5.3 Expenses can always be smaller

I allways bring to memory the sad history of the closing of a factory that I visited in the United States. The poor engineer  did not understand why such a decision to close the factory, because, in his words, it served to dilute the fixed costs of the industrial plant where it was.

My interest in visiting this plant, two weeks before closing, it was more in order to verify the possibility of bringing to Brazil the technology used in the plant and some equipment still in excellent condition.

Although my goals were pretty clear, I could not contain myself before so much discontent and even of such engineer to satisfy my curiosity and to show interest, I began to analyze why the factory would close.

Lack of cost competitiveness? Lack of customers? Some competitor had resolved to settle beside such works? More competitive imports from China? Prices deteriorated? Logistics of supply of raw materials too expensive? Logistics supply customers inappropriate? Factory with outdated technology? What really justified the closure of this plant?

Someone like me who has worked for a long time in factories, not satisfied to see the closing of a plant. My first reaction was to try to understand why and so I began to ask the engineer who expressed surprise that the only one who had visited in recent times were a Brazilian, and that this appeared to be as unhappy as he was before this event.
Astonish you my dear readers to see the cost comparison of the plant with the largest factory of the world's largest competitor, we could see a very well done study of cost analysis that showed me that engineer.

This factory was no more than 3% higher costs. Had large customers within a radius of 30 km or so, receiving raw materials arriving by train directly in the stock from the factory, had a contract for the supply of raw materials that will guarantee the best value in the market. What happened then, I asked? I can not understand anything. I have been able, in Brazil the cost levels that you have here!
See the cost he told me. Note the level of expenses that force me to add the cost to form my selling price. With this level of expenditure of the industrial complex where our factory is located and the cost of headquarters, research, travel, technology centers that develop products and processes that are not needed nor my factory to my clients. Marketing expenses that do not add any value to my product, which does not need to sell my product. This level of spending in aggregate mine production costs, make me less competitive and therefore took the decision to close the factory.
We both almost cried together, but like every Brazilian, we're used to crises and more, we must turn the situation on. I asked him yet, how many administrative workers will be fired by the closure of their factory? Who then will pay the cost of research, marketing, etc.. That his factory pays today?

He replied that would be transferred to other plants and that no one from the administration would be fired, ie, the costs remain the same and make other products, other manufacturers even less competitive.

Do you think this only happens here is not it?
In your company this is not because you have mastered all the expenses and keeps them under control?
Know that nothing is further from the truth!

What would you like appropriates spending? You have a plan to cut them in half? And continue cutting without stopping? Which costs the client agrees to pay?

Can not answer or have any questions?

It's time to start acting!

Every expenditure is HIGH, SHOULD AND CAN BE REDUCED!

Good spending cuts!


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