Semi-automatic flute laminators may seem to be the lower cost, safer alternative on the purchase order. But as volume increases, many corrugated manufacturing facilities find that increased labor requirements, reduced capacity to run at full levels and increased quality fluctuations subtly eat into the bottom line. This ROI analysis of the switch from semi-automatic to full automatic machines for flute laminating demonstrates how to measure the true reduction in labor cost, daily capacity and scrap in order to determine whether or not the investment in additional capital is a worthwhile expenditure for your particular mix of jobs and wage rates.
There are two general assumptions that must be corrected at the outset. First, price of the machine is not necessarily equal to the total cost of ownership. Secondly, fully automatic systems are not just for giants: many mid-sized plants with a steady demand for litho-lam may find a compelling return on investment if the right metrics of labor and throughput are applied.
What Changes When You Move from Semi-Automatic to Fully Automatic Flute Laminating
The gap between what they expect and the reality of operating an aircraft is greater than they realize. To calculate any ROI given the changes that will take place on the shop floor, one must know what those changes are.
Semi-Automatic Flute Laminators – Lower CAPEX, Higher Manual Involvement
Semi-automatic flute laminators are typically configured with 100% auto feed of the bottom corrugated sheet and a manual / limited assist loading and alignment of the top printed liner or board. Operators should stay with the machine, deal with misfeeds and stacking. In reality, this typically requires a minimum of 2-3 on-shift people per shift (on larger formats and faster speeds, it could require 4).
Speeds are moderate and very much coupled to top sheet ability of the crew. Most of the machines have been successful with smaller plants and converters because of their flexibility to run short runs and frequent size changes. It’s a trade-off between lower initial investment and greater ease of entry and increased labor demands and leveling-off production.
Fully Automatic Flute Laminators – Higher Automation, Higher Throughput
Fully automatic flute laminators receive both top and bottom sheets from automatic feeders, place glue under careful control, position the sheets with servo positioning systems and place the finished boards into an automatic stacker. The one operator can usually maintain all of the line, and only requires the assistance of another for material or job changeovers occasionally.
Typically operating at 10,000 to 16,000 sheets per hour (or more with more sophisticated machines), such machines can now be fed by man for extended periods without limitation to the sheet speed. Most modern systems have an accuracy of within ±1 mm, which minimises variation from job to job. At sufficient volume, the more you can invest upfront, the lower the labor cost per sheet, the more capacity you can achieve per day, and the more predictable the quality will be—these are the “levers” that will help generate ROI.
Core ROI Drivers – Where the Upgrade Gains Actually Come From
These four practical factors move the numbers most: labor, throughput, quality/scrap and the total cost of ownership that ensues.
Labor Requirements and Cost per Shift
Usually 2 or 3 operators are needed to keep the semi-automatic lines working, feeding and alignment checks and stacking. Fully automatic lines remove that requirement, and only require a primary operator and occasional material assistance. In areas with full loads over $20-25/hour the difference can quickly run up to tens of thousands of dollars a year per shift. Other expenses, such as training, absenteeism coverage and supervision will also drop. Each year the machine is in operation, those savings keep building up.
Throughput and Capacity – Semi vs Fully Automatic
A semi-automatic machine has a maximum production that is determined by the slower of the machine’s mechanical speed or the operator’s feeding speed. Fully automatic systems eliminate that limitation. A 40-100 % increase in sustained sheets per shift is typical for plants with the new line optimized for their mix. The extra capacity either takes up overtime or means outsourcing or opening up a new avenue for litho-laminated work without a second crew.
Quality Consistency, Scrap and Rework
Manual top-sheet feeding adds small registration errors leading to higher scrap or secondary rework. The advantage of automatic systems with servo control is the more even film and alignment of the glue, which can lead to several percentage points lower scrap rates. The financial and customer-service aspects are both enhanced by the reduction in rejected orders and by the savings in material.
Building a Simple ROI Model for Upgrading to a Fully Automatic Flute Laminator
It’s not necessary to have a complicated spreadsheet to obtain a usable answer. There are three simple steps.
Step 1 – Quantify Current Semi-Automatic Baseline
Write down actual average sheets or square meters per shift of the existing machine. Record the precise quantity of operators assigned, the fully loaded hourly rate of the operators plus overtime if applicable. If available, track scrap/rework percentage of laminated board. These numbers are used as the “before” baseline.
Step 2 – Estimate Output and Labor after Automation
Inquire with vendors on realistic running speeds for the flute types you use and the size of boards that you typically use. Make adjustments for your job mix and changeover frequency. Draw a new crew size (typically one operator) and scrap reduction. Turn the surplus production into additional completed products or reduced outside demand.
Step 3 – Calculate Payback Time and ROI Range
Include annual labor savings, materials savings (from reduced scrap), and contribution margin of any additional production capacity the new capacity will allow. Divide net annual benefit by incremental capital cost of fully automatic machine compared to keeping/replacing the semi-automatic machine. Calculate the same number with conservative, expected and optimistic volume assumptions. Payback occurs in most plants within 3–5 years, and can be quicker for high volume and/or high wage operations.
Non-Financial Factors That Influence the Upgrade Decision
There is no one that says numbers are the only thing that matters.
Capacity Headroom, Lead Times and Customer Service
Additional capacity gives room for surges in demand and rush orders. Faster turnaround and reduced deliveries failures boost customer relationships with brand owners that require reliable graphics packaging. Those gains are rarely found in a straight payback formula but they still help or increase revenue.
Flexibility, Custom Work and Changeover Complexity
In small quantities or for customized products that are highly variable, semi-automatic machines are still very useful for the operator to be able to intervene. Many of the good plants still use one semi-automatic line for that niche and the volume is transferred to one fully automatic machine. This helps to prevent over-automation by ensuring that the appropriate equipment mix is used for the real job profile.
Example ROI Scenarios – When the Upgrade Pays, When It Doesn’t
Medium-Sized Converter with Growing Litho-Lam Volume
The demand for litho-laminated continues to grow steadily for a plant operating two semi-automatic laminators. Overtime is on the rise and work is even being outsourced at such a thin margin. Replacing one of these lines with a fully automatic machine reduces operators from 3 to 1.5 per shift – reduces most overtime and re-homes outsourced volume. The payback of the incremental investment is evident with typical mid-market labor pricing, and provides capacity to continue growing.
Small Plant with Seasonal or Low Volume Litho-Lam Work
A smaller converter would only be using their semi-automatic laminator a few days per week, for seasonal displays and/or occasional high graphics jobs. Utilisation remains low at less than 50 %. In this instance, the upfront cost of a fully automatic machine is not the best bet and the current semi-automatic machine is the superior investment until volumes increase and become consistent.
Summary Guidance – How to Decide If Now Is the Time to Upgrade
The transition from semi-automatic to fully automatic flute laminating machinery results in a more capital-intensive operation than a labor-intensive one, but will provide lower operating cost per sheet. The ROI is realized when the increase in production volume and labor expenses are sufficient and the number of jobs is consistent to the extent that the annual savings is more than the additional investment in a reasonable period, which is typically between three and five years for many mid-sized facilities.
Collect your true starting points, ask for realistic performance data from suppliers and create both a ‘low’ and ‘high’ scenario. The choice is then based on your plant-specific data and not on general statements. When plants are presented in this manner, they are more likely to make better and safer investment decisions.