The workshop is the foundation for the production of every business. Should you choose to build or lease a workshop? Each option has its own advantages and disadvantages, and is suitable for each stage of business development, each manufacturing industry, etc. Investors should carefully consider both options to make the most suitable decision with the current situation of the business.
What stage is the business in: market exploration or long-term development?
This is the most important question for every business. Enterprises need to know clearly what their current business orientation and strategy is, then they can choose the option wisely.
A newly built workshop is the workshop designed and constructed in accordance with the production characteristics of each enterprise, synchronously from infrastructure to M&E systems and production machinery. Therefore, building a new workshop is a long-term solution for manufacturing enterprises, suitable for enterprises with long-term and stable development orientation in the locality.
A ready-built workshop is built with a simple design, meets basic production requirements and equipped with some available infrastructure such as ventilation, waste treatment and air conditioning and production area. Enterprises only need to invest in M&E systems, machinery suitable for production needs, and can start using them immediately after leasing. However, at the end of the lease period, the investor must return the premises as it was at the time of the new lease. Therefore, this option is suitable for businesses that are in the market exploration stage with short investment time, or suitable for the manufacturing industry with a compact, easy-to-move machinery system in which the set-up and removal is not too complicated and does not take much time and cost.
Building or leasing a workshop – each option has its own advantages and disadvantages
Investment time
To invest in building a new workshop, the investor has to go through many procedures from applying for an investment license, designing – building the workshop to applying for a construction permit, fire protection, environmental approval, etc. The investment period to build a workshop can last from a few months to several years, depending on the size and progress of the project. This has a significant impact on the time it takes to start production. Therefore, building a new workshop is suitable for projects with a long-term investment plan.
DORCO Living Vina 3-storey workshop construction project at No. 2 in Hoa Mac Industrial Park, Ha Nam, built by the General Contractor DELCO, divided into two investment phases lasting from January 2021 to November 2022
Leasing a ready-built workshop can shorten the investment time in building workshop infrastructure, and businesses only need to invest in an MEP system connected to existing infrastructure. After arranging machines and lines to ensure the safety and stability of production, the enterprise can go into operation immediately. This option is especially suitable for projects that are under pressure on order progress and need to save construction investment time to quickly go into production.
Cash flow/capital requirement
If leasing a workshop, enterprises only have to invest in M&E system and suitable machinery lines, ensuring safety and production efficiency, whereas the investment process of building a new workshop requires enterprises to make a full investment from fees for land procedures to the cost of design – build and MEP, the cost of licensing, approval and putting the factory into operation. Building a new workshop requires a high initial investment capital.
For businesses facing cash flow difficulties and having a limited investment budget, leasing a ready-built workshop is a solution to optimize investment costs thanks to flexible payment methods from three months to one year, helping businesses stabilize their cash flow.
The ability to optimize the area and capacity of the factory
Because it is designed and constructed according to the requirements of each business to meet its production needs, a newly built workshop is highly suitable. The area and function of each production area are carefully researched and designed on the basis of optimizing the production process, which will contribute to optimizing costs and product prices. In addition, for manufacturing industries that require special technical requirements, namely that printing factories require the stability and accuracy of machine foundations, or food and pharmaceutical factories require cleanliness, humidity, pressure, a new workshop will be the right choice, meeting the specific characteristics of the industry.
The SMT area is designed and constructed to meet the specific requirements of safety, engineering and production environment of the Power Plus Technology factory, with DELCO being the Design – Build contractor and providing the Smart Factory solution.
Ready-built factories are the ones that meet very basic requirements to be suitable for most businesses and many production industries. As a result, their utilization factor is quite low. For example, the area may be limited in one area but wasted in another. This low suitability can result in suboptimal manufacturing processes, affecting costs and product prices.
Synchronicity and the possibility of risk
A newly built workshop has synchronization from design drawings to construction drawings, from technical infrastructure to MEP system. A synchronous system is a prerequisite for the approval, construction permission, fire protection and environment procedures to go smoothly, saving time and costs. If a reputable and quality design-build contractor is chosen at the same time, the option to build a new workshop will usually not face any arising costs or legal risks.
Because the workshop infrastructure for lease is available, and the MEP system and line machinery are invested after leasing, the investor may face many risks in asynchronous connection with the existing infrastructure system. This may cause costs, time as well as legal risks related to the procedures for environmental approval and fire protection approval before putting the factory into operation. The infrastructure of a ready-built workshop may not be suitable for the lessee, making the cost of renovation and M&E system of the workshop sometimes equal to or more than the cost of building a new workshop. In addition, when the lease term expires, the dismantling of the system and returning the premises also incurs a significant cost.
As the Design – Build Contractor for M&E system and providing smart solutions for DAINESE factory, a workshop lease project in Yen Binh Industrial Park, Thai Nguyen, DELCO always upholds safety, efficiency and production stability to consult and with the investor to build the system
Flexibility and proactive investment
For a newly built workshop, the workshop is owned by the investor, so the investor can flexibly choose an investment location so that it is close to raw material areas, convenient for logistics and has many investment incentives. In addition, the enterprise can easily and proactively plan to expand, renovate and upgrade the workshop depending on production needs.
HAEM VINA Factory Project No. 3 leases a workshop in Song Khe Industrial Park – Noi Hoang, Bac Giang. DELCO is the M&E design – build contractor, using a technical ceiling system suspended on the tyren D12 system to ensure sturdy and easy to disassemble after the lease term expires.
For leasing a workshop, the investor can only choose investment locations in the list of ready-built factories for lease in industrial parks and industrial clusters. The leased workshop belongs to the owner of the workshop, so all construction, repair and renovation plans must be considered, so that after the lease term expires, the enterprise can return the premises to its original condition.
Building a new workshop or leasing a workshop has its own advantages and disadvantages. The investors should carefully analyze and consider choosing the most suitable option for the business, helping to optimize costs and save time, create production stability and promote business capacity.
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