New v. Used – Points to Ponder
by Tom Kirkland, www.tributek.biz
There are those who say nothing used is as good as the same thing new. Then there are those who say buying certain things new, especially big-ticket items, is throwing away money. Who is right? A spectrum of new, near-new, reconditioned, running-used, and bone-yard equipment exists in the marketplace, and sorting through it all can be something of a challenge.
When buying equipment new, especially when buying something familiar, the buyer has the greatest confidence about exactly what he is getting. The sale comes with the equipment suppliers attention in correcting after-sale issues, and the buyer has some legal recourse through the warranty if things go wrong. Since equipment generally has gotten more precise and capable over time, a buyer is probably, though not always, buying recent generation technology when buying new. Assembly and decorating equipment suppliers generally also supply tooling for the machines they make, so a buyer can have a single-responsibility vendor to call when things go bump in the night. Having been the custom tooling manager for a machinery company, I can assure you that while we tried very hard to treat all customers alike, human nature dictated that we had a lot more incentive to do more for the customer if there was machinery on the order as well.
But during ebbs in the business cycle, used equipment sings a sweeter song than in times of roaring prosperity. Plant closures and underutilized capacity means there is more used equipment out there, and often in good condition and relatively new. Company cash flows also may be running low and jump-starting some new business with a good used machine might be a wise move.
Used Equipment Comes in All Shapes and Sizes
Used equipment may be purchased from the manufacturer as a demo system, or occasionally as a surplus machine built for another customer who didnt follow through and take delivery. Sometimes demo machines have had light use and a lot of storage time, while other machines may have had hard use and have traveled extensively. Before making a decision, the buyer should find out as much as possible about such a machines history and, in any case, negotiate some kind of warranty. Reconditioned can mean a lot of things and before purchasing, certain items should be verified such as whether the machine has been cleaned, inspected, repaired, wear parts that are near end of life replaced, and above all, that the machine has been tested to new machine specifications. The buyer is not paying for a new machine, but he is paying for the manufacturers assurance that the machine can be expected to deliver nearly new reliability and performance. Getting tooling from the machinery manufacturer or having existing tooling and parts shipped there is important. Also, the buyer should expect to see it running on the machine that is being purchased before it ships.
Used equipment also can be purchased from used equipment dealers. Dealer types vary and can cover a wide range:
- Specialists in process or even brand of equipment who also provide tooling
- Manufacturers representatives who also deal in new machines
- Dealers who buy auction equipment and warehouse it until sold
- Scavengers who buy and sell equipment they really know almost nothing about
The lines can be a little blurred here, so it is paramount that the buyer understands what he is getting into if he doesnt want to risk wasting a lot of money. Most business people are honest, but sometimes the buyer may need to walk away if it just doesnt feel right.
A plane ticket and a hotel stay can go a long way toward avoiding a lot of headaches down the road, so it is important that the buyer visit the facility and see what he is buying and from whom he is buying. The seller also should be willing to run off parts and tooling on the machine that is being considered for purchase and provide some kind of warranty. As above, the seller has more incentive to please if the seller is both building the tooling and selling the machine.
I have seen many cases where machinery bought at auction was dropped into trouble-free production. However, this has always required the expertise of a manufacturing engineer who, through his confidence and proven track record with the type of equipment in question, would be able to physically check out the machinery and make it work. A buyer who is not capable of being so bold should not swim in that pool.
Once in a while, a situation occurs where a used machine can be bought directly from the company that has used it in the past. Keeping in mind the companys motivation to be rid of it, the buyer should try to find a manufacturing or process engineer who is personally familiar with the specific machine (sometimes this is very difficult or impossible to do) and have a known issues discussion. Many times companies will prefer to sell off lightly used equipment directly to capture as much value as they can for accounting purposes, and these machines can be a tremendous value buy.
Maintaining a Used Equipment Purchase
Another point that bears mentioning is that buyers of used equipment often are not in much of a position to know the kind of use a machine has seen. For example, if a person is knowledgeable about cars, he can sometimes pick up on signs that a used car has been driven hard and under-maintained by its previous owner. This can be much more difficult to assess when buying used equipment, especially when not very familiar with the make, model, or even type of machine being purchased. Remember the old Russian expression: Trust, but verify. If in doubt, it may be wise to pay more and either buy from somebody who will provide a warranty on a reconditioned machine, or just bite the bullet and buy new.
As machinery ages, bearings and cylinder seals can wear, insulation on wires can crack, wires subject to frequent flexing can break, switches or membrane panels can wear out, displays can burn out, valves can get sticky, relays can burn out and the list continues. This is of particular concern if buying an orphan machine that is, the original builder has gone out of business. Sometimes spare parts and manuals will be available from an authorized source; sometimes the buyer can find direct replacement components himself. Some companies make replacement parts and sometimes, unfortunately, what breaks cant be replaced or repaired at all.
Even if the original manufacturer is still in business, it can be difficult to obtain some manuals and spare parts, and impossible to obtain others. Few industries have changed as rapidly as electronics over the last three or four decades. Component obsolescence is a big problem for equipment manufacturers as they attempt to support an installed base of equipment that may stretch back 40 or more years. Certain generations of circuit boards may become impossible to make, and it is not unusual to have restrictions about which version of board works with which version of another board or which version of installed firmware or software. If older CRT tubes or other types of displays die, the machine may not be repairable in its present form. Some older machines may not be upgradable either.
A new machine is much more than used, but costs a lot less than the sum of its parts. If I went to the local Chevy dealers parts desk and ordered all of the parts to build a brand new Corvette, would it cost me more or less than a new one from the factory? The same is true with machinery. How about trying to obtain parts for a 30-year-old car? Same with machinery, though perhaps less severe. Even with significant prices for service parts, a machinery manufacturer runs a parts and service operation primarily to benefit its own direct customers. Would it be surprising to learn that buying used machinery from a third party most likely will not come with free copies of manuals, service bulletins, free training, and phone support as would be the case with buying a machine new?
Buying equipment and tooling is not like buying a sculpture or even like buying a car. Equipment isnt bought to admire its lovely lines and cool paint job and graphics. The buyer is actually buying a set of capabilities the ability to produce product and, one hopes, reliability. An older vehicle, for example, may be a great bargain, but anyone who has ever operated a fleet of trucks (or even one) is familiar with the concept of dispatch reliability. That is to say: If I have a mission to accomplish today, what is the likelihood that the mission will get accomplished given the equipment with which I have to work? The older a machine gets, the lower dispatch reliability tends to be, even with good maintenance.
The tough realities of todays manufacturing world has manufacturers trying to make value decisions in an environment where just-in-time is the rock and do more with less is the hard place. There is room for both new and used assembly equipment in such value decisions. But there are no quick and easy answers, no one-size-fits-all solution. The buyer must do the homework and ultimately make the decision that is most likely to produce the best financial outcome in the end.
Tom Kirkland originally trained in industrial/manufacturing engineering and worked as a project engineer whose responsibility was to purchase and implement assembly and decorating equipment and tooling. He has since spent over 20 years supplying assembly equipment and parts to the industry. Holding numerous board positions with many industry-related associations, he has authored numerous articles and papers, is a renowned trainer, and is a recognized expert in plastics joining. For information on Tom Kirklands consulting and machinery parts business, visit www.tributek.biz.