This memo will be devoted to an apology and a notice of a change in policy.  Both subjects are triggered by this company’s ever increasing fryer repair and rebuild business.  First the apology, preceded by background information:  Recently two fryer system evaluation projects that include Computational Fluid Dynamic (CFD) analysis of the oil flow in the fryer kettle have been rescheduled.  The delay in completion of this work was caused by a heavy CFD work load.  Gem Equipment has one CFD work station, and because of the price, (a big chunk of $100,000) has no plans to add a station.  The design of all new fryers and a significant portion of the rebuild work requires Computational Fluid Dynamic evaluation of the oil flow in the fryer kettle.  In addition, sometimes CFD will be used to help understand conditions encountered in the operation of a fryer.  This company’s mistake was in overlooking how much work was ahead for CFD.  The customers for these jobs should have been given a realistic completion date at the time they placed the order.  They were not; for that we apologize.  In the future, normal lead time quoted for CFD work will be 8 weeks after receipt of order.

The policy change concerns the warranty period on repair and rebuild work.  Over the past 10 years, there has been a large increase in this portion of the business.  It appears that there are three reasons for this increase.  Food processors are doing less of this type of work themselves; some competitors for this work have gone out of business; and many of the rebuild projects have a more comprehensive engineering requirement than smaller firms are capable of furnishing.  The risk factor is much higher for repair and rebuild projects than for those utilizing new equipment.  A project with a significant amount of new equipment carries a higher price than that of a repair or rebuild job.  Therefore the same problem costing the same to repair will have much less impact on the profitability of the large project that uses new equipment.  Hence a warranty obligation that would be shrugged off on the new large project could cause a repair or rebuild job to be a losing proposition for this company.  Problems or damage caused by componants that were not worked on is another high risk factor with repair and rebuild work.  Most repair and rebuild jobs, even those that include a significant upgrade, come with a very tight installation schedule.  These tight schedules greatly increase the pressure on Gem’s installation crews, increasing the chances for warranty producing errors.

In recognition of this higher risk, Gem’s warranty on labor and materials for repair and rebuild projects, with a significant amount of the work performed in the customer’s plant, will be 7 months after the completion of installation or 6 months after start-up, which ever completes the warranty period at the earlier date.
This change will take effect for all jobs quoted after August 15, 2008; and all jobs ordered after January 1, 2009, regardless of the date of quotation.  In specific cases, when a customer feels that a longer warranty period is required, Gem Equipment will honor this requirement.  The extended warranty will, however, come at a higher price.

Current Newsletter

GEM Equipment of Oregon, Inc. © 2008 | All Rights Reserved