The skills shortage has manufacturers turning to automation. But buying the equipment and technology that will fill the void of workers on production or packaging lines presents yet another problem. These systems are expensive. So expensive, in fact, that manufacturers—especially those with multiple plants—have to prioritize projects and sometimes put off purchases indefinitely.
Of course, in the past, savvy CFOs have skirted the issue by leasing rather than buying equipment creating an OpEx versus a CapEx expense. But another obstacle has appeared in the form of ASC 842, which is the new lease accounting standard published by the Financial Accounting Standards Board (FASB). In short, ASC 842 considers equipment leasing long-term debt that needs to be put on the company balance sheet.
Understanding the need to get creative with how automation is delivered, RoBex, an engineering-based integrator of automated systems, ripped a page from the software industry, offering its equipment as a structured technology licensing agreement that only requires a monthly fee. Introduced in May, it’s called RoBex Flexx.
“We spent time with our CPA firm, several attorneys, and end users to come up with an agreement that is not considered a lease,” said Craig Francisco, president of Robex, during the company’s Automation Solution podcast. “This technology agreement drives it, and the things in there are unique to RoBex, as there’s a patent pending on the process.”
What this means is that RoBex can build a custom-designed, integrated robotic system based on a manufacturer’s unique needs that RoBex ultimately owns and is responsible for. For example, a palletizing application for finished goods that typically takes six people to manually do the work across multiple shifts can be replaced with an automated robotic palletizing system that creates a significant cost savings on the line—estimated at up to 50%—while allowing organizations to redistribute valuable talent to other areas of the factory where they are needed most.
“There is a huge labor problem and every manufacturer is understaffed,” Francisco told Automation World. “We are going in and automating a job that will free up people to do valuable tasks. But we are not seeing customers let people go, they are repositioning them, pulling them away from monotonous, demanding, physical tasks.”
Many will liken this set up to the latest Machine-as-a-Service (MaaS) technology trend. But Francisco says, that, while MaaS is a great model, it does require measuring performance and output to calculate payments. The Flexx difference is in the simplicity of a flat monthly fee. How much it costs is dependent upon the machine. First, RoBex works with the customer on what they are trying to accomplish to create a system that works for them. The price of such a system can range from $150,000 to $1 million, but the average system is in the $250,000 to $300,000 range, from which a flat monthly fee is determined that is easy to budget.
|Read how RoBex is also delivering Machine-as-a-Service offerings.|
“The other beautiful thing is that [customers] are allowed to exit as there is no short-term termination clause,” Francisco said. “If they are not happy they are allowed out of the contract without hoops to jump through. Typical leases don’t give you the ability to exit.”
Of course, RoBex is responsible for making sure the system works, as well as providing parts, equipment maintenance, and service. “We are putting in a lot of the risk and the money upfront to make this happen for our customers, but we think we have something special and unique,” Francisco said, noting that he foresees 20% of the company’s future automation solution sales being delivered via Flexx.
“As more people understand the [Flexx] program and run it through their accounting team, senior leadership team, and legal team and they see what we offer, it will take off quickly. We already have a couple of multibillion dollar companies that understand it now and are looking at second, third, and fourth systems, so I believe it has tremendous opportunity for growth,” Francisco said.
PACK EXPO Las Vegas and Healthcare Packaging EXPO (Sept. 27-29, Las Vegas Convention Center) will reunite the packaging and processing community. With over 1,500 exhibitors, no other event in 2021 will bring together a more comprehensive gathering of suppliers offering new products, technologies and solutions. Attendee registration is now open.