Figure I’d start a new string.
I’ve seen many companies ‘grow themselves to death.’ Now I truly doubt that this is happening to CD, but look at the math:
Lets make some assumptions:
Cost of Supplies for SR20/22 (Avionics, prepreg fiberglass, engine, prop, ,etc): 50% of purchase price.
The production rate has changed from 1 airplane a week to 1 airplane a day: this means that thera are 4 additional planes per week on the assembly line.
Time to build: 6 weeks = 24 total additional airplanes on the assembly line.
Deliveries split 50/50 between SR20 & '22.
This all means that as they have ramped up of production, they have invested about $3.8MM (oops $3.8 million) in inventory just because of the planes in the pipeline. This is capital they have to raise or borrow.
To that you have to add the salaries (& benefits of the employees added to build those planes. I assume that they are near 2,000 man hours per plane at a cost of $20/hour = another 40K per plane or about another $1.0+ million.
Now if they have $40K in profit in the SR 22’s and $10K in the SR20’s that they are delivering now, then each time they sell a plane, they only assist their cash flow by that amount ($10K or $40K). They have to replace all of the inventory with new for the next plane to start its way down the assembly line. (Please don’t remind me that the profit is a direct function of fixed and variable costs per plane and the greater the production rate the lowers the fixed costs hence the increased profit per plane.)
It seems to me that they are making the right moves, but I am operating in a total vacumm. All of my assumptions are just guesses.
Meantime, I wish all of CD the best of luck and agree with EB: Thanks for all of your hard work. We all appreciate it.
Marty SR22 # 20