Own business: wire production

* The calculations use the average data for the World

Wire is an item that is used in many areas of human activity. It is used in the production of many products, but at the same time among the population, individuals, the demand for wire is constant, because it is often used in everyday life. There are several types of wire that differ in their composition, and hence in their characteristics. Most often, you can find cheap steel wire, which in some cases is coated with a special protective layer of non-oxidizable metal in the air (zinc or aluminum). Often it is also subjected to copper plating, although a wire of pure copper can also be indispensable. They also use aluminum, metal alloys (therefore, even distinguish between bimetallic and polymetallic products) and even non-metallic raw materials. Thus, wire production is a business that is always relevant, and given the variety of these products, any novice entrepreneur will be able to find a niche that is still poorly occupied in his region.

It is from this that you need to start opening your business - with a market assessment to identify which products competitors offer, what is the demand for a particular product, what quality the products have and whether there is a need for anything new at all. Technologies are constantly being improved, and formally, metal wires obtained by drawing are referred to as wires. However, this definition is applicable in the technical analysis of the product, in some cases, the metal wire can be replaced by analogues that do not contain metals in their basis.

They also distinguish products by section - it can be round, hexagonal, oval, etc .; the size of the wire is also determined by the cross section, although some enterprises use different methods for determining the size. That is, there are really many opportunities, and it is hardly possible to find a city (except the largest ones), where all possible types of wire are produced. However, many metallurgical plants are engaged in its manufacture, for which wire is only one item in the whole variety.

Without an accurate determination of which products are needed, which are supplied, and at what price, you cannot start your own business, otherwise there is a risk that the offered product has many analogues from other manufacturers, and there is a completely different shortage on the market. Of course, the easiest way to deal with the usual steel wire, not covered with a protective layer, there is always a demand for it, but a large number of companies already produce it. Also, one should not forget that in many cases a particular product is brought from another region, if not from another country at all, so you can easily conquer the local market by offering a cheaper product due to savings in transportation costs. There are chances to enter this market, but the risks are quite serious, because there have always been and will be many manufacturers, and the entrepreneur must have some kind of competitive advantage.

To start your work you need to register as a business entity. There are no restrictions on the form, therefore, if you wish, you can even take shape as an individual entrepreneur. In this case, a simplified taxation system will be available, which will make it possible to transfer no more than 6% of revenues or 15% of operating profit to the state. But most often, registration of a legal entity is necessary, and here the limited liability company is best suited, because as in the case of individual entrepreneurship, the simplified tax system will be available. Next, the OKVED codes are selected, for a wire that is manufactured as an intermediate raw material for production, the code (OKPD 2) 24.34 is more suitable. The wire is cold drawn (and only obtained by cold drawing), the universal code is (OKPD 2) 25.93 Wire, chains and springs.

It is also worth familiarizing yourself with state standards for wire, which are very precisely spelled out, following GOST will allow an entrepreneur to use this as an advantage, although not all consumers are interested in using “standard” products.

Wire workshop

After that, there is a place for its production. In order to save money, you can be located in the industrial quarters of the city or even on its outskirts, sometimes it is advisable to open an enterprise in a small settlement, but located near a large metropolis. This is necessary to reduce rent, because in the provinces and on the outskirts of the city it is lower than in the center. If possible, you can contact the municipal authorities, and if they are interested in the entrepreneur’s business (if they find it “useful”), they can allocate territory on favorable terms for a long time. Otherwise, you need to find a fairly large plot with ready-made buildings; it may be an old and no longer working plant of anything, which can be converted to fit your needs. Otherwise, you will have to redeem the land and build the buildings at your own expense, while in the case of a long-term lease with a high probability that it will be possible to extend or redeem the land in the property, you can also begin construction. In other words, the entrepreneur is at great risk if he erects structures at his own expense in the territory that can be recalled.

The construction cost is estimated at several million (even more often tens of millions of rubles), because you need to refine the site, erect buildings, bring all the necessary documentation. This is also a very lengthy process. Nevertheless, it is worth doing it exactly when the enterprise will not only produce wire, when in essence a large and diversified metallurgical plant is being built. For the production of wire only, a relatively small area with rented buildings is sufficient. The rental price depends on many factors, primarily on the city and its location.

To work, you need several buildings. This includes the administrative unit, production workshops and warehouses for raw materials, finished products and intermediate production (if such is assumed in the selected scheme of work). Following modern ideas about the organization of production, the warehouse of finished products should not be large, all stocks should be minimized, that is, the goods received should be transferred to the consumer as soon as possible, all stocks should not wait in line, but should be used immediately upon admission to the enterprise. True, only a competent and experienced logistician can provide all this.

The largest building is the production workshop, the enterprise can manufacture several types of wire, so there can be several workshops for receiving different types of goods. The wire production line sometimes takes up several hundred square meters (and sometimes much more), taking into account all machine tools, places for transporting products and raw materials, and an auxiliary technical zone. In the administrative block are people who are only indirectly related to production, these are managers, marketing, accounting, personnel, etc. departments. Of course, they won’t need a lot of space, only a few managers are needed for production, but who are specialists in their field, it does not make sense to hire a large staff of “managers”. Thus, the territory of its production sometimes occupies several hectares, although with the small planned production volumes, a relatively small plot with a small workshop and warehouse can be dispensed with.

It is also worth considering the construction of access roads, and if you intend to engage in self-export of products to the consumer, you still need to take care of the equipment of the car park. Investments in the car fleet are also very significant: one or even several trucks, auxiliary transport for small transportation and transportation of managers on working issues, also not taking into account forklifts that are involved in warehouse and production processes (although they are often placed in the warehouse itself )

The following is a staff question. It will require a fairly large staff - these are the operators of all machines, managers, administrators, driver-forwarding agents (although delivery can be entrusted to third-party companies or even to arrange a pick-up with customers), support staff (loaders, assistant operators, stackers), specialists working with by customers. You can take exclusively highly qualified specialists to the last position, the success of the entire enterprise depends on their work, because they find a potential consumer, negotiate and convince him (the consumer) of the purchase.

At first, if an entrepreneur is able to engage in such work, he can start negotiations alone and find the first customers, however, for development, which is natural, you need to constantly expand the sales base. There are a lot of customers for the purchase of wire - from construction stores to metallurgical plants. The enterprise can work in wholesale (including small), if you want to engage in retail sales, you need to take care of opening a store in the city, although people rarely turn to just one wire, no matter how many types of wire, it’s possible to open either a metal goods store (as an option - to also produce a netting netting or barbed wire), or a multi-profile outlet. It is usually more advisable to work with wholesale buyers - they buy a lot of goods right away. A store like World of Wire will simply not pay for itself. However, if such a decision was made (or the decision to open a small wholesale store), then you also need your own specialists here, but you can do it with a competent leader and ordinary sellers.

In order to save some business processes (primarily those that are not related to profit-making by the organization) can be outsourced. This applies, for example, to security activities, because maintaining your own security service is usually not profitable. At the same time, when working with a private security company, the enterprise is put on an alarm (including a fire alarm), and specialists in their field take up duty on duty at the facility.

Wire production process

The production process is a rather complicated procedure. Depending on the chosen direction, the transfer of equipment can vary greatly. The most common - steel wire - is produced sequentially in four stages, but each of them consists of many operations. Usually, a sequential or serial-parallel type of movement of material resources is selected, it depends on the volume of production and equipment. The process is controlled by technologists who are well aware of the metalworking process. Here is the list of equipment of a typical steel welding wire production line supplied by a Chinese manufacturer:

  1. Pretreatment line

    1. Uncoiler pulling up.

    2. Emergency stop device.

    3. Mechanical rust remover.

    4. Wire break protection device.

    5. Melting device.

    6. Pressure washer.

    7. Apparatus for electrolysis acid washing.

    8. Apparatus for washing with cold water.

    9. Hot water rinse apparatus.

    10. Tumble dryer

  2. Drawbench with winder

  3. Copper line

    1. Unwinder

    2. Control instrument

    3. Hot water tank

    4. Electrolysis alkali tank

    5. Activation tank

    6. Copper tank

    7. Neutralization tank

    8. Tumble dryer

    9. Block and coiler

    10. Control Panel

  4. High speed winder

    1. Main reel

    2. Plastic bobbin

The cost of equipment for the production of wire

The cost varies greatly depending on the manufacturer. The cheapest are Chinese cars, and the choice here is really big - China's production is constantly growing, and there are usually a lot of suppliers. You can find official representatives in Russia, but in this case you have to overpay for mediation services, so if knowing the language (at least English) allows, you can go to another country for negotiations. Just do not forget that the equipment must still go through customs, and transportation costs must be taken into account.

However, there are simpler lines that are designed for small-scale production and for a very simple product. The simplest drawing mill costs about 200 thousand rubles, a fully equipped line designed for large volumes and representing the most modern equipment can have a cost reaching up to 15 million rubles. And even this can not be called the limit figure, there are machines much more expensive that work with other types of material. To the cost of equipment you need to add its transportation, customs operations, installation and commissioning, sometimes this figure can be up to half the cost of equipment. If you cooperate with manufacturers not in China and not in Russia, but, for example, in Europe, then the amount needs to be increased several times more.

Advertising in this production is unlikely to be effective; an entrepreneur should pay attention to promoting products through the efforts of employees themselves. If you follow the state standard, you can get a regular product that has a familiar level of quality, and the end consumer will be satisfied - he no longer needs. The reseller looks primarily at the price, as well as at the discount system, because he expects a good discount when buying large lots. When the enterprise becomes known, consumers (namely wholesalers, distributors, dealers, intermediaries, resellers) will start to turn to the factory for products themselves, technical wire (used in other industries) is required by the plants in large quantities, so they themselves are looking for suppliers. To solve this issue, you can create your own website, which contains information about the company and its offer, such support can attract a considerable number of consumers, so this is what you should think about from the first day of production. In the future, you can try to go directly to retailers to bypass wholesalers who set their percentage on the final cost of the product.

In this type of business, the first time will almost certainly be difficult, however, when starting any production, you need to count on a sufficiently long payback period (up to several years) and many difficulties at the first stages: conquering your part of the market, working with consumers, building up your client base. But there are quite a lot of prospects, you can constantly expand your production (namely, expand it, and not increase the volume unnecessarily), that is, start producing other metal products or wire from other materials. If you open your own laboratory department, you will be able to find new alloys and combinations of components; for example, carbon makes steel hard, silicon and manganese elastic, but sulfur, phosphorus, chromium, nickel and nitrogen are harmful impurities. Of course, the raw materials will not always be delivered clean, and they must either be further refined or produced independently. The laboratory department will significantly improve product quality and gain a serious competitive advantage, however, its opening refers to projects with a long-term payback (like any know-how), and most often only after a few years of work.

Matthias Laudanum

08/18/2019


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