Buying the wrong machine can be injurious to your health - The Noel D'Cunha Sunday Column
At some point, we think it’s time for investment. This is when the print shop is operating to its maximum capacity, and it becomes difficult to resist the temptation to buy new equipment. We all look to take our business to the next level. We look to improve our competitiveness, and most importantly, we want to be more efficient.
24 Apr 2015 | By Noel D'Cunha
Buying the wrong machine can be injurious to your health - The Noel D'Cunha Sunday Column
Today, the price and quality gap between two brands has narrowed considerably. Yet, no matter how good the reputation of the brand, the buyer’s risk is always greater than the seller’s.
So, what happens when an exciting new investment turns out to be a poorly considered choice?
Recently, we came across a print company, which made a big investment. Now, the owner is unhappy. He says, "It's more than six months of installation, and it's still not giving the consistency for the huge investment we made. Too many hardware problems causing breakdown. Distressing after sales support." He adds, "Might be a wrong buy."
Perhaps not understanding the gap that has driven the need for change, we find ourselves on familiar territory, taking comfort from it, though not many tell the extent of damage it has done to the reputation, capabilities by the contracts lost.
So I spoke to the more seasoned players in the field, I was surprised to learn that they too were involved in a print equipment buying decision, which did not meet their expectations or simply, was a wrong decision.
“Yes, and a costly one at that,” says Mehul Desai of Mumbai-based MOS. He adds, “A few things went wrong. First, I believed all that was told to me in terms of how the volumes on that particular kit were going to go through the roof, as there was a huge demand and very few players. Media reports, etc [PrintWeek India: it surely wasn't us] were produced to support the claim. I believed those. First mistake. Also, the realisation is exceptional. Margins are huge. Again, I believed this. The reality was that what the client was willing to pay was far less. Second mistake. I also based my decision on expected business rather than actual business on hand for that kit. Third mistake. Basically, my research was not thorough, and I based my decision on a feel-good rather than reality.”
Narendra Paruchuri of Pragati Offset also confirmed that he too was involved in the purchase of a wrong machine. “We were too early to introduce this technology. The market did not accept it. As such, it was a wrong decision,” he says.
Paruchuri adds, “We tried our best to take it forward. But customer mindset is difficult to understand. If we did, we will make no mistakes. It is like trying to time the stock market.”
What happens when you buy a wrong kit?
It can result in lost contracts, damaged reputation, and reduced efficiency, among others. “Luckily for me, though the investment was huge, we could absorb it and move on. But the reality of it scares me even today. A decision like that could have had a hard impact on our company. Lesson learnt. I still have the kit as a constant reminder of what I should not do whilst buying an expensive kit,” Desai says.
What happens when you buy a correct kit?
“As far as printing machines are concerned, we have been lucky that we have taken correct decisions.” Paruchuri adds, “We will not go wrong when we are going in for the regular machines. Maybe one or two options you bought might not be put to use. But, by and large, it will succeed. We were one of the first companies to buy online coater. It was a great success. But then, at the end of two years, we found that the roller coater we bought was incorrect and we should have an anilox coater. Luckily, this could be retrofitted, and we did that for both the machines. From then on, it was only anilox coaters.”
How do we improve the buying process?
Desai says, “Base your decision on your research, potential, current volumes, ROI and how quick it will be. Do you have a client base that will appreciate what the kit brings as value to them, and will this investment let you build further on that. The investment has to remain relevant in the scheme of things for next three to seven years.”
Paruchuri says a lot of homework needs to be done before you buy big-ticket machines, listing out a set of questions, the answers to which might make us take a better and correct decision.
1. What is it that you want to do?
2. What are the options available?
3. What would be suitable to us?
4. Training and service setup.
5. Cost of ownership (cost of machine + running cost for about 10 years – spares, etc).
6. Going and seeing the machine at a couple of presses other than at the demo centres.
7. What is the budget?
DENVER ANNUNCIATION, Janus International (Mumbai)
Have you ever been involved with a print equipment buying decision, which has not met your expectation or gone wrong?
Yes. We have made several decisions that have not worked out as per our expectations at first.
What went wrong?
Entrepreneurship is about risk and sometimes people evaluate risk differently with different degree of conservativeness. The first major investment of ours was in flexo. It was the need of the hour. However, by the time the machine came in, we lost some business and then it took us some time to re-build. Mind you, there never was anything wrong with the machine technically. It was just that the business environment had changed.
The second decision was our investment in digital. We were the first movers in the industrial digital space. All our analysis for this decision were based on a pre-sub prime crisis, booming world economy. Once again, business environment had changed after we made our decision.
What happened when you bought the wrong print kit?
In both the cases, there was nothing wrong with the technology or the print kit. Just that factors had changed that were external to us. However with the passage of time and as the business situation improved all these decisions turned out to be correct and lived up to our expectations and analysis.
Your advice on: how not to buy a wrong print machine?
There is nothing as a wrong print machine when one is buying from reputed proven manufacturers and companies. In my experience, people need to be more conservative when making decisions and even more conservative when making investments in areas that are new and not currently their forte.
The availability of finance without additional collateral can be a big incentive. But I feel if one is entering a new uncharted area you should put in more of your own money. This way, when things get rough you are not under the pressure from your financiers. In our current economy we are assured of growth. Being conservative will ensure stable growth.
MANU CHOUDHARY, CDC Printers (Kolkata)
Have you ever been involved with a print equipment buying decision, which has not met your expectation or gone wrong?
When it comes to conventional print equipment, our expectations from the equipment are also standard. Nothing really can go wrong. One equipment, which has not met our expectation would be the Proteck cutting machine with a jogger.
What went wrong?
The machine itself is quite good, but Proteck does not have good service engineers in this region.
What happened when you bought the wrong print kit?
Whenever there is any machine issue, we have to wait till the engineer arrives. Since cutting is one of the primary tasks, it leads to various problems.
What happened when you bought the correct print kit?
A 12-station gatherer with an online perfect binder (Wohlenberg) was one of the very important equipment that we had purchased from Welbound. This helped us bind the books faster than it gets printed.
Your advice on: how not to buy a wrong print machine?
A basic market survey on the need for the equipment (tentative ROI calculation), service availability for the print equipment, and comparison of different brands would take the third place.
(PrintWeek India: Identity of the cutting machine manufacturer has been withheld. You will need to have a private conversation with Choudhary to know the brand and make)
DWIPAL PATEL, Shree Printwell Offset (Ahmedabad)
Though we have been lucky with our print equipment decision, I understand the consequences of a wrong machine buy.
But having the correct print kit in your infrastructure really adds great value to the organisation. It has for us. Our clients have great solutions option and our team has a new energy. Print kit is like an MOB (Make or Break). The correct print kit takes you to the next level and uplifts your organisation.
Your advise on: how not to buy a wrong print machine?
Do an in-depth research of your print kit and machines. Never invest in infant technology. Check the manufacturer’s background and future planning. Take a look at the technology you are investing in, in and around your area or outside where a similar investment has been made and if that’s working for them. Check the after-sales service; this is very important. Check market potential. And finally, how much are you convinced that ‘this’ is the print kit that will take your business to the next level.
PRATIK SHAH, PrintStop (Mumbai)
Have you ever been involved with a print equipment buying decision, which has not met yourexpectation or gone wrong?
Yes, we have.
If yes, what went wrong?
We had bought an Amritsar-made, rotary half cutting and creasing machine after just a very brief demo. When we installed it on site, we realised that there was too much of wastage from the digital printing perspective for setup as well as in production.
What happened when you brought the wrong print kit?
Of course, the machine was eventually just occupying expensive real estate till we decided to scrap it.
Your advice on: how not to buy a wrong print machine?
Don’t be ashamed to take multiple demos if required. Ensure that sampling is done on at least four to five different actual customer jobs to understand the actual problems that can occur.
VASHIKARAN RAJENDRASINGH, Bell Printers (Sivakasi)
Have you ever been involved with a print equipment buying decision, which has not met your expectation or gone wrong?
With changing buyer behaviour and evolving requirements, we have felt that some of our machinery investments haven't fully justified their purchase. This has, for us, been a mistake only in post-press/conversion front and not exactly on the printing press buying decisions.
What went wrong?
Our group's business interests include fireworks and matches. In fireworks, for example, our board has insisted on the purchase of specialised equipment like Swiss Blumer machines for confetti production. However, when the Indian market was not keen on Confetti as a product, the machines remained idle; as such equivalent specialisation was not part of our business model for packaging.
What happened when you bought the wrong print kit?
Literally, it’s like the equipment sitting as white elephants in the shopfloor, taking up space and money. The Indian tendency to "not let go" of something because of some emotional attachment creates unwanted strain on cash flow. This is not the tendency of Europeans/Americans - who immediately amputate any unproductive component in the business.
What happened when you bought the correct print kit?
Our buying decisions, on a majority, have been based on clear customer requirements, with confirmed business commitments. So we have been fortunate to have made only a few relatively wrong buying decisions.
Obviously, when our decision was right, and when we see the machines being put to full production capacity- there is a smug feeling of contentment and self-righteousness; a sense of pride that we got it right, and our investments will potentially make us more money! And who wouldn't want their buying decisions to be like the ‘goose that lays the golden eggs’.
Your advice on: how not to buy a wrong print machine?
1. Identify what exactly are the customer requirements before looking at a machine's capabilities. Sometimes a highly touted and seemingly attractive feature that we seem convinced we need, might not be what the customers really want.
2. At the current scenario of printing equipment's ROI being far too long, unless a kit's value is justified through a long term business plan with a clear focus and vision, buying to be a "one- stop-print-shop" is unwise. Hoping that business "will come to us" after a major machinery investment, is just wishful thinking.
3. In case of secondhand machines, please test-run jobs you will eventually run before getting convinced that the machine is right for you.
RUPESH SAWANT, Superlekha (Mumbai)
Have you ever been involved with a print equipment buying decision, which has not met your expectation or gone wrong?
Yes, we have made a lot of mistakes in sourcing good equipment and yes we have paid the price of wrong selection very heavily.
We, as a print company, know just one brand that could print quality and kept on buying it to satisfy our ego quotient. We bought a few machines, and always overlooked the engineering flaw in it, which was never undone by the manufacturer. We then moved to a different manufacturer, who we observed always went back to customers for feedback and always improvised the next models. We sold the previous machine at a huge loss and shifted to this brand, which in Marathi, I call – Swast, sundar aani tikaau (affordable, good and lasting).
What happened when you bought the wrong print kit?
Everything goes wrong with a wrong purchase. For example, our first CTP was a thermal platesetter. Never be a leader in buying expensive machine especially if the technology is very new. At that time, it was a half-baked product, introduced into the market due to competition pressure and as a result we suffered. We bought this system, which I call an emotional buy. The machine simply used to stop working during peak production time, when we needed it the most.
Then as a back-up, we brought in a very different technology CTP machine after collecting lots of information in terms of AMC, spare parts, its tendency to breakdown, and most importantly having an India pricing. The machine did its job for seven years, 24x7, 365 days. And when we sold it, we got a good resale value.
Moral of the story: Spend Rs five lakhs on travelling and meeting people who are using the machine for the last five years. You will get a real picture of the machine and its dealers, too. Always ask for ten wrong things in the machine, it will give you an idea of what you have to live with and whether it’s good idea to buy more expensive options if you need.
Trust me, your Rs five lakh will be well spent, for you will save Rs 50-lakh.
What happened when you bought the correct print kit?
Again, when you buy a rugged product, you exactly know how to milk the machine and how to get what you want. The reason is: when you ask for the right questions before a buy, you will always look for the answers during your buying spree or shopping. For example, online coater, do you need, or you don’t? For me the answer was, no. Online coating kit would have cost me Rs 60-lakh, seven years ago. I am doing the same job on a Rs 50,000 offline varnish machine.
Your advice on: how not to buy a wrong print machine?
Never listen to the dealers. Listen to the end-user, at least 15 of them.
Please lookout for not only positives but also negative opinions about the kit, because that’s where you will find answers for your questions.
Keep your needs ready in the buying to-do list. Don’t buy a four-clamp perfect binder because your dealer says that it’s the best price and you can double your production, when a single-clamp fast machine or a single-clamp PUR will do your work.
(PrintWeek India: Identity of the hard metal and the CTP system replaced by the new ones has been withheld. You will need to have a private conversation with Sawant to know the brands and makes)
NITIN SHAH, Award Offset Printers and Packaging (Mumbai)
I joined the printing industry in 1987, after which I first learned about the industry model of our pharma business and its daily needs, rather than understanding what is the need of the customers and the fast changing technology. According to our set-up, I started getting myself involved in procuring the machines, and it included all types of pre-press, press and post-press machines. My first selection was Heidelberg SORDZ press in 1993.
Have you ever been involved with a print equipment buying decision, which has not met your expectation or gone wrong?
After working for many years, it is difficult to say that one has become perfect, but yes, I made a big buying mistake in 2008.
We brought in Asia’s first Heidelberg XL-75, which was introduced at Drupa in the same year. There was no problem with the machine, but we ordered the machine without a coater. The Heidelberg representative, Peter Rego, told me that it could be a wrong decision to buy the machine without a coater, given our business need. I did not listen.
My decision was based on the premise that we are going to print small runs, so why invest in an online coater, when an offline coater can do the job. But I soon realised that offline coater could not cope with the output generated by the speedy Heidelberg. To match the speed of the press, I had to invest in two offline coaters.
I still rue that decision of mine.
Your advice on: how not to buy a wrong print machine?
If you want to buy a new print kit or setup a new plant, first study your model of business, the total need for machines and future expansions, and the kind of customers you are investing your machines in.
Investing for a single customer can be a big risk in today’s time. Investment should be made in equipment where you can always be plus one and remain in demand for the products you produce. Before your customers ask, you should be ready to offer him what he needs.
Create your own market. We at Awards are doing that.
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