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Topic: The ethics of buying parts directly

Matt Zeiner
Expert Film Handler

Posts: 146
From: Windsor, CT USA
Registered: Sep 2003

posted 01-04-2004 12:23 PM

If I can get it cheaper, I will. Period. There are some manufacturers of Cinema equipment that offer no incentives to dealers to buy from them - they offer no discount on parts - MSRP = Dealer cost. Screw that. My customers have a hard enough time paying repair bills, and we have a hard enough time making those repairs profitable without obtaining discounted parts. Our in-house repair services provide faster service than any manufacturer is capable of, and our customers value that. We would have to suspend that service or up our rates if we bought parts directly from most manufacturers.

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Sam D. Chavez
Film God

Posts: 2153
From: Martinez, CA USA
Registered: Aug 2003

posted 01-04-2004 08:14 PM

There is definitely case law regarding "preferential payment". It is intended to cover situations where some vendor gets paid and no one else does. In theory the money all gets recalled and the judge pays everyone an equal share. In this case, Merrill Lynch (who put the deal together to buy out the previous owners) was the only secured creditor. MTS went chapter 7 and the assets were sold. Merrill Lynch is short several Million $$ so any money retrieved will go to them with nothing left over.

There is a defense to this and I believe they have to prove that payments were preferential. Since the letter was sent to just about everyone it can hardly be called preferential.

It will be a long grind before anything happens.

There is an English expression about "The Law is an Ass". This was quoted in the movie "Oliver" about the fact that the law presumes that a man is in charge of his wife. The man responds that if the law supposes this, the law is an ass!

One thing for sure, logic is not the answer when it comes to this law.

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Steve Guttag
We forgot the crackers Gromit!!!

Posts: 12814
From: Annapolis, MD
Registered: Dec 1999

posted 01-04-2004 09:21 PM

First off...I don't agree with John's claim that parts are so expensive...sure you can find aburditees but in general...the spare parts or parts cost compared to the operation is pretty reasonable. Sure an Intermittent will set you back over a grand but then again...how many screens is that spare good for? You can always have the bad one rebuilt to as good or better than new. So lets say you put $5000 on the shelf in each complex in spares for a typical complex of 12 screens...you are at just over $400 in spare parts/screen...that isn't too tough. These are certainly hypothetical numbers since each case will be different based on screen-count and equipment. How much money is put into spare xenon lamps on the shelf per complex...those are true consumables (but less costly than the cases of carbons of yesteryear).

You compare that however to yesteryear where virtually every part needed was in the booth to service the two projectors...it is far less costly today to maintain a theatre in real dollars due to economy of scale.

As to where to source parts...Ian has it right..from you dealer. Support those that support you...everyone wins. If you supply it yourself...then put it in yourself.

From a dealer's point of view...I will source the parts from where it makes sense to source the parts. Sometimes it is money driven, sometimes it is quality driven.

For instance...lets say a projector manufacturer uses a low grade import bearing and we have found a higher grade made in USA bearing...when we sell a part we are selling our quality too (especially since we are probably doing the repair too). Like others we have industrial supply contacts that, in some cases are quite similar to the equipment manufacturers.

While we are on bearings...should we stock P-3368 and BG-259 bearings in separate places? They are the same bearing (in terms of size and grade)...or the Christie feed-finger bearings (I don't know the Christie number but it probably doesn't end in -001 since it is outsourced). The only difference in the Christie bearing and the BG-259 or P-3368 is the duty type...the Christie is much more light-weight so it can spin much more free. We can source both bearings from the same place and know what it will be down to the brand, country of origin and grade.

Now there are other cases where getting the cheaper part price wise is more expensive. Lets say we are making a parts order from Strong and we know we can obtain a widget from an other supplier for couple dollars less. What do you do about freight? The incremental increase in adding it to the Strong order is unmeasurable as opposed to the $10 freight bill to obtain a one-off order. So, did the savings of less than $10 really save you anything? Not in the above example.

Yet other examples are when a manufacturer modifies a stock part...it may be cheaper to by the part direct but when you add in the time and hassle of doing the mods in-house...it may or may not be worth it.

In short, there is no cut and dried answer as to where to source parts. What the equipment manufacturer normally has is convienence...just spout out the part number and it normally shows up.

Then you have wonderful companies like Wolk...they sometimes are the only one making a part that the original manufacturer stops supporting. Sometimes this 3rd Party supplier has a better part too (though not always).

One thing I've found is that all suppliers have bad batches too. Heck, I've even received 1000s of feet of "twisted" speaker wire (from Carol...not an off-brand) where it came in ruler straight....everyone seems to have had a bad day or two in 2003.

Steve

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Jeff Taylor
Jedi Master Film Handler

Posts: 601
From: Chatham, NJ/East Hampton, NY
Registered: Apr 2000

posted 01-05-2004 11:10 AM

Good sentiment, Tim, but pre-filing payables fall into a general creditor pool, and must be settled equitably with the approval of the court--you absolutely cannot pick and choose, nor can you satisfy some claims in full and others in part. It's got to be on a equal percentage basis for everyone.

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Tony Ratcliff
Expert Film Handler

Posts: 216
From: Madison, IN, USA
Registered: Mar 2002

posted 01-05-2004 12:16 PM

I've actually run into situations where it is CHEAPER to buy from the dealer than the manufacturer.
Case in point was a video modulator I bought recently during my day job duties.
I traced down on the internet the model I wanted and called the manufacturer. They quoted me a list price, but then refered me to a dealer in my area. The dealer's price was MUCH cheaper, plus I got terrific service from a local company I didn't even know existed.

I think the same is true for theatre equipment. It may even cost a little more to buy your parts, etc. through a dealer / repair tech. But then you are building a relationship that will pay off when you get a major breakdown on a Saturday night.

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Michael Schaffer
"Where is the
Boardwalk Hotel?"

Posts: 4143
From: Boston, MA
Registered: Apr 2002

posted 01-06-2004 11:58 PM

Sometimes things get really ridiculous: A few years ago, we needed an Imax platter deck for a location in Berlin. The shipping costs were enormously high. I don`t remember the exact figure, but it was a substantial 4-digit amount. We found out that was because the platter deck was manufactured by Kinoton in Munich (just 8 hours or so from Berlin), shipped to Imax in Canada, then shipped back across the Atlantic to Berlin. We were OK with buying the deck through Imax, but they just wouldn`t let us have it shipped directly from Munich to Berlin. It cost a lot of persuasion and many phone calls to make that happen. Great customer service for a product that in itself isn`t all that inexpensive.

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Sam D. Chavez
Film God

Posts: 2153
From: Martinez, CA USA
Registered: Aug 2003

posted 01-09-2004 01:32 AM

I had a similar experience to that cited by Michael but with Showscan. At that time their audio systems were based on Dolby CP 200's.

Showscan would not allow the franchise holder to contact Dolby for replacement cards. Added to that, they would charge the franchise more than the full list price. A real gouge!

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Michael Elam
Film Handler

Posts: 84
From: Clarksville, IN, USA
Registered: Mar 2001

posted 01-09-2004 04:19 AM

Let's don't forget, often,like buying from Christie they don't have the part in stock, they backorder more than they ship, if you can't depend on them to deliver than what is your next step?
Buy some where else. I've waited on backorder items from Christie as much as 6 months, and YOU have to remind THEM on a regular basis you are waiting! [Eek!]

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