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54 SMT007 MAGAZINE I OCTOBER 2021 ly investing in new machinery—may become necessary for your company to continue being competitive in the marketplace. Choosing to start in-house production is cer- tain to reduce your overhead by an average of 35–40%. And by adding select equipment to your assembly line through strategic capital expenditures, you can always stay ahead of the curve. However, you should exercise caution, always making sure that what you are adding to your production line through capital expen- diture will truly be a long-term investment that will be helpful for years to come. Key points on capital expenditure: • A capital expenditure is the money your company uses to purchase, upgrade, or extend the life of SMT equipment (and/or other assets) • Types of capital expenditures include pur- chases of equipment and soware updates • Your capital expenditures should only be made on assets that will last for a year or more, making them investments for your company Bringing Production In-House If you don't already own and operate your own SMT line, choosing to purchase equip- ment can be a great investment. Looking at an SMT equipment purchase from a total cost vs. savings standpoint, there will be a quick pay- back period and the benefits to business op- erations and overall cost savings will be so substantial that the cost of equipment will be small compared to continuing with alternate expenses. In light of these savings, what companies should make absolutely certain is that they don't underspend when it comes to installing their first SMT assembly line. Nothing is more frustrating than trying to produce a high-qual- ity product with equipment that isn't up to the task. ere's certainly no need to overspend either. e key is to purchase the best equip- ment that will get the job done effectively, while keeping an eye toward future needs and upgradeability. Upgrades to Equipment In the manufacturing industry, even high- quality SMT equipment needs repairs and up- grades. If you are working with a reputable equipment supplier, there should be warran- ties in place to help with soware upgrades and replacement parts; on average, you can ex- pect these warranties to last one to three years, depending on the machine. But the time will come when the warranties expire, or the needs of your company change, and it is time to in- vest in your line again. It is important to keep up to date with the available technology, or you may risk a loss of customers, reputation, and even key employees. Figure 2.