Scrap Handler Guide -- New or Used?

Making decisions about buying equipment implicitly includes the question, whether we seriously address it or not, “Should we buy new or used?”

While the question should be addressed for all equipment, in the case of scrap handling equipment decisions sometimes may be affected by the kind of equipment and applications we’re considering. Those responsible for purchasing equipment for scrap operations are looking at a wide range of responsibilities, including:

•Material handling equipment-including cranes, loaders and fork lifts

•Processing equipment-including balers, shredders, wire choppers and shears

•Transportation equipment, including trucks and trailers.

As a result of our strategic acquisitions over the past five years, our company is in the unusual position of offering significant amounts of used equipment for sale as we eliminate redundancies in the course of consolidating our operations around the country. While used equipment from scrap processing facilities historically has carried the stigma of being old, worn out and poorly maintained, we have been taking strides to overcome this perception over the last several years because of our commitment to proper maintenance and good record-keeping. Because we are both buying and selling equipment, we have a rare perspective on the market.

Application Criteria

Overall, we have several criteria for making purchase decisions. The first determining factor always has been the requirements of the specific application. For example, if we are looking at a piece of equipment that will be feeding a high-volume continuous processing operation, we want equipment that is extremely reliable, no matter what.

Some of the specifics we look at include:

•Lifting capacity

•Reach

•Cycle times

•Attachments needed (grapples, magnets, clamshells, counterweights. We, by the way, always like to have grapples that also can pick up magnets).

Then we consider operating requirements:

•Mobility

•Continual, intermittent or reserve duty

•Training and maintenance

Also, we certainly look at all of the cost factors:

•Initial purchase price

•Financing charges

•Operation

•Maintenance

•Delivery (availability; moving and installation expense)

•Residual value at the end of the planned useful life for us. (We plan, for example, to replace new trucks after five years, which helps us forecast our capital needs).

Evaluating all these criteria helps us make the best “new” or “used’ decision.

Why Buy New?

Buying new, which is our usual policy, generally means:

•More choices are available, as to the basic machines and attachments.

•There is no need to worry about prior wear and tear or quality of maintenance.

•Maximum warranty protection is available, and from established, reputable dealers.

•Training and service are more readily available from people thoroughly familiar with the equipment.

•Delivery generally is prompt, under 120 days, except perhaps for processing equipment, for which delivery and installation could go out as much as a year.

Why Buy Used?

While our philosophy generally is to buy new, we do consider buying used if:

•Financially it is attractive

•The operating history shows low mileage or low hours

•Quick availability is a factor.

And, we like to go on-site to see used equipment we’re shopping for at work, particularly to see how similar its operating environment is to the one we are contemplating for it.

Standardization

Ultimately, all of our equipment purchases also are influenced by our desire to standardize, which makes both operator and maintenance training simpler and more efficient.

Material handling equipment has especially significant differences in design from one manufacturer to another. So we’ll buy from one or two manufacturers or maybe three. But we don’t want to put all of our eggs in one basket, either; so we try not to sole source any equipment purchases.

Standardization certainly reduces our repair parts inventory costs, too. We’d rather, for example, stock one spare engine that can go into many machines than a dozen different kinds of spares.

Terrain and Platforms

Terrain determines equipment choice, too, especially for material handling equipment. Rubber-tired machines are preferable because of their speed and mobility, though rough terrain may require crawlers; either is preferable to fixed-platform machines that can’t be moved out of the way if they go down.

This is particularly critical, again, for feeding continuous processes such as baling or shredding or for critical loading facilities.

Cable cranes represent a huge investment and so are more likely to be bought used than other material handlers. But they require significantly more maintenance and more highly trained and skillful operators.

A lot of pedestal-mounted cranes still can be seen in scrap yards, but we have yet to see one that makes a lot of sense. Their only advantage, and a minor one at that, is that the energy cost to run them is low. But if the processing equipment they are feeding goes down, pedestal-mounted machines cannot do anything beyond their reach. But crawler cranes or rubber-tired machines can be moved to other places where they can be productive.

We do shop the used equipment market aggressively to fill specific needs with equipment that will meet our requirements. In the final analysis, we take into account the net present value of the dollars involved and the return we can expect based on all of these criteria.

The author is president of the Midwest Division of Metal Management Inc., Chicago.