Basic research avoids complex problems

A scrap processing yard does not have to grow very large before it can find itself benefiting from owning a hydraulic scrap handling machine. This is particularly true in the ferrous scrap sector, where the majority of such customized machines or converted excavators operate.

Companies large and small have multiple sources to turn to when shopping for scrap handlers. Most manufacturers of such machines have dealer networks that cover North America, even if the machines themselves are made in Germany or another nation.

Some of those same dealers and distributors, as well as the larger after- market, can serve as sources where used and refurbished scrap handlers can be obtained, almost certainly for a smaller upfront cost compared with buying new.

But machinery vendors of all stripes will indicate that the upfront cost of a piece of capital equipment is one of several total cost factors. Buying a machine for less money upfront, if not done carefully, can lead to operating and service costs that soon outpace those of what had seemed to be the more “expensive” unit.

Nonetheless, the preowned equipment market also offers viable options. A recycler who can find a scrap handler that has plenty of good operating hours ahead of it with minimal downtime ensuing can make a purchase that will by no means lead to buyer’s remorse.

Recycling Today has asked Jeff Wilson, president of Republic Equipment, Charlotte, North Carolina, about some of the factors that play into the new-versus-used decision with scrap handlers and what a scrap processor might need to consider during the shopping process.

Recycling Today (RT): What depth and range of used scrap handlers can be on the market at any given time, and where would a recycler go (online or in person) to find such equipment?

Jeff Wilson (JW): At any given time, there could be anything from an abundance of used equipment to minimal availability. Finding a used material handler is an attainable task, but one must also consider quality and the company standing behind the product. Typically, local dealers selling new equipment like Liebherr, Sennebogen, Fuchs or Atlas also have used pieces available through trade-ins for purchase, both in person and online.

At Republic Equipment, we pride ourselves on being a first-class distributor of quality used equipment, both through our website and one-on-one consultations. Our business model is based on providing customers with the best machine for their specific needs. Combined, Craig Russo (vice president at Republic Equipment) and I have over 45 years of experience in this niche market.

RT: What tasks or conditions might make sense for a recycler to consider a used machine?

JW: A yard with Tier 2 or Tier 3 machines [based on United States engine emissions standards] and in-house techs capable of working on their own units should consider used. This keeps operating costs down. On the flip side, a yard that consistently purchases new equipment should look at a low-hour used machine if available. Operating hours limitations are something to consider, depending on the used machine. Low-hour used machines have little to no limitations. A machine with high hours could have more, depending on the specific unit and age.

The key to used equipment is knowing exactly what is being purchased. A rebuilt used machine typically has remanufactured major components, has been thoroughly inspected and painted and comes with a warranty. A repowered unit has had most major components replaced but would be a tier below a “rebuilt” unit. Warranties typically come with units like this as well. This is common among all manufacturers. The price point below that are machines with more hours, sold “as is” and still in good running condition.

A benefit of used equipment is it gives options and hits a wide range of price points. From a rebuild going to a multimachine facility to a high-hour unit for a yard looking for low-cost solutions, used equipment allows the purchaser to find something that best suits their needs from a production and a financial standpoint.

RT: In the used equipment market, is there a well-understood definition of what counts as a “reconditioned” or a “remanufactured” machine and, if so, what are some aspects of those definitions?

JW: Each manufacturer has their own definitions, but they are all similar. The key to purchasing a used machine is to get all the details of the work that has been done. Whether defined as reconditioned or remanufactured, the company providing the customer with a quote should have no issue sharing what work has been completed. This allows end users to make the best decisions for their companies’ needs.

RT: While a buyer could save upfront when buying used, what operating/ recurring costs could be higher with a preowned machine? How does a buyer measure productivity differences?

JW: Purchasing used equipment does provide you immediate, upfront savings. With that being said, it has variables new equipment does not.

A new piece of equipment should provide a relatively consistent fixed-asset monthly cost for roughly 10,000 to 12,000 operating hours. With a used piece of equipment, one hopes for the same, but it comes with the factor of already having hours on it. That’s why it’s critical for a business to know what they are purchasing and from whom.

Regarding production and costs, there are some differences. Newer units have shown better fuel consumption and, on some models, higher lifting capacity. But new technology also incurs the cost of computers and training. The older tier machines make it easier for yards to work on them independently and allow troubleshooting over the phone.

RT: If a buyer likes older equipment because it is easier to maintain, is that a reason that can provide return on investment (ROI) in terms of less downtime or reduced outside maintenance costs?

JW: It certainly can be. That’s why Craig Russo is such an asset to our company and customers. He can troubleshoot some older tier units remotely, eliminating a trip charge and getting the customer up and running faster. Many yards can quickly show ROI and reduced downtime. It’s more difficult to provide that value on newer, computerized machines.

RT: What newer features might new machines have that a buyer might not benefit from in an older model?

JW: New equipment can have value and features that used equipment may not. Manufacturers have shown 10 percent to 25 percent fuel consumption savings in newer machines. Some offer hybrid models, an additional boom cylinder with more lift capacity and, depending on the operation’s technology and training, computer programing that can provide an on-site tech with quick issue diagnosis. Depending on the year, tax value can also be a benefit of new equipment.

At the end of the day, each operation is different. Used equipment is a perfect fit for some. New equipment has advantages for others. Companies trying to fulfill a multimachine budget may purchase a combination of new and used.

Jeff Wilson is president of Republic Equipment, a construction and mining equipment distributor based in Charlotte, North Carolina.