Friday the 13th : Capital equipment and the corrugator scare

Posted by Michael Villeneuve on Apr 13, 2012 2:08:00 PM

Today is Friday the 13th. So as an ode to the classic horror films of the 80's I thought I would share a chilling tale of selling-problem-assets gone wrong. Fortunately for the sake of this blog, I have many experiences from which to draw, but none more scary than a client's story of the asset that just wouldn't go away.

The Freddy Krueger of Capital Equipment

As told by one of Active's clients...

"Times were different then. Markets were growing, consumers were spending, and life was grand. Looking back, one can almost smell the aroma of money in the air as jobs were plentiful, management was golfing and the sound of laughter could be heard throughout the office.

Then it happened. Nobody had seen it coming - not even the finance team, who are generally prepared for everything. It took us all by surprise. The lights seemed to flicker, the laughter faded and an eerie hush fell over the entire building, office by office, one by one.

It was the corrugator.

Purchased in 1972, it had faithfully fulfilled its duties year after year. And as the business grew, it grew. Parts were added, other parts were tweaked, expansions were made and it delivered. Then came the day when it just couldn't deliver any more capacity. Younger, newer, faster corrugators were being built across the country making this one appear slow and dated. And eventually, it was time.

We disassembled it, packed it up in 19 ocean freight containers and went about our business trying to sell it. A daunting task, sure. But someone would need it. I mean, knowing how effective it had been for us over the past many years we didn't want to compete against it. So we did what we could to sell it overseas, but nobody wanted it. So there it sat. Like a cinderblock tied to our ankle it weighed on our books and prevented us from leaping forward as the spirited energetic company that we once were. This once loved and valued asset, now rusted our resolve... and we loathed it.

But like the parents of the children of Springwood, someone needed to take action and rid our lives of this monstrous metal noose around our neck. Then, from seemingly out of nowhere, we were told it's over - problem solved! The lights stop flickering and the sound of laughter was heard again. Nearly two years had gone by since this old capital equipment had begun clamping its slow and steady grip around our balance sheet. And just like that, we could breathe again! We could spend again! Who did this? Who saved us from this Nightmare on Bedford St?

I didn't hear right away. But eventually we came to learn of a company that took ithe corrugator and smelted it. Melted it down - ocean freight containers and all! Apparently they got $100,000 for the metal, but paid us $300,000 for it. Paid us with something called trade credits, which we used to pay for some of our media advertising of our new product line. I don't know how it all worked, but I sure am thankful for it. We all are. It set things right again in the office.

Seems to me I heard someone refer to it as....ah yes, Corporate Trade."

Do you have an asset scare you’d like to share? I’d love to hear it.

Happy Friday the 13th!


Topics: Corporate Trade Industry Report, Cost Management, EBIT, Supply Chain Management (SCM), Case Studies, Capital Equipment


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