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Finance options change the game

23 February 2024

FIXED-COST financial products are proving a game changer for warehouse operators looking to invest in automation, according to a report produced by Linde Material Handling UK.

Contract hire products and hire purchase facilities that were not readily available a decade ago are playing a key role in opening up opportunities for investment. Now that finance house and banks recognise automation as an attractive asset proposition, logistics companies can benefit from reduced whole-life costs on a project that will typically pay back in two to three years. The Chancellor of the Exchequer’s recent decision to allow permanent full expensing for firms investing in plant and machinery, adds to the attraction of such investments.

The report – Automation: can you afford not to? – is based on contributions from industry leaders and experts. It reveals:

  • Packaged contract hire products for automation hardware are available for those who wish to take advantage of government grants and allowances; 
  • In making calculations on whether or not to invest, businesses should not overlook the long-term benefits of automation;
  • To gain the full benefit of investing in automation, businesses must look at their entire value stream and ensure it is ‘automation ready’;
  • Introducing automated and guided handling equipment also brings considerable savings in out-of-contract costs such as collision damage compared with manually operated machines; reducing wastage and damage to product can be significant too;
  • Adopters of automation must be prepared for a different workflow within warehouse or manufacturing processes; redesigning the workflow can generate considerable productivity savings;
  • The tight labour market might be continuing to cause issues at both financial and operational levels but brings further opportunities for automation;
  • By going down the route of automation, warehouse businesses are immediately eliminating the cost of wages, overtime, sick pay, pensions, holiday cover and National Insurance;
  • Operators should be ensuring that automation does the dull, dirty and dangerous jobs while they employ people where their skills can add value, preferably in more interesting jobs;
  • Automated equipment is designed to work in a mixed environment of machines and people, using scanning technology to deliver higher standards of health and safety;
  • Automation offers the prospect of three or even four-shift working in a 24-hour period.

KION Financial Services account manager Howard Thomas, says: “Ten years ago, you couldn’t get financing, whether by contract hire or hire purchase, for this type of product. We see payback typically within 36 or 30 months on investment.”

Along with increased productivity, he predicts new adopters of automation could see a completely different workflow coming into their warehouse or manufacturing process. 

“It’s not just a question of swapping out manual equipment for automated technology; it’s redesigning the workflow which can generate considerable productivity savings.”

For more information, visit www.linde-mh.co.uk