The Biscuit Barrel - Episode 8 – New plant for old?
Lee: Malcolm, can I have a word?
Malcolm: Of course.
Lee: George Paterson just phoned from production.
Malcolm: Yes?
Lee: Yes, and some bad news I’m afraid. The guarantees on the Bake B X6 machines are about to run out.
Malcolm: Already?
Lee: Yes. You bought them five years ago, didn’t you? The guarantee runs out on 20th of next month.
Malcolm: Oh Lord…
Lee: So we need to decide whether to extend the insurance policies or to get new machines.
Malcolm: What does George say about that?
Lee: He thinks we should get new machines. He’s been having discussions with Garnet Engineering who supplied us with the original machines, over the past few weeks apparently….
Malcolm: Nice of him to tell us about them – but let that pass.
Lee: Quite. But anyway it seems that Garnet have brought out a new model – the Bake B X8. It’s much more efficient – less wastage and much higher productivity. It could speed up our production by a good 8-10%, and George reckons that could be quite useful when it comes to the new Country Crumbles range.
Malcolm: Well he has a point. Anything that can help us keep production costs down on that range would be welcome. But what about the capital outlay for, what, 6 new machines?
Lee: At least, maybe 7.
Malcolm: Phew!
Lee: But George says they can offer us a really good deal if we exchange the old machines for new models and take out a new guarantee.
Malcolm: And is it a good deal?
Lee: Well I haven’t had time to go through all the paperwork details yet, and as you know I’m having to keep a really tight control on capital outlay at the moment. The banks aren’t exactly rushing to lend anybody money right now and we don’t want to run up huge interest repayments. This is no time to get overextended.
Malcolm: Well if the deal with Superkor goes ahead at least we would be guaranteed a very comfortable level of sales for the next two years, wouldn’t we. Would that make you more inclined to go for this deal?
Lee: It certainly would. But that’s not secure yet, is it? I think what we’d better do is get Garnet to come here and give us a presentation of this new equipment. We’d need George in on it too of course. He could quiz them about the technical side and I could go over the figures and the small print with their finance guys. It would be good if you could be there too, unless of course you are busy with other things…
Malcolm: Excuse me Lee. Hello. I thought I said I was not to be disturbed Janet. What? From the hospital you say? Oh Lord, Ok then tell her I’ll be right over. Sorry Lee I’ve got to get over to the hospital. My wife has had some sort of collapse and has been rushed in to A & E.
