost always shows that the “free warehouse” shop is charging 15% - 18% more (based on national averages). So, let’s assume that this perspective client is at a large company and they are spending $1,000,000 a year in repair. With an 18% add-on your free warehousing just cost you $180,000 a year. Then we ask where they are buying new motors from and they almost always say “from the same guy because he stores our new motors too”. If the new motor spend is $350,000 and repair shop tacks on an extra 15% for storage, there is another $52,500. Now your free storage is costing you $232,500 a year. These cost add-ons do not include motors that are not maintained properly which makes them not ready for service or they have a shortened in-service life and loss of production.
From this point the rabbit hole can go deeper...way deeper. We then question why are you spending a $1,000,000 a year? Does your free warehouse guy have predictive services to increase uptime? Have you given your free warehouse guy motor repair specification or does he just do what he wants because he knows he has your business because he stores your motors and he has you held hostage?
HECO's philosophies differ from the “free” guy. Using a systematic and transparent approach to Equipment Management we can provide a program in which we will store and maintain your motors, and assure you that you will know the condition of each motor. By separating the warehousing fees, we can provide competitive repair and new electric motor prices. We will question your motor spend and reduce that spend by establishing matrix repair pricing, establishing a motor repair specification that is customized to your plant, utilize our predictive service capabilities and share our new product buying power to lower your costs. All of this can do done without holding you hostage.
So is free really free?
Author: Bob Bolhuis, Director of Equipment Management.