The buying and selling of used equipment has provided an economic alternative for those
customers wishing to purchase capital equipment. Typically, used equipment can be 30 % to 60% less expensive
than new.
Like
your automobile, used laundry equipment loses its value, quickly, as soon as you come into possession of it. Typically,
the value after one-year is nearly 33% less then the original selling price, and up to 60% less after three to five years
in operation.
Used equipment is aquired in different ways by your used equipment supplier.
Many times the machines come directly from the equipment owner. The company may have replaced older equipment
or decommissioned a line and is selling off its surplus equipment. Other ways that used equipment is obtained includes
taking trade-ins from customers, buybacks, auctions and through other used equipment brokers.
USED - MAKING THE DECISION
What sort of factors would make a customer buy used equipment instead of new?
Of course, the first and main reason is money. A
second reason might be because the customer doesn’t need new, more technologically advanced machines. So
instead of purchasing a newer machine that requires a new skill-set, adding more machines that already fit into the plant
process is more convenient. (Your investment in service knowledge and spares should be considered).
Other reasons may include the ability to increase the capacity of the equipment for the same dollars, when compared
to lower capacity new, or to move to a fully automated tunnel or open-pocket system for comparable funds.
Whatever the reason, when buying
used equipment, certain factors should be considered. Customers should always account for their plant capacity
and balance this against their long and short-term goals.
Do you want this equipment to fill a contract that you are trying
to acquire, or do you want this equipment to be on-site to bring in business or contracts for future purposes?
If the customer has decided to revamp the factory to continue to get good contracts, that’s where he or she might
want to spend a little more money and get refurbished or high-grade used machines that have a longer life. If
it is a short-term contract, the customer may not be too concerned about whether this equipment is going to last several years.
Furthermore, the customer should weigh any anticipated
utility or labor savings, that new equipment may provide, against the initial purchase price savings for used.
A review should be made to determine the break-even point between these two factors. If the offer is good, used
equipment pricing should represent an overall savings through several years.
CRITERIA FOR USED EQUIPMENT
If the customer
decides that used machinery is the way to go, additional factors should be considered. Follow these rules
of thumb.
- Supplier performance and support
must be evaluated while considering the purchase of used equipment. Consider the warranty, spare parts availability, freight
and installation services provided with the machine.
- Availability of manuals and machine documentation should be considered, along with service
and technical support.
- Ascertain
the degree of value for the equipment (see degrees – below).
- If possible, the customer should inspect the machinery before making the purchase.
Other
considerations might be:
- Is this a machine that the manufacturer
is still building?
- How long has the machine been out of production?
- What type of environment was the machine working in?
You can view degrees of used equipment like
rungs on a ladder. Basic used equipment is the lowest rung. It is the least expensive option for used equipment—sometimes
costing as little as 10 percent of the purchase price of a new machine. This machine is drop-shipped as-is, directly to the
new customer, without rebuild, warranty or technical support. Its cheapness can be a pro or con.
The buyer, upon receipt, must take full responsibility for assessing the actual condition and operating capabilities
of the machinery.
The next step up the ladder is equipment that has several years of operation, but has been maintained
at a very high level. Most all functions of the equipment operate as they did when first sold.
Prices for this rung typically range anywhere from 20% - 40% of new equipment. The equipment is
still sold essentially as-is, with minimal warranty and after-sale support. In this case, the used equipment seller might
steer the customer toward aftermarket assistance from the OEM.
Next up is equipment that is late model (low use) and
has been well maintained. This equipment operates per original specifications and may even have some of
the new warranty left over. These machines will be turned on and cycled to determine functionality.
This equipment typically sells for 30% - 60% of new value.
At the higher end of the ladder, the equipment provider performs a partial teardown of the machine. Major
systems are examined, and parts are replaced as needed. However, rebuilding and replacing at the subassembly level or providing
extensive upgrading or enhancements to the equipment is still minimal. Machines in this category typically
sell for approximately 40% to 70 % of original equipment price. A “remanufactured” warranty is typically
offered for 90+ days.
The highest level of used equipment is fully remanufactured equipment. Machines
at this level typically sell at 50% to 80% of original equipment price, and are warranted just like new machinery. At
this level, the equipment is completely disassembled down to the frame and castings. All machine parts
are cleaned. All damaged and worn parts are replaced with OEM parts. This not only includes
parts that are not working, but also parts that the OEM has identified from its own warranty and field reports as typically
requiring replacement after a certain period of time to prevent future breakdowns or degradation.
