Die Shop: Analysis and EBITDA Impact. Step B.
- Silvio Ruiu
- Dec 30, 2025
- 3 min read
Updated: Jan 24
💰 may be lost into drops 🩸
🚩 devils is in details 😈
💡 cLEANing wisely back profits 🤑
(All numbers are field-collected and averages.)
1. Profit & Loss of Alu Extrusion Plant ($50M size).
Financial Item | % Weight | Annual Value ($) |
Total Revenue | 100% | $50,000,000 |
Raw Material (LME + Premiums) | 65% | $32,500,000 |
Direct & Indirect Labor | 12% | $6,000,000 |
Energy & Utilities | 7% | $3,500,000 |
Depreciation & CapEx | 6% | $3,000,000 |
MRO (Maintenance, Repair & Op.) | 4% | $2,000,000 |
SG&A (Admin & Sales) | 3% | $1,500,000 |
EBITDA (Operating Margin) | 3% | $1,500,000 |
2. Capital Assets Distribution ($25M Total Investment).
Asset Category | Value ($) | % of Total |
Extrusion Lines & Auxiliaries | $12,000,000 | 48% |
Building & Infrastructure | $5,000,000 | 20% |
Handling & Logistic Systems | $4,000,000 | 16% |
Die Inventory (H13 Steel) | $2,500,000 | 10% |
Die Shop & Tooling | $1,500,000 | 6% |
TOTAL FIXED ASSETS | $25,000,000 | 100% |
3. Impact Analysis on the P&L ($50M Turnover).
There is a common way of saying, “devil is in details.”
Financial Item | Annual Value ($) | Impact of Process Inertia | Estimated Annual Loss ($) |
Material Cost (LME) | $32,500,000 | Scrap Rate: 1% increase from poorly prepared dies | $325,000 |
Manufacturing Labor | $6,000,000 | Unplanned Die Changes: 1% conservative | $60,000 |
Operating Costs | $2,500,000 | Maintenance & Disposal: 1% | $25,000 |
Asset Depreciation | $3,500,000 | Tooling Decay: 20% die lifespan reduction | $80,000 |
4. The "Smallest Gear" Paradox.
Inside the Die Shop, there are 3 assets:
The repairing dies team: is generally good at it, with the best of both training and leadership just can’t do miracles.
The dies nitriding equipment ($800,000): which is the ultimate treatment to make dies working & lasting properly, is deeply influenced by how the surface of the die is prepared and cleaned as it should be.
The dies cleaning equipment ($400,000 only): it is finally responsible, as a small gear in a precious watch, of the deviation that impacts on EBITDA and revenues far than expected.
5. The Truth: EBITDA Erosion in numbers.
Total estimated annual loss with superprudential 1% deviation = $490,000.
What is going wrong in that small 16% of assets (die shop/tooling and inventory), is conditioning the whole plant, production flow and ultimately your EBITDA for about 30%. With a deviation of 1% only imagine the impact with a slightly higher deviation how the numbers could be. For corporate, now you can apply to all your plants accordingly with the size of each.
6. Solution.
Two tips for the managment to understand if parameters are deviating and so profit leaking.
If there is a wheelblaster in the plant, media consumption: 1 hour of blasting should not exceed 1kg (or 2lbs) of media wasted. More details on this rule here.
If the process is 5 years old it needs a review; if the equimpment is 10 years old both machine and process need a review. Learn more about this predictive approach.
Sometime the review reveals the need of new equipment with all the related costs, anyway the oldest process and equipment are, the more beneficial a fine tuning on them is.
Next steps:
Previus steps:
