Buying used equipment is nothing new to the recycling industry. Used equipment can be a great way for a company to obtain a piece of machinery at a cost savings and also allows for companies to sell equipment they may have outgrown. Purchasing a piece of used machinery can have its advantages and disadvantages, although research on the machine being purchased can result in a solid piece of machinery at a cost savings to the buyer.
Buyers purchase used equipment for a variety of reasons, perhaps the foremost being cost. Cost savings is one of the more obvious advantages to buying a used piece of equipment compared to new, says Jerry Bruce, president of Railcrane Corp., Chagrin Falls, Ohio. "The fundamental difference between buying new and buying used is it costs less to buy used rather than new," Bruce states.
Al Schultz agrees that cost can be a benefit to purchasing used equipment rather than new. "They may have an operation that doesn’t need a brand new machine because the operation is intermittent, therefore a good used piece of machinery could satisfy that need," Schultz, president of Counselor Engineering, Hudson, Ohio, says.
Another perk to purchasing a used machine rather than a new one can be speed of delivery, he says. "It can be a matter of delivery," he says. "If they need something quick, a decent piece of used equipment may satisfy that requirement."
Greg Gaither, a sales representative with McIntyre Machinery America, Stow, Ohio, notes, however, that sometimes the monetary savings associated with buying used equipment may come at a price. "Many people I deal with want used equipment for the pricing factor because you can get something used for a lot cheaper than new," he says. "But one of the things you want to consider with new versus used is: has the machine been rebuilt and what warranties are there if it has been rebuilt?"
Rustin Ross, president of Alan Ross Machinery Corp., Northbrook, Ill., offers his opinion that sometimes older pieces of equipment are built more solidly than newer machinery. "The advantages are cost advantage, that it is less expensive, and you can get it right away. And in some respects some of the used equipment is built better than some of the new," he says. "In the old days they would overbuild the equipment. As the equipment industry has become more competitive, some of the equipment is not as good [as the old]."
But that good value for the dollar can come with a caveat, Bruce says. "It comes as a trade off because in turn for lower prices the customer faces other considerations, such as there is a higher risk that something could go wrong."
Another risk in buying used equipment rather than new may be that it is hard to accurately assess what condition the machinery are in, Ross says.
DOING YOUR HOMEWORK
Just as with purchasing a used car, one would not make a significant capital investment without at least test driving the vehicle. The same goes for purchasing a piece of used equipment. "Seeing the machine running is important in the precise application you are going to be using it in," says Bruce. Bruce recommends seeing the machine operate in the same environment that you will be using the machine, or at least as close to as possible. Seeing a piece of equipment operate in one situation may not tax the machine in the same ways that it is going to be taxed at its new home. "Often you will see a crane that will be handling a certain material well, but when you put it in with your material it won’t perform nearly as well," Bruce says. Ross also suggests seeing the equipment in use. "And preferably processing the material you are going to process," Ross adds. "Short of that, it is nice to get the piece purchased with a guarantee or a warranty and to have that guarantee actually backed up." But sometimes warranties for used equipment are hard to come by or just not offered, unless a component of that machine has been rebuilt or replaced. "From time to time warranties are available, but almost never if you are buying from the person who used it," Bruce says. "That risk will come at a cost, with a warranty there is less exposure." Bruce suggests that the company the equipment is purchased from is less important than the machinery itself. "With used equipment or equipment sold without a warranty, the company you are buying from is less important than the equipment you are buying," he says. "It is more dependent on your own discernment or capability to evaluate the machine." Not only is seeing the machine in use important, but so is doing a "blood test" on the machine, Bruce says. For example, he says, a visual inspection of a hydraulic crane might not always show any problems with the equipment. But sampling the oil from the machine and having it analyzed can show what parts of the engine are wearing and give the potential buyer a real idea of how the machine has been used. Contaminants in the oil will show which parts of the engine are wearing and may need attention soon. Checking references on a manufacturer with which one is not familiar is also a recommendation Gaither has for buyers of used equipment. "You want to check with other references; people who have bought through them before," he says. "If you have never done business with them before, don’t go into it blind," Gaither says of equipment manufacturers with whom the buyer is not familiar. Another factor to research is to make sure that the company or person who is selling the machinery actually owns the machine and there are no liens on the equipment. Most veterans of used equipment dealing say they know of cases where a person who was selling a piece of equipment did not own it.CHOOSING THE RIGHT MACHINE
As in buying a used car, one would most likely not purchase it without having a mechanic look at the vehicle. The same goes for purchasing a used piece of recycling equipment. Bruce suggests spending the extra money to take an operator of the machine to "test drive" it. An operator may be able to point out potential problems with the machine better than an executive may, simply because the operator is using that piece of machinery daily. In addition to technical know-how, if the operators of the machine feel that they have a vested interest in the choice of machine, they can be more likely to support the care and maintenance of that machine, Bruce says. Ross agrees that it is important to take the operator of the machine into consideration when making a purchase. "Make sure that it is adequate from a safety point of view and not just a capacity point of view," he says. "You want the person operating the equipment to be the person choosing the machine. They may be less inclined to take care of it if they don’t like it." Another perk to having a machine that the operator likes and can maintain is that the buyer then already has someone with the technical know-how to service that equipment. "You don’t have a new equipment manufacturer to lean on," Ross reminds buyers of some used equipment.HEADING TO THE NET
As in other segments of the business world, the Internet is slowly finding its place into the used equipment market. Bruce sees the Internet as another tool to find used equipment that is for sale. "What the Internet is going to do for used equipment sales is to increase the level of awareness of the buying sector of the machines that are available," he says. "But it [the Internet] won’t be able to prove the machine or demonstrate it." While viewing a machine on the Internet can not replace actually seeing the machine in person and operating, the Internet could serve as one more avenue for sellers of used equipment to advertise their merchandise. Schultz says there are only a few outlets to advertise used equipment, such as trade magazines, and that the Internet could provide one more avenue for sellers to spread the word of the availability of their machines. Gaither also says that the Internet can be an added mechanism of advertising machinery for sale or for finding the equipment desired. But he also cautions that the same legwork needs to be done for equipment that has been found using the Internet as equipment for sale that may have been found through more traditional methods. "It is a new avenue of locating an item," he says.WHAT THE FUTURE HOLDS
As the markets for scrap made a slow climb to higher prices in early 2000, the market for used equipment also continued to improve. Gaither has noticed that the past six months seem to show promise for markets to improve. "What I have noticed in the past six months is that it is definitely increasing and the way the market has been, everybody is coming in here and is looking for used equipment," he says. "What we try to do is find it for them." Schultz says that from the summer of 1998 to roughly November of 1999 was a tough time for used equipment sales. "It was survival time roughly from August 1998 to November 1999," he says. "I have noticed a marked increase in the inquiry level and the quality of inquiry levels. From August to November I had a lot of tire kickers, but it was really tough to get an order. Since November to where we are now there is definitely a need. People have gotten orders, they have needs to address, production requirements have gone up. There is light at the end of the tunnel." RT The author is the assistant editor of Recycling Today.
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