Walk into almost any scrap yard and you’ll likely find at least one used grapple or mobile shear working alongside newer hydraulic attachments. Many recyclers purchase used attachments to employ as backup, while others purchase used attachments with the intention of reselling them once a particular job is finished.
Either way, the process of buying and selling used hydraulic attachments is not as straightforward as some recyclers might think.
"The problem many recyclers encounter when purchasing used hydraulic attachments is that they really don’t know what they need to do the job," says Mike Schulz, sales manager, Kuhn Equipment, Summerville, S.C. "A lot of times they call us looking for advice along with looking to buy something."
With this in mind, equipment dealers have offered to share their experiences with recyclers looking to buy or sell used hydraulic attachments.
IN WITH THE USED
Whether recyclers should purchase new or used attachments depends on the jobs they are doing, equipment dealers say.
For instance, "If the recycler has a fixed-base operation and is committed to running the hydraulic attachment long term, then it would pay off more for him to purchase new," Schulz says. On the other hand, "If the job has a finite completion date and it’s likely the recycler is going to sell the attachment at the end, then he should consider purchasing used."
"A recycler’s decision to buy a used grapple or shear is also dependant on market conditions," says Gary Gleckler, president, Company Wrench, Carroll, Ohio. "In a reasonable marketplace, if you get something that’s rented down to about two-thirds the original price, that’s when people are eager to buy used."
Gleckler adds that even when market conditions are poor, such as they are today, recyclers should still consider purchasing used hydraulic attachments. "Now would be a good time to buy because most manufacturers and distributors are sitting on too much inventory and they need to find a way to get rid of it," he says.
Another reason recyclers may consider buying used is if they see a good deal, according to John Shaughnessy, owner of Call Shaughnessy, Hamburg, N.Y. "If they can get a good piece of reconditioned equipment for half a million dollars vs. $1 million, then that’s the way they should go," Shaughnessy says.
When talking to a dealer about used attachments, recyclers should be prepared to answer some standard questions, including the type and volume of material they will be processing or handling.
Recyclers also should be prepared to ask the dealer some questions when shopping for used attachments.
Recyclers usually start off with questions regarding financing and warranties, equipment dealers say. Unfortunately, most dealers do not offer financing on used hydraulic attachments. But, Gleckler says it is possible to get financing on a used attachment, especially if the recycler buys it in a package deal with an excavator. "Financing companies are more interested in the bigger packages," he adds.
Used attachments also do not typically come with a warranty. But some dealers will make an exception for reconditioned attachments. "If I’ve reconditioned a piece of equipment, I will usually put a 30- to 45-day warranty on it," Shaughnessy says. He points out that this type of warranty only covers the work his company did on the unit, not the entire unit.
When purchasing a used attachment, it’s also important for recyclers to find out if it has been well maintained. "Unlike excavators, attachments don’t have an hour meter to tell operators how much usage they’ve had over the years," Gleckler says. He adds that if recyclers want to get the most for their money, then they should request to see the attachment’s maintenance records.
SELLING THE OLD
Maintenance is also important for recyclers considering selling their used hydraulic attachments. "The market universally dictates the price," Shaughnessy says. "So, if you take care of your equipment, then it will hold its value relative to the market."
NEED A (TAX) BREAK? In a move to jump-start the economy, President Obama has signed the American Recovery and Reinvestment Act (ARRA) into law. The ARRA offers incentives designed to encourage capital equipment purchases in 2009. Among the incentives the ARRA offers is an extension of last year’s 50 percent bonus depreciation for capital equipment purchases. This means companies purchasing some types of new equipment in 2009 will be able to take a 50 percent depreciation off for the first year in addition to the traditional 20 percent depreciation they would take off using a five-year depreciation schedule. For example, if a company purchases an eligible $100,000 piece of equipment, it can take 50 percent off immediately in addition to 20 percent of the remaining equipment cost. To receive this depreciation tax break, the equipment has to be new and must have a life span of 20 years or fewer. The ARRA also has amended Section 179 of the IRS code. This depreciation allowance can be applied to new and used equipment and is designed to target small businesses. Under the Section 179 amendment, a small business can expense up to $250,000 as long as its qualified equipment purchases do not exceed $800,000. More details 2009 bonus depreciation established by the ARRA can be found at www.depreciationbonus.org, a Web site set up by Associated Equipment Distributors and the National Utility Contractors Association.
Gleckler agrees that if recyclers want optimal resale value for their attachments, then they must maintain them. "You have to have good merchandise to sell if you want to get top dollar for it," he says.
For recyclers, properly maintaining attachments means regularly greasing them and making sure they are not being abused.
For example, "Shears should be used for cutting and not as a pry bar," Schulz says. Gleckler adds that twisting or pulling a rotating shear also is not a good idea, as it could destroy the attachment’s ability to rotate.
Following these guidelines can pay off in the end, according to dealers. For instance, "Let’s say a recycler buys an attachment that is five years old and he maintains it well. Conceivably, at the end of a six-month job he could sell it for close to what he paid for it," Gleckler says.
He adds that recyclers don’t typically buy an attachment and use it for six months before turning around and selling it. "Usually, if recyclers have a need for new used attachment, it’s because their old one has worn out," Gleckler says. A
RENTAL MENTALITY
Throughout the past couple of months, many dealers say they have seen an increase in equipment rentals.
"Going back into the summertime, approximately 50 percent of our business came from sales, and the other 50 percent came from rentals," Schulz says. "Today, about 80 percent of our business is rentals, and the other 20 percent is sales."
Dealers attribute this change in customers’ buying habits to plummeting scrap prices and an overall weak economy. "In a slow economy, people typically tend to rent to supplement their peak demands," Gleckler says. "And, in some instances, a customer may decide he wants to rent to own." He recommends this rent-to-own option for recyclers looking to build some equity by applying a certain percentage of the rental toward their purchases.
But, renting hydraulic attachments may not be for everyone. Schulz recommends the renting option to recyclers who are not certain how long a job is going to last and for those who are not sure how much money they would be able to get for their scrap. "In these instances, recyclers may rather rent then risk taking a loss trying to dispose of the attachment."
The author is assistant editor of Recycling Today and can be contacted at kmorris@gie.net.
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