Production Expansion for Rhino Steel Industry

Discuss about the Financial Request For Project Expansion.

The production department of Rhino Steel Industry is seeking a financial support to purchase the necessary machinery and equipment for project production expansion. The objective of this expansion is to gain partnerships and to capture ready local and foreign markets. The machinery in question is capable of increasing our production to meet the market demands on a low cost of labor but quality production. The machinery will also not require additional labor investment but rather maintain the current labor force and still operate effectively.  This project is based on the research carried out to determine possible market niches and partnerships with India, Maldives, and Bangladesh which proved viable and ripe for the taking as many business people have shown interest in our products especially the supply of office furniture, cabinets, and lockers.

We, therefore, propose a diversification of production at Rhino Steel Industry by introducing a new product line capable of serving the markets already identified. This comes with a few desired changes in the technological use at the production unit to ensure we produce affordable quality products that meet the market demands at a low cost without the disturbance of the current workforce. In line with this vision, therefore, the production unit puts forward this proposal of funding for the introduction of the new woodwork technology to help meet market demands.

Rhino Steel Industry operates two branches, the main branch is headquartered in Leeds, United Kingdom and the factory at Negombo, Sri Lanka. Currently, Rhino Steel industry produces steel chairs, tables and cupboards which are sold locally in the UK and Sri Lanka where the two industries are established. There is need to expand the company’s markets to capture market niches available in the foreign lands which are currently not occupied hence less or no competition exists. Currently, we have established partnerships with business individuals who are interested in our products so long as we can supply high-quality products, on low costs and also durable, conditions which we are able to meet and surpass.

With the machines at our disposal, we will be able to produce high-quality products, reduce significantly our cost of labor, no need to higher more workforce and still increase our revenues through exports. Most importantly, the machinery will aid our company in diversifying our business by introducing new lines of products within our production unit. We intend to add to our product line the production of office furniture, cabinets, and lockers, all of which our customers in the foreign market have shown great interest in trading with us. Currently, as we stand, the company does not have the capacity to produce these highly desired products. Secondly, it would very costly to indulge in the production of these products with the current technology at our disposal. We will require employing more labor force for the production of the new product line. Therefore, it will not be feasible to introduce the product line with our current state at the production unit.

Market Niches and Partnerships

With the machinery at hand though, we stand a better chance of operating at the bare minimum costs. First, we will be able to retain the current workforce hence there will be no need of raising our costs through engaging more labor force. Secondly, we will be able to diversify the business at production level by introducing to our list of products the office furniture, cabinets and lockers and upholding quality. Thirdly, we will be able to produce a high quantity of quality products within a short duration of time hence be able to meet the market demands and serve them efficiently and effectively (Design Tech, no date). We will be able to automate our production which in turn will enable us to respond quickly to changes in market demands and other associated forces within the markets we serve (Vita Enterprise Solutions, 2018). Finally, it is significant that our company be very vigilant in financial management. For us to ensure high revenue returns from our investment, it will be necessary to institute a financial saving strategy. This project will enable the company to cut on inflated costs of production and other associated costs even with a new product in the line. The company is set to realize high-profit margins in line with the introduction of the production machines on request.

The production unit projects a daily production of 50 units of office tables and 50 office chairs, 10 cabinets and 25 lockers with the same workforce and the availability of the machinery. The industry will stand at 250 units of office tables, 250 office chairs, 50 cabinets and 75 lockers weekly. The production process will be continuous without a stop so as to establish an inventory and stock enough to supply the market and meet the consumer demands without hitches in the process and to continue capturing more markets thereafter.

The production unit requires three machines that perform different roles in the manufacture of the newly to be introduced products, and of different specifications.  The machinery is to import from India, who offer quality products and at affordable prices. The machinery includes; CNC Wood Carving Machine, CNC Wood Working Machine, and CNC Wood Router Machine.

According to Nihar Industries (2017), the ANC Wood Carving Machine is an equipment with a wide range of uses as far as wood carving and working is concerned. The machine is able to customize wood in every manner of design required by the user. Rhino Steel Industry through the production unit will be able to use this machine in cutting out various wood designs in the production of office furniture that would give elegance and perfect finish to the furniture. The machine comes with a number of advantages that make it more suitable to the needs of the production unit. 

Introduction of a New Product Line

First, it is fast. The Woodcarving Machine is a computer automated machine that operates on minimum supervision. It is capable of handling large amounts of wood in designs required very fast hence saving on time spent in production and meeting requirement of large productions within a specified timeframe.  Secondly, it comes with both manual and automatic operation ability. It enables the user to operate it either manually especially on wood curvature that requires attention to details or specification or automatically by computerizing the desired art specification. Thirdly, the machine is considered very accurate in cutting out the designs. For example, it is capable of cutting out wood in the shapes desired and ensure accurate measurements too.

The production unit would require a set of the woodworking machinery of different uses to aid in the venturing of the new product lines. Among the woodworking machines needed include but not limited to chisel and chain mortises, which will be useful in drilling holes in the woods for joints and joinery and also control the depth of the hole or mortise on the wood. Dust collectors will be used for collecting sawdust, granular and chips.

This machine will be useful in drilling, trimming and sanding and come alongside some tool changers. They are operated using a computer software and are used in nesting, in other words, putting wood inside of another.

The budgetary allocations of the machinery required for the new product line will be classified into two; first, the production department is requesting funding allocation for the purchase of the machines and the transportation costs from the source in India. Secondly, the costs associated with assembling and installation once they arrive at our stations. After keen comparison of suppliers’ quotations, the production department has settled to procure once funds are made available from ANC company in India which specializes in the production of woodwork machines. The company is considered the best in the Asian continent in the production of such machinery considering quality, durability and their relatively affordable costs in line with their pricing strategy. Kindly see the below table 1.0 on the budget specifications.

Table 1.0

The production department foresees efficiency in the introduction and production of the new products to meet consumer requirements. In line with the production projections, the project seems feasible and capable of realizing high rates of return upon commencement.  The production unit believes that the project is capable of realizing high returns on revenues that will boost other the organization to realize high-profit margins. The payback period for the amount to be invested in the purchase of these pieces of machinery is estimated to be within six months of investment and to cover all the costs associated with the purchase of the machinery.

The Benefits of Machinery Purchase

The unit pricing of each unit of furniture production is estimated to be affordable enough that will compare relatively with the competition pricing the markets. We plan to have relatively cheaper products, high-quality products that meet global standards, perfect finish that provides elegance and aesthetic value to customers that will enable Rhino Steel Industries to capture a competitive edge in the market.

The productions department at Rhino Steels Industries projects a future of successive business operations and further expansion. We aspire to expand our market coverage further in the Far Eastern countries, the Asian continent, Africa, and the Americas. This plan is achievable by ensuring that we embrace technology and take advantage of globalization which continues to open up new global markets by removing most of trade hurdles and bottlenecks. In terms of sustainability, the production unit will ensure that it conducts an evaluation of the suitability of the new business line if it is in line with the objectives of Rhino Steel Industry. We will also conduct reviews and comparisons of different and related production processes to come up with a system that is feasible, less labor intensive, high output to input ratio and less capital intensive.

We also foresee further expansion of the industry by opening up branches in different countries, establish retail shops so as to sell directly to the consumers and appoint representatives in different parts of the world who will ensure direct contact with our valued customers. It is also necessary to increase our workforce in the future to ensure efficient running of our systems and the general operations. Finally, the production department of Rhino Steel Industry projects the possibility of embracing specialization and offering training to staff in their areas of specialization so as to continue developing our staff to be competent enough which in turn will positively impact quality, time management, taking responsibility, and overall development.

Reference list;

Design Tech (no date). Advantages of Technology in Manufacturing (Latest Trends and Current Scenario) [online]. Available from: https://www.designtechsys.com/articles/advantages-technology-manufacturing [Accessed April 29, 2018]

Duemyer, R. (2017). How to Write the Funding Request for your Business Plan. [online]. Available from: https://www.thebalancesmb.com/steps-to-write-a-business-plan-1794230 [Accessed April 29, 2018]

Kurzweil Education System (2002) Sample Grant proposal [online] Available from: https://www.kurzweiledu.com/files/proof_resources_grant1.pdf [Accessed April 29, 2018]

Nihar Industries (2017). The Benefits of Using A CNC Wood Carving Machine [online]. Available from: https://www.niharindustries.com/benefits-using-cnc-wood-carving-machine/ [Accessed April 29, 2018]

Resource Centre (2018) Writing a funding application [online] Available from: https://www.resourcecentre.org.uk/information/writing-a-funding-application/ [Accessed April 29, 2018]

The Costello Construction Group (2017). The Use And The Functions Of Woodworking Machinery. [online]. Available from: https://thecostelloconstructiongroup.com/use-functions-woodworking-machinery/ [Accessed April 29, 2018]

Vita Enterprise Solutions (2018). 5 Benefits of Technology in Business [online]. Available from: https://vitaenterprisesolutions.com.au/new-ideas/articles/5-benefits-technology-business [Accessed April 29, 2018]