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Hire an intern to find out which company assets are the least productive. Consider creating a capital asset plan to replace them if market conditions warrant a trade. If you do not have the manpower to do this analysis, hire an engineering student to measure the productivity and efficiency of your current machinery. You may be happy your machines are paid off but they may be costing your company market share because of their age and ineffectiveness in your current market. In some industries it is mandatory you keep up your company’s competitiveness or you lose customers and market share.
Productivity question to solve: Measure cutting ability, accuracy and speed of your current production equipment. The machine may be paid off but it may not be able to keep up with current market demands and speed. Find out from the vendors how fast the comparable new ones are versus your current older models. The productivity may outweigh the fact you paid off the machine. It does you no good if you cannot be competitive.
Tax Benefits: There may be tax benefits when you buy a new machine. Ask your tax preparer if this is applicable for you, what are the tax savings (potential first year writeoff) and when would be the best time for buying a new machine?
GPI 393
