Location. Location. Location. Being involved in a family business in Florida, then relocating to North Carolina I quickly realized that where you do business directly affects your bottom line. The hot rod industry shop rates are all over the map just like the shops. I have guys doing the same quality builds that vary $50 an hour in shop rate. Overhead affects the baseline costs as much as anything, the costs you can’t change rent, utilities, taxes, all dictate the cost of operation. A 5,000 sq. foot shop in Mooresville, North Carolina will cost $2,000 a month, that same shop in the country in Kentucky will cost $800 a month. In Orlando, FL, the shop cost is close to the NC shop but everything has to be shipped in, the shop in Mooresville, NC is ten minutes form virtually every piece it takes to build a car. We recently moved our shop to Crossville, TN; our manufacturing facility was in Florida, our training facility was in North Carolina. A number of determining factors influenced our move. Tennessee is a pro-manufacturing state, no sales tax on new shop equipment, raw materials, any part of materials that become a finished product, no taxes, on packaging materials, labels, boxes, etc… Tennessee also has no property tax on goods in progress, finished goods inventory, inventory of merchandise for sale. Equipment purchased before 2000 has no tax value. One top NEXTEL team stated that in 2006 they paid close to a million dollars in sales tax in NC for the parts and products used. Another attractive issue in Tennessee is physical location; our shop is located within an 8 hours drive of 70% of the U.S. population. Tennessee also has a strong government financial income base so government fines, permits, licenses, inspections are all very minimal. One of our west coast customers moved their entire refinishing center out of California to Nevada because of the red tape associated with painting. Our associates tell horror stories of local and state laws dealing with everything from building codes, environmental issues and fire codes. If your business relies on exposure at trade car shows, motorcycle shows and or competitions then travel expenses play into overall costs. A Florida parts manufacturer located in Stewart, FL told me that a series of mid-western, mid-Atlantic shows cost over $100,000 in travel expenses, flights, motels, rental cars, not to mention the show cost and lost time in the shop. Every one of those shows were less than eight hours driving time of our location in Tennessee.

In 2005 at a trade show workshop one business owner said, “I can’t compete with a guy in his backyard.” The hot rod industry has many backyard builder one-off projects that are in most cases hobby builds. Most backyard guys have no overhead, minimal shop space, very little equipment and do not even attempt to compete in the open market. In Athens, TN one quote “Backyard Builder” has a 5,000 sq. foot shop, two full time employees, works 50 to 70 hours weekly, has $100,000 worth of equipment, and builds 20 cars a year. Its not the backyard builders that you have to compete with but the efficient business owner that surrounds himself with quality personnel, state-of-the-art equipment, has a distribution network that works, with the least amount of overhead and associated governmental baggage. You are allowed to make a profit and that profit sometimes comes from the expense side, other times it comes from the being more productive. One west fabricator that specialized in custom motorcycle tanks was building the tanks using the bag and mallet, and English Wheel method. Each tank was taking about 40 hours to make at $50 per hour. After attending a metal shaping class, he purchased a double-headed power hammer. His staff can now turn out two tanks in the same 40 hours period. He paid the hammer off in six weeks and now makes a comfortable profit being more productive.