Scrap Handler Focus -- Rent Or Own

Recyclers need scrap handlers. Among the questions they first face, however, is whether to own, lease or rent a machine.

Scrap recyclers seem to prefer owning, but other options are available for those looking to rent or lease equipment.

While many suppliers offer different options when it comes to this decision, recyclers can start by assessing the pluses and minuses of owning vs. renting or leasing scrap handlers.

MAKING A CASE. Ownership appears to dominate in the scrap recycling industry. At L. Gordon Iron & Metal, Statesville, N.C., the company has never rented a scrap handler. "We buy all of ours. We have never rented," says L. Gordon Iron & Metal’s co-owner Kalman Gordon.

Mark Leder of Minneapolis, -based Leder Bros. Co. says his company has never rented scrap handlers either. He says having a machine of one’s own has its benefits. "They are yours and you are familiar with them and you already have them outfitted with the accessories you need," he says. "You know they are there everyday and you can use them when you want."

Leder says if a company has to rely on renting, it may face a situation where it needs a machine that is not available.

Mitch Davis of Moline, Ill.-based Midland-Davis Corp. says his company has never rented or even leased a scrap handler. "We have never rented anything. When you buy it, it’s yours and you can do what you want with it," says Davis.

The company bucks the trend toward hydraulic scrap handlers at its Moline location, opting instead to use lattice-boom locomotive cranes. Davis helped put together an American Locomotive Crane in 1973 that the company still uses today.

Even RSC Equipment Rental Branch Manager D.J. McCoy says most of the scrap yards near his office in Myrtle Beach, S.C., own their equipment. "It’s common for people in the U.S., as compared to Europe, to own their own equipment," he acknowledges. "But people are starting to realize that owning isn’t always in their best interests. When you own equipment, not only is it a huge capital investment, but you also have to worry about maintenance, storage and a host of other issues," McCoy says.

Ken Rusnica of Terex Fuchs, Southaven, Miss., says there are only a few dealers in the United States who would rent scrap handlers, especially short term. "Most of the dealers do not rent short term because it’s such specialized equipment."

END OF LIFE. When a company is done with a machine it owns, Leder says it can sell it to second-hand users. At Leder Bros. Co. this is usually done through printing an ad or by word of mouth. He says he has never traded one back to a company.

Leder also says by the time a company is done using a scrap handler, in some cases it might be ready to become scrap itself because of the wear and tear that has been put on it.

Lee Gibson, owner of Gibson Machinery LLC in Oakwood, Ohio, says his dealership sees many customers turn over leased machines for new ones when the time comes. "A lot of people are looking at leasing," he says. "About 70 percent buy while 30 percent lease." Of those who lease, his dealership probably sees 70 to 80 percent turn the leased equipment back in for a new machine at the end of the agreement, according to Gibson.

OFFERING OPTIONS. Gibson, whose dealership carries equipment made by Sennebogen, Daewoo, Terex and other brands, sells, rents and leases scrap handlers, loaders, attachments and other types of equipment

In a case that a company might need an extra machine for a month, Gibson would most likely rent out a previously used machine rather than a new one. A one-month rental agreement could be extended for a new machine if there was an understanding to purchase the machine at the end of the month, Gibson says.

Gibson offers a number of leasing options through the company’s subsidized leasing program, with time frames ranging from three or six months up to 84 months. At the end of a lease, a customer can turn the scrap handler in for a new machine or purchase the machine for what is determined to be fair-market value. Deals can also be structured with higher monthly payments that allow a customer to purchase a machine at the end of a lease for $1.

To encourage a purchase at the end of a lease, Gibson Machinery also offers leases where the dealership can arrange to maintain the machine to ensure it stays running properly and in good shape.

Gibson Machinery also rents grapples and shears and sees more recyclers showing a willingness to rent these attachments. "We rent a great [number] of shears," says Gibson, even to customers who would not necessarily rent a scrap handler.

Rusnica says Terex Fuchs offers three, four and five month leases.

SHORT-TERM ATTACHMENT. McCoy says RSC also works with recyclers who rent grapples and shears. "In all the industries we work with, attachment rentals are common. This is because a customer may own the right piece of equipment, but doesn’t necessarily own all of the different attachments for it," he says.

RSC Equipment Rental recommends that if an operator is not using a piece of equipment at least 70 percent of the time and it does not have the facility to store it, then renting should be considered.

McCoy outlines what RSC sees as some of the benefits of renting:

Renting can also help scrap yards avoid downtime. "It also makes sense to rent when the customers’ own unit breaks down and needs to be repaired," McCoy says. "In those instances, we can provide them with comparable equipment to keep the recycling center operating."