Last week I met with a large client who has their own engineering department. They are a large and very clever company and have used their engineering department to make solutions for their production and installation teams which set them apart from their competition.

When you own the staff the actual costs for making such items for your company is often more than you think when floor space, holiday and sick leave, training, heat light and power, tools, maintenance and the like are all considered. In my opinion owning staff outside your main core business is often a false economy.

However, the point of this blog is that this customer is currently very busy in all parts of their business. During our discussions we identified one project which requires some custom made equipment to be fabricated. Their staff are simply too busy to get onto it, so we will fabricate it for them.

As the economy picks up I expect more work like this return to the specialists. Glass and window companies will want to utilise every last bit of floor space and staff resource for their core business and outsource everything else. This allows more specialisation for everyone, and hence more efficiency and ultimately more profitability for everyone, something which typically happens in a buoyant economy. 

I challenge you to consider what the true costs are for making things outside of your core business.

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