Ugly, but Profitable

In the February issue of Modern Casting, Dan Marcus comments that some of the oldest, ugliest foundries in the metalcasting business are also among the most profitable foundries in the metalcasting business. His argument is that equipment has little to do with how profitable metalcasters can be.  Good management has everything to do with how profitable metalcasters can be. Knowing your markets and focusing your business toward them is a more potent profit generator than the newest, most efficient piece of production equipment. Many companies fall into the costly trap of thinking they will be more profitable if  they could only acquire the latest bit of high productivity equipment, never recognizing that unless they do things differently, they will just have more debt, lower cash flow, and fewer profits. His argument is similar to one I read a few weeks ago about machine shops profitably growing relying on older equipment. It’s also my experience in New Hampshire – more companies fail due to poor management than from poor workers or foreign competition. Ugly and wealthy, or pretty and poor. Which would you choose?