Most new-line business cases rest on one number: the equipment quote. It is the most precise number in the project, because a vendor wrote it down. It is also the smallest.
By the time the line is validated and running at the plant’s real OEE, the all-in cost is often 1.5 to 2 times the quote, and a year or more has passed. During that year demand has been served by overtime, co-packers or not at all.
This article builds the full number for a new line, puts it next to what it costs to recover 15% from the lines you already run, and shows how to present both to the board so the decision is a comparison rather than a leap of faith. If you have not yet measured how much capacity your existing lines are hiding, start there; the numbers below assume you have.
Take a mid-speed FMCG packing line quoted at $4 million for equipment. The figures below are illustrative; your own quotes will set the ranges, but the shape of the stack is the same in every plant we have seen.
| Cost item | Typical share of equipment quote | On a $4M quote |
|---|---|---|
| Equipment (the quote) | 100% | $4.0M |
| Installation, civils, utilities, floor space | 25 to 50% | $1.0 to 2.0M |
| Controls, line integration, MES and ERP connection | 5 to 15% | $0.2 to 0.6M |
| Tooling and format parts for the full SKU set | 5 to 10% | $0.2 to 0.4M |
| Validation, qualification, customer audits, first-article runs | 3 to 8% | $0.1 to 0.3M |
| Recruiting and training a crew per shift | 3 to 6% | $0.1 to 0.25M |
| Spares, consumables and initial inventory | 3 to 5% | $0.1 to 0.2M |
| Working capital in buffer stock during ramp-up | 5 to 10% | $0.2 to 0.4M |
| All-in before first full-rate output | 150 to 200% | $6.0 to 8.0M |
Two items never appear on the capex form. The first is ramp-up loss: the output the line does not produce in its first year because it runs well below its design OEE (next section). The second is management attention. A new line absorbs the plant manager, the engineering lead and the best operators for twelve months, and the existing lines quietly get worse while it does.
The all-in figure lands at roughly 1.5 to 2 times the quote before the first unit ships at full rate. Finance teams who have been through one installation know this; the business case should state it rather than wait to be asked.
From purchase order to validated output is nine to fourteen months for a standard line, longer for anything custom or anything with long-lead components. Demand does not wait, so something else serves it in the meantime, and each option has a price.
Put a monthly number on whichever one you are using today and multiply by the gap months. On a plant running weekend overtime to cover a 15% demand gap, the twelve-month cost of waiting often exceeds the integration line item in the table above. It belongs in the business case as a cost of the build option, not as background.
The vendor’s proposal shows the line at 85% OEE. Your existing lines run at 58%. The new line will run much closer to 58 than to 85 within a quarter of commissioning, because it runs with the same crews, the same changeover habits, the same stop-coding gaps and the same bulk supply.
Steady state in your plant is the number your other lines reach, not the number in the proposal, and a new line spends its first months well below it while crews learn the line, changeovers are standardized and early faults are found. So the honest planning assumption is a ramp that starts far below 58% and settles at 55 to 60% by the end of year one. Against a business case written at the vendor’s 85%, that is a third of the expected output missing, on top of the nine to fourteen months of lead time.
This is the strongest argument for measuring before building. The losses you quantify on the existing lines are the losses the new line will carry. Remove them first and the new line starts at the effective OEE, not the demonstrated one. Leave them in and you have bought a seventh copy of the same problem.
A recovery program is not free, and a business case that pretends it is will not survive the CFO. The honest cost on a six-line plant:
| Cost item | What it covers | Typical range |
|---|---|---|
| Measurement | A one-line diagnostic to establish the recoverable number, then sensors or PLC connectivity on all six lines and a year of OEE and loss-tracking software | Under $10k for the diagnostic; $30 to 80k for six lines over a year |
| Program lead | A CI or OpEx lead at roughly half time for six months | $50 to 90k |
| Targeted fixes | Bad-actor equipment repairs, jam-point modifications, overdue PMs | $50 to 200k |
| Standardization and training | Changeover standards, digital work instructions, crew training time | $30 to 80k |
| Operator and supervisor time | Weekly loss reviews, shift handover changes | Absorbed, but real |
| Total | $160 to 450k |
These ranges are illustrative and vary with line count and the condition of the equipment. Note the sequencing: the diagnostic that produces the recoverable number is the cheapest item on the list and the one that de-risks everything below it, so it comes first and the rest is committed only if the number justifies it. The point is the order of magnitude: low six figures against a build cost of six to eight million, with first measured gains in three to four months and the full 12 points inside six to nine.
Two properties of this spend do not appear on the cost line. It is reversible: if the measured recoverable capacity turns out smaller than expected, you stop, having lost months rather than years. And it compounds: the changeover standard, the coding discipline and the maintenance fixes stay in place and transfer to any line you buy later.
Same plant as the hidden-capacity article: six packing lines, 120 planned hours a week each, rated at 200 units a minute, running at 58% OEE, with a 15% demand gap. Measurement showed 12 points recoverable without capital and 6 points structural.
| New line | Recover 12 points on six lines | |
|---|---|---|
| Cash required | $6.0 to 8.0M all-in (on a $4M quote) | $0.16 to 0.45M |
| Lead time to first added output | 9 to 14 months | 3 to 4 months |
| Time to full added output | 18 to 26 months (lead time plus ramp-up) | 6 to 9 months |
| Added capacity at full rate | ~835,000 units a week at the plant’s 58% OEE | ~1,040,000 units a week |
| Output added in the first 12 months from decision | Close to zero | At least 20 million units, ramping from month 3 |
| Cash per unit of weekly capacity added | ~$8 | ~$0.30 |
| Execution risk | High: schedule, commissioning, crew, inherited losses | Moderate: depends on discipline holding |
| Reversibility | None | Stop at any point; sensors and standards stay |
| Effect on existing lines | Diverts attention; often worsens them for a year | Improves them; the program is the existing lines |
| Covers the 15% gap? | Only once ramp-up completes, around month 18 to 26 | Yes, from month 6 to 9, with margin |
Option A: build the seventh line. All-in $6 to 8 million, first output in month 9 to 14, full output around month 18 to 26. The new line delivers 835,000 units a week only at full rate, and the gap needs 752,000, so the gap is covered only as ramp-up completes and the plant runs weekend overtime until then. The line settles at the plant’s 58% OEE because nothing else changed; the vendor’s 85% never arrives. Cost per unit of weekly capacity: about $8.
Option B: recover 12 points across six lines. $160 to 450 thousand, first measured gains in month 3, full 12 points by month 9. Added capacity of roughly 1.04 million units a week, which is more than the 752,000 the gap requires. Overtime stops around month 6. Cost per unit of weekly capacity: about 30 cents. The 6 structural points remain, so the plant is at 70% OEE with a known, measured bottleneck.
Option C: recover, then build narrow. Option B first, then a targeted investment at the measured bottleneck (a single machine or station rather than a line) to release the 6 structural points, typically $0.5 to 1.5 million across the six lines, because the structural loss sits on one machine per line rather than on the whole line. Total added capacity about 1.56 million units a week for $0.7 to 2 million in all, with the new equipment starting at 70% OEE because the losses were removed before it arrived.
On these numbers, Option C wins on cash, time and risk, and Option B alone closes the gap. In our experience that is the usual outcome on lines below 65% OEE. It is not the outcome on every line, which is the next section.
Recovery is not always enough, and a business case that pretends it is loses the room. Build when the data says one of these:
Even then, measure first. A line specified against a measured bottleneck is a smaller, better-targeted line than one specified against a demand forecast and an unmeasured average.
One page, two columns, the same rows for each option. The rows are the ones in the side-by-side table above: cash required, lead time to first output, time to full output, added capacity, output in the first twelve months, cost per unit of capacity, execution risk, reversibility, and the effect on the existing lines. Under the table, three lines:
A board that sees the build option costed honestly, next to a recovery option with a 90-day proof plan, almost always funds the recovery and asks to see the re-measurement. That is the right outcome. It keeps the capital available for the moment the data shows it is needed.
What does a new production line really cost? The all-in cost before full-rate output is typically 1.5 to 2 times the equipment quote once installation, utilities, integration, tooling, validation, crew, spares and ramp-up working capital are included. A $4 million quote usually becomes $6 to 8 million.
How long does a new production line take to reach full output? Nine to fourteen months from purchase order to validated output, then a further six to twelve months of ramp-up, during which OEE starts well below steady state. Steady state in your plant is the OEE your other lines reach, not the vendor’s figure.
What is ramp-up loss? The output a new line fails to deliver in its first year because it runs below design OEE while crews learn it, changeovers are standardized and faults are found. It is rarely in the capex form and is often the largest hidden cost of a new line.
Is it cheaper to improve OEE or add capacity? On lines below about 65% OEE, recovering capacity is usually at least ten times cheaper per unit of added capacity (more than twenty times in the example above) and six to twelve months faster. Above about 75% OEE, or where the bottleneck is structural, new equipment is more often the right answer. The measurement decides.
How do you calculate cost per unit of added capacity? Divide the all-in cash required by the added capacity at full rate (units a week or line-hours a week). Compare options on this number alongside lead time and risk, not on the equipment quote alone.
The comparison only works if the recoverable capacity is measured, not estimated. One representative line, machine-verified data, a loss Pareto sorted into recoverable and structural, and a financial case in dollars: that is what belongs next to the equipment quote.
The fastest route is a fixed-scope pilot: six weeks, an industrial sensor and hub installed with your team, and an executive readout with the quantified capacity case and a scale or no-scale decision. The fee is fixed and credited in full against a first-year subscription if you roll out. The pilot runs on Fabrico’s manufacturing performance platform (MES, OEE, CMMS & AI), which connects machine data, OEE and loss analysis, production scheduling, SKU-level output value and maintenance in one system, so the recovery program is measured against the build option week by week rather than reported once.
Request a demo or run the ROI calculator for a first estimate.
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