Rental stimulation

Mills CNC's ‘Smart Options' rental scheme is just the job for precision manufacturers looking to increase and improve machine tool capacity without being tied to any long term purchasing commitment. Solutions investigates.

Mills CNC is the exclusive distributor of Doosan machine tools in the UK and Ireland and its new rental initiative is available on all new Doosan machines.

The scheme, administered and managed by Mills CNC Finance, the independently operated machine tool finance arm of Mills CNC, was launched in July 2009 and has to date seen eight UK and Irish companies take out rental agreements on new Doosan machines. Ian Barber is the CNC finance manager at Mills CNC. “The majority of our Smart Options business has been with SMEs,” he reveals. “In all cases our rental scheme has helped these companies manage to square, what for them was a difficult but not atypical circle.

“A significant number of precision manufacturers are busy,” he continues. “These companies are working flat out and their order books, at least in the short to medium term, are healthy. To help cope with the workload, savvy companies are looking to increase capacity through the purchase of additional machine tools, but there are however a number of problems that manufacturers face.

“The first of these is with the manufacturers themselves and the prevailing lack of confidence that, despite a gradual upturn, is still evident in some manufacturing sectors. Some companies, perhaps understandably, are reluctant, at this moment in time, to saddle themselves with what they consider to be long term financial commitments such as investing in a new machine tool via a bank loan or via a traditional hire purchase or operating lease arrangement. They are also rightly concerned by the high interest rates that banks currently charge which is typically 6-6.5% despite the low bank base rate of 0.5%.

“And, because there is still some uncertainty in the market, with new manufacturing contracts taking longer to come to fruition – manufacturers err on the side of caution and shelve their investment plans in favour of making do with the technology they already have to hand,” he adds.

Options available

It was against this backdrop that Mills' Smart Options' rental scheme was designed and launched. It has a number of elements:

The first is that the rental of a new Doosan machine must be for 12 months in the first instance, but towards the end of the 12 month period, manufacturers have a choice to make: return the Doosan machine tool to Mills CNC; extend the rental period for a further 12 months or; buy the machine and get 100% of the rental payments already made refunded against the original price of the machine.

“The Smart Options rental scheme gives manufacturers much needed breathing space to be able to focus and improve their performance in the short term without being distracted by what may or may not happen in the future,” Mr Barber affirms.

“Smart Options rental payments are highly competitive with a monthly repayment of just £30 per £1,000,” he says. “Such low payments combined with the scheme's ‘No deposit required' condition and machine tool delivery, installation and training included in the price, has resulted in significant interest amongst manufacturers.”

Help in the short term

One such company that has taken advantage of the scheme is Dartford-based precision subcontractor, Kenard Engineering who acquired a Doosan HP 5100 horizontal machining centre during September via the Mills rental scheme.

“We needed additional milling machine tool capacity quickly to help us fulfil a short term eight month manufacturing contract that we had secured,” advises Matt Cornford, operations director at Kenard. However, as the contract was finite, we didn't want to be tied to any long term financial commitments which would have been the case if we had decided to purchase a new machine tool.

“Instead we decided to rent a new Doosan HP 5100 via Mills' Smart Options scheme, which gives us the flexibility to hand back the machine to Mills if the short term contract is not renewed. Or, we can continue with the rental arrangement for a further 12 months, or buy the machine outright depending on what our manufacturing requirements are further down the line.

“The scheme gave us instant access to a high performance machine tool and, once the rental agreement was signed with Mills, the new HP 5100 machine was installed at our Tewkesbury facility within days.”

Bending over backwards

Mr Barber continues: “Our Smart Options programme is just one example of how Mills CNC is helping its customers maintain their competitive advantage through the acquisition of new, high performance Doosan machine tools. We work closely with customers and get to know and understand the key drivers in their business. By doing this we are able to take a more holistic view to machine tool finance and funding arrangements, and are able to devise a number of innovative solutions for the customer.

“Our objective is to be as flexible as possible,” he says. “For example, we can work with and help customers consolidate existing finance agreements by perhaps extending the terms of a pre-existing arrangement and, as a consequence, reduce a customer's monthly outgoings.

“We also work with customers to free up equity capital that they may have tied up in their existing machine tools. By doing this we can help them find the deposit for a new machine tool or help restructure existing financial arrangements so that cash flow and access to working capital is not adversely affected.”

Mills CNC Finance is not tied to any particular lender so customers can access a broad range of funding/finance packages and deals that are on the market. This independent approach enables the company to offer flexible terms that can include: low start options; holiday periods; no or low deposit options and; VAT deferments.

Concludes Mr Barber: “The current economic conditions dictate that machine tool manufacturers need to help customers access the best and most appropriate funding and finance arrangements. At Mills CNC Finance we are constantly developing and shaping the portfolio of products and services we provide and the recently launched Smart Options rental scheme is just one example of what we're all about.”

Mills CNC
www.millscnc.co.uk