CHG-MERIDIAN finances production equipment for furniture parts
International wood merchant enters the smart factory era
J. u. A. Frischeis (JAF) is one of Europe’s leading suppliers of wood and wood products. Thanks to the new, fully automated production equipment that the company is leasing through CHG-MERIDIAN, it can now manufacture furniture parts to individual customer specifications – and in record-breaking times.
Headquartered in Stockerau, Austria, J. u. A. Frischeis (JAF) is one of Europe’s leading suppliers of wood and wood products. ‘Wood is our world’ is the mantra that unites its approximately 3,000 employees around the world. The company is a trusted partner of the woodworking industry, with the production of furniture parts among the many services that it offers.
JAF has recently embarked on a new strategic investment made possible by the financing experts at CHG-MERIDIAN. Thanks to the new, fully automated production equipment that the company is leasing through CHG-MERIDIAN, it can now manufacture furniture parts to individual customer specifications – and in record-breaking times.
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A blend of tradition and innovation is deeply rooted in JAF’s approach to doing business. It has served its market for more than 70 years with an ever-growing range of products and services. Ongoing investment in equipment and processes is how JAF ensures that it always delivers the highest quality no matter what the order involves.
In early 2021, JAF worked with CHG-MERIDIAN to implement its extensive capital spending plans. This strategic investment in new production equipment has proved extremely successful, with the wood specialist able to expand its offering through products with a greater degree of prefabrication. The machinery it has purchased can manufacture furniture parts fully automatically to customers’ individual specifications, which means that JAF is now more closely integrated into their value chains.
A one-stop shop for financing complex machinery
The plant itself actually comprises a number of machines made by different suppliers. The main challenge besides the technical integration was to manage the acquisition of all the individual parts in one transaction. It was a task that the CHG-MERIDIAN experts were happy to resolve. They combined all supplier invoices into a single lease schedule and created a bespoke financing model.
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“Our machinery leasing solutions, which are based on actual use, offer an attractive alternative to the outright purchase of equipment, something that is always capital-intensive when it comes to manufacturing equipment,” explains Paul Pyzik, Key Account Manager at CHG-MERIDIAN. Thanks to the leasing agreement, JAF is able to follow through with its capital spending plans without affecting its liquidity and without tying up equity for the long term. Leasing the equipment has zero impact on JAF’s balance sheet as it remains the property of CHG-MERIDIAN throughout the term of the project. This gives the company the freedom to continue investing in its business, without running the risk of overstretching its budget. “Given the extent of our plans, knowing that we could share the risk with an experienced partner such as CHG-MERIDIAN made the process so much simpler,” says Barbara Melichar, Head of Group Treasury at JAF. The fact that no payments were due during the prefinancing phase was one of the key factors in JAF’s decision to lease through CHG-MERIDIAN. Despite the lease having to be extended as a result of the coronavirus pandemic, it remained cost-neutral for JAF as payments only became due once it had signed-off on the equipment.
Income and expenditure in balance
It usually takes between one and two years for a new production facility to ramp up to full capacity. CHG-MERIDIAN adapts its leasing model to help customers bridge this gap from a financial perspective. “For production equipment, it’s important that income and expenditure are in balance right from the start,” explains Pyzik. “Our customers pay lower installments at the beginning of their lease for exactly this reason.” A further benefit for JAF in terms of flexibility is that the lease is based on actual use. Costs for the leased machinery are incurred only up to a predetermined amount calculated by CHG-MERIDIAN at the outset, based on expected usage. This means the costs of using the equipment are, to the greatest extent possible, proportionate to the costs of acquiring it. The ideal scenario is, of course, for it to pay for itself over time. If the equipment is then remarketed at the end of the lease term, JAF takes a cut of the proceeds.
“Superb customer care, attractive terms, and maximum flexibility in lease structuring are what makes CHG-MERIDIAN an ideal partner for our future-focused investment.”
