Capital investment in a company is sometimes a very scary thing to make. Business owners and investors will put large sums of money into the hands of company management, and there is no telling if the projects the money is going towards will benefit the company or lose money in the long run. The only thing that managers and investors can do is have faith that they are doing the right thing, and ultimately these strategies will probably pay off. One great example of capital investment that paid off is that of Gregory James Aziz and National Steel Car.
National Steel Car is a rolling stock and railcar manufacturer located in Ontario, Canada. Before being purchased by Gregory J. Aziz in 1994, National Steel Car had quite the reputation in the area. It had served almost every railroad in Ontario up until the collapse of the railroads there. When the trucking companies came around, all of the railroads either went out of business or merged together, making the customer base for companies like National Steel Car much smaller and harder to sell to. This created a vacuum, and the low-cost, low-quality cars that NSC had started to make were not going to fill that void. Management panicked.
Instead of putting more money into the company to help with a strategic shift to higher quality cars, management decided to pull their capital out and focus on making an even lower-cost car, hoping that the low price point would attract the railroads. Unfortunately, all this did was create cars that were rendered obsolete in only a matter of years.
Gregory J. Aziz knew what to do when he bought the company. He knew the importance of capital investment in a company, and that without it the lifeblood of the company stops flowing. Instead of trying to find ways to cut costs, Aziz put millions of dollars back into National Steel Car. He focused on areas such as design and engineering, hiring more engineers and starting new projects that would help NSC build a better, higher-quality car. Customers need quality, and a heavy investment would help them get it. Now National Steel Car is one of the only rolling stock providers left in the North American market. Go To This Page for related information.
The importance of capital investments cannot be overstated. If a company needs to change its strategy or shift how things are being done, the easiest way to change this is to push more cash into the company and make those changes. While it might be scary, it could be the only way to save the company. National Steel Car and Greg Aziz have found this out firsthand. Go To This Page for related information.
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