Yes, you really can rent a custom packaging line

I spent this week teaching the Packaging Machinery Basics class at Frain Industries and it was lots of fun as always. After class Rich Frain and I had a chance to talk about packaging line rental.

Yeah, me too. Fifteen years ago I didn’t even know it was possible to rent packaging machinery. There were a few exceptions such as where a machine builder had taken back a machine and was renting it until they could find a buyer. It was the rare exception, not the rule.

Ten years ago, I would have thought it impossible to rent an entire line. Both economics and engineering seem to work against the idea. Rich and I discuss rentals in our book Secrets of Buying Packaging Machinery but this time he gave me an example that finally hit home.

A large candy maker needed to introduce a new product. They could have gone out and bought a new line for about $1.5 million in machinery, integration, startup and training costs. More importantly, it would have taken most of a year from order to production.

Instead they rented a a complete packaging line from Frain Industries  This allowed them to reduce the year lead time to 13 week and saved over $1.3 million in initial expense and cash flow vs purchasing. The line is now producing about $250,000 of candy monthly for a rental fee of about $13,000/mo. Now that’s the kind of cash flow that puts a smile on everyone’s face.

The cash flow is super but another factor often goes unthunk. This was one of the 15% of all new products that succeed. Nobody expects failure but 85% do. Had this project failed, they could return the line rather than be stuck with $1 million in equipment they had no use for.

Today we take it for granted that we can fly to a city and rent a car. Ninety years ago, that was a strange idea until taxi mogul John Hertz started Hertz U-Drive-It. Renting cars is no longer a strange idea. Neither should renting packaging lines.