Free Web NovelChapter 53: The Numbers
They were now on their way to Helmarte Soap Works, which took almost an hour to get there.
And they arrived at the main entrance. The moment the two of them climbed down, Ernest was greeted by workers who were also entering for their shifts.
"Good morning, Master Ernest!"
"Morning, sir!"
"Good morning!"
Several workers removed their caps respectfully.
Others nodded as they passed.
Actually, the first few times this happened, it felt awkward.
Now he had gotten somewhat used to it.
Somewhat.
"Morning, everyone."
"How are things today?" he asked one worker carrying a crate.
"Everything’s running smoothly, sir."
"Good."
The man smiled before continuing toward the production hall.
Victor walked beside him while observing the scene.
"You know," the older man said, "they genuinely respect you."
Ernest glanced toward the workers.
A group of laborers were currently unloading animal fat deliveries from a wagon.
Others were pushing carts loaded with cured soap bars toward the warehouse.
"They respect the company."
Victor shook his head.
"No."
The former forge worker looked directly at him.
"They respect you. Anyways, I’ll get to work now. Good luck on your meeting with Master Hollen."
"It’s going to be easy," Ernest simply said and walked towards the office where inside, Hollen was already present.
"Ernest, I must say, congratulations to your estate in Beryl District. Why didn’t you tell me that you are going to buy a house there? If only I knew, I could have recommended the house next to us."
"Oh, so you live there too?" Ernest asked.
"Yes, it’s the best place to live."
"I couldn’t agree more," Ernest chuckled and then continued. "Now, the efforts of our research team that was sent to the three cities have done their job. Let’s discuss the expansion plan."
Hollen immediately sat down across the desk.
Several thick folders already rested between them.
Ernest opened the first folder.
Northport.
"The first factory will be built here."
Hollen nodded.
"That was expected."
Actually, Northport remained the strongest candidate.
Not because it had the largest population.
Not because it had the cheapest labor.
But because it offered something the other cities couldn’t.
A port.
Ernest pointed toward the map.
"Estimated population is around three hundred seventy-five thousand."
Then he pointed toward another section.
"More importantly, merchant traffic."
The scholars estimated thousands of ships passed through Northport every year.
Merchant vessels.
Fishing vessels.
Military ships.
Trading convoys.
All potential customers.
"We’re not just selling soap to Northport," Ernest explained.
"We’re selling soap to every merchant who enters Northport."
That immediately got Hollen’s attention.
Actually, many businessmen made the mistake of only looking at local markets.
Ports created regional markets.
Sometimes international ones.
"If we establish a distribution warehouse there, soap can travel across the western coast faster than anything shipped from Helmarte."
Hollen nodded slowly.
"That makes sense."
Then Ernest opened the second folder.
Ravenford.
"This one is different."
The city occupied a strategic position in the kingdom’s growing manufacturing sector.
Textile mills.
Metal workshops.
Machine shops.
Coal traders.
Water-powered factories.
Industrial activity already existed there.
Primitive compared to what Ernest envisioned.
But still industrial.
"What makes Ravenford valuable isn’t the customers."
"Then what?"
"The workers."
Actually, skilled labor was becoming one of Ernest’s biggest concerns.
Machines could be built.
Buildings could be built.
But experienced workers?
Those required time.
A lot of time.
"The scholars estimate nearly eight thousand industrial workers operate there already."
Workers accustomed to schedules.
Production quotas.
Machine maintenance.
Material handling.
All things that reduced training costs.
"The Ravenford factory will become our training center."
Hollen looked surprised.
"Training center?"
"Yes."
The forge owner frowned slightly.
"I thought Helmarte was our main facility."
"It is."
Ernest nodded.
"But Helmarte remains headquarters."
He tapped Ravenford.
"This city will train future supervisors."
That was something many companies ignored.
Growth required managers.
Not just laborers.
A factory with one hundred workers needed supervisors.
A factory with one thousand workers needed entire management structures.
And management couldn’t be created overnight.
Then Ernest opened the final folder.
Eastgate.
Actually, this was his favorite city.
Not because of immediate profit.
But because of long-term potential.
"The coal city."
Hollen immediately understood.
Coal.
Lots of coal.
The scholars estimated Eastgate supplied nearly seventy percent of the kingdom’s commercial coal output.
It also possessed substantial iron deposits.
Foundries.
Metalworking facilities.
Mining infrastructure.
Everything required for future industrialization.
"It also sits next to another country, so that’s another major market, and since there’s a lot of factories there, they are going to need some cleaning that only our soap can provide. Now let’s go to the numbers, how much they are going to cost us to build and operate, and future profits."
That immediately got Hollen’s full attention.
Then Ernest spread all three reports across the table.
"Let’s discuss construction costs."
Hollen immediately leaned forward.
Actually, this was the part he cared about most. Research was useful. Population estimates were useful. But eventually every expansion plan came down to a simple question.
How much would it cost?
Ernest opened the Northport report first.
"The Northport factory will be our largest investment."
He slid the parchment across the desk.
Land acquisition:
250,000 riels.
Main factory building:
650,000 riels.
Waterwheel system:
180,000 riels.
Five industrial soap kettles:
220,000 riels.
Mixing machinery:
150,000 riels.
Warehouses:
200,000 riels.
Office building:
75,000 riels.
Worker housing:
100,000 riels.
Initial inventory:
250,000 riels.
Contingency fund:
225,000 riels.
Total:
2,300,000 riels.
Hollen slowly nodded.
Actually, that sounded reasonable.
Expensive.
But reasonable.
Especially considering it would be nearly four times larger than the original Helmarte facility.
Then Ernest moved to the next report.
"Ravenford."
Land:
180,000 riels.
Factory building:
700,000 riels.
Waterwheel:
180,000 riels.
Machinery:
200,000 riels.
Warehouse:
250,000 riels.
Initial materials:
250,000 riels.
Contingency:
240,000 riels.
Total:
2,000,000 riels. freeweɓnøvel.com
"Cheaper than Northport?"
Ernest tapped the report.
"Yes. Northport is designed for distribution."
Then he tapped Ravenford.
"This one is designed for production and training."
That immediately made sense.
The city already possessed skilled industrial workers.
Training costs would be lower.
Recruitment would be easier.
Then came the final report.
Eastgate.
Land:
150,000 riels.
Factory building:
650,000 riels.
Waterwheel:
180,000 riels.
Machinery:
150,000 riels.
Warehouse:
200,000 riels.
Initial materials:
250,000 riels.
Contingency:
220,000 riels.
Total:
1,800,000 riels.
Hollen quickly performed the arithmetic in his head.
Northport:
2.3 million.
Ravenford:
2.0 million.
Eastgate:
1.8 million.
Combined total:
6.1 million riels.
The office became quiet.
"Our budget in this factory was only 600,000 riels. Why are others so expensive?" Hollen asked.
The number looked surprisingly small compared to the investment they had secured.
Finally Hollen broke the silence.
"Our budget in this factory was only 600,000 riels. Why are the others so expensive?" Hollen asked.
Ernest smiled.
Actually, he had expected that question.
"Because this factory wasn’t built to become what it is today."
Hollen frowned slightly.
"What do you mean?"
Ernest tapped the desk.
"When we built Helmarte Soap Works, we were experimenting."
That was the truth. Though they knew that there was a demand for soap when he distributed it for free to workers and then to the merchant guild. They didn’t expect it to blow up this much.
If this was a power plant, their capacity factor would be near 95 percent.
"We already know the product works, and that the market exist, and that market is willing to buy, and we know the production process and how to train workers. So instead of building another small factory, we are building facilities designed for the next two decades."
He moved on to the next topic. "Now let’s discuss the more interesting part."
Hollen immediately grinned.
"Profit."
"Profit."
Ernest wrote several numbers.
Current Helmarte capacity:
120,000 bars per month.
Northport projected capacity:
180,000 bars.
Ravenford projected capacity:
180,000 bars.
Eastgate projected capacity:
150,000 bars.
Total network production:
630,000 bars monthly.
Hollen stared at the number.
Then stared again.
"Six hundred thirty thousand?"
"Assuming all facilities reach full production."
The forge owner leaned back.
Actually, the number sounded ridiculous.
Five times larger than their current operation.
Then Ernest continued.
"Current average selling price."
"About one hundred riels per bar."
He wrote another figure.
630,000 × 100
= 63,000,000 riels monthly revenue.
The office became silent again.
Even Hollen stopped smiling.
Sixty-three million.
Per month.
Of course, that wasn’t profit.
Not even close.
There would be wages.
Raw materials.
Transportation.
Maintenance.
Taxes.
Merchant commissions.
But even after deducting those costs...
The potential was enormous.
"Let’s be conservative."
Ernest wrote another figure.
Assume thirty percent net profit margin.
63,000,000 × 30%
= 18,900,000 riels monthly profit.
Hollen nearly choked.
"Nineteen million?"
"Potentially."
"Once all factories are operational."
"Once distribution networks mature."
"Once customers become accustomed to purchasing soap regularly."
The forge owner looked down at the reports.
Then back at Ernest.
Then back at the reports again.
Actually, for the first time, the six-point-one-million-riel construction budget looked small.
Very small.
Because now he wasn’t looking at expenses.
He was looking at future income.
Ernest leaned back in his chair.
"Do you understand now?"
Hollen slowly nodded.
"Yes."
"Six million sounds expensive."
"But if it allows us to earn tens of millions every month..."
He let out a low whistle.
"It might be the cheapest investment we’ve ever made."
