—Sponsored article by Blue Chip Leasing
Reprinted from the August 2016 edition of Canadian Metalworking
With the International Manufacturing Technology Show (IMTS) just about upon us, it’s time to discuss why visiting this show could be a very productive use of time. IMTS is one of the largest industrial trade shows in the world, held every two years in September at McCormick Place in Chicago. This year is the 31st edition of the show, which occupies more than 1.3 million net square feet of exhibit space and features 2,000 exhibitors and 114,000 buyers and sellers from around the world.
It’s not only the sheer size that distinguishes IMTS from every other show held in North America, but most, if not all the exhibits are prepared by the equipment manufacturers as opposed to local representation used for smaller, regional shows.
In many cases, the machinery and equipment are manufactured in another part of the world so for most buyers, visiting the factory may not be time- or cost-effective. This makes visiting IMTS worthwhile. You’ll find examples of the latest technology and the people working the booths will be a combination of the smartest and most successful employees from both the manufacturer level, as well as its distribution network.
It’s contact with these types of people that makes the trip to Chicago worth the time for anyone interested in learning about and potentially purchasing new technology. To exhibit at a show the size of IMTS takes a lot of time, planning and of course, money. With such a large investment comes a huge amount of pressure to sell product to justify the expense.
IMTS is also a unique opportunity to meet and engage with the principals of the equipment manufacturers. When you consider the large investment, the show can be a great place to negotiate a deal on a piece of equipment. I can tell you firsthand that working this show as a seller means spending many hours in a hotel room at night cranking out quotes and finalizing pricing to be ready to continue a discussion with a customer that started on the previous day.
Have a plan
In today’s world, even a few days away from the shop comes at a significant cost. So if you’re going to make the trip, have a plan in place. First, there’s much more to the show than just the machinery and equipment; you can also visit exhibits for software, measuring equipment and tooling, with all of these booths staffed by experts. These areas can be just as important to upgrade as your machining centres or multiaxis CNC lathes.
In many cases, manufacturers that invest in new machinery but continue to use their existing programming software won’t maximize the efficiency or utilize the new technology to its capacity. Therefore, the impact to their bottom line profitability ends up significantly less than anticipated.
However, with all of that being said, if the purpose of the trip is to finalize a decision on a new piece of equipment and take advantage of a “show special,” it is important to ensure that funds are available for the potential purchase. This could mean just taking the time to work with your chosen financial institution and have a preapproval in place.
If you’re dealing with a financial institution with which you have an existing relationship, getting pre-approval is typically as straightforward as providing some current financial information for review. Even if you’re simply exploring a new relationship, an efficient institution can review credit applications and financial information in 24 to 48 hours to either provide a pre-approval for a specific amount, detail what a potential approval may look like from a pricing and structure standpoint, or simply request some additional information for further analysis.
A standard lease pre-approval is normally good for up to 60 days, but in some cases it’s 90 days, so there’s no time pressure. In my experience, if the buyer is serious, the deal will close within 30 days. Most important, there’s no obligation to proceed. If the buyer likes the terms and conditions, great; if not, the pre-approval will just automatically lapse.
Regardless of where the actual capital comes from, the signal sent to the seller by simply telling them you’ve been pre-approved for financing is very strong. The seller will immediately know its potential customer has been checked out and is credit-worthy.
It also means the seller knows a potential purchase will be paid in full either on delivery (usually with a hold-back until the equipment is running) or installation completion, and it can essentially negotiate a cash price.
Whether the funds come from your own account or a financial institution, the seller knows you’re someone who is to be taken seriously and worth spending their valuable time on. Going to a show with a pre-approval in hand may provide an opportunity to negotiate a great deal on a new piece of technology. If that’s the case, it certainly will have been a productive use of time.
Ken Hurwitz is senior account manager with Blue Chip Leasing Corporation, an equipment finance company in Toronto. Ken has years of experience in the machine tool industry and now works to help all types of manufacturers either source or tap into their own capital to optimize their operations. Contact Ken at (416) 614-5878 or at via email. Learn more at www.bluechipleasing.com
This article originally appeared in the August 2016 edition of Canadian Metalworking.
The article is part of the Financial Management Success Centre, showcasing strategies to access working capital, reduce costs, and leverage the value of shop floor equipment.