The Benefits of Buying Used Equipment

The Benefits of Buying Used Equipment

By Todd Benney

Whether purchasing a car for the family or production equipment for a manufacturing facility, looking for the best deal while getting a quality product is usually the number-one objective for most people. Savvy manufacturers will explore all options, including looking at used as well as new equipment, and base their decision on what best meets their needs. And in the face of these hard economic times, it is imperative to look at all means necessary to cut costs and increase profits. In the long-run, buying used equipment is a viable option that may not only save money, but also decrease down time and establish relationships with used equipment dealers that will go the extra mile for a natural products manufacturer or raw material supplier.

Why Buy Used?

While buying new equipment may seem the obvious choice, many times, it is just not a practical reality. New equipment is often not readily available and companies in need of machinery may be quoted lead times of six months or more--time that they do not have. Used equipment, on the other hand, is available immediately, with a variety of comparable models from which to choose. Furthermore, a knowledgeable dealer can often locate equipment that is close to a manufacturer's facility, which may sidestep potential shipping costs.

Perhaps the greatest benefit in buying used is that a manufacturer's engineers can inspect a pre-owned machine first-hand while it is still installed and running product at its original place of business. This allows the manufacturers to see everything the machine does, what parts it has and its overall condition. New equipment purchases rarely if ever afford this luxury. Depending on the machine, new equipment customers will likely see either drawings or similar models of the machine that have yet to be manufactured, but not the specific machine being bought until it has been delivered.

In determining the cost effectiveness of purchasing used equipment, the big questions generally include how much will be saved by buying used and will "pre-owned" machinery last? Very often, used equipment can save customers well over half the price of new models, sometimes for machines that are practically brand new or else unused and still in their original crates. "Used" machines may be handed down from companies that never took them out of the original packaging and include everything from fluid beds to capsule polishers. Part of the reason for this is that used dealers are privy to information that competing manufacturers, packagers and suppliers may not share with one another. In addition, sales reps for new equipment manufacturers may not be inclined to disclose information about a six-month-old machine they just finished installing. After all, they are trying to protect their bottom line as well, in the form of commissions. A used equipment dealer can find these machines, including one- and two-year-old machines that will soon be sold off due to changes in contracts. In the long-run, the insider knowledge and experience of a used equipment dealer could ultimately save a company thousands of dollars.

Financial risk and cash flow are subjects broached whenever a company is considering a purchase. Used equipment allows nutraceutical companies with small budgets the latitude to purchase "money making" machines at a substantially reduced investment, minimizing financial risk and strains on cash flow. Even larger supplement companies with bigger budgets can benefit by buying used equipment for projects and contracts that require expensive or specialized machinery. Also, companies that would otherwise spend exorbitant fees for machines they will divest in a year or two can maximize cash flow by purchasing used. Even if the used machine requires modification, start-up costs and lead times can be appreciably less than costs and delays incurred from the purchase of a new machine. Another bonus in buying used is that dealers will attempt to locate purchasers for surplus equipment. Ideally, this infuses cash flow and creates floor space as soon as the project is complete.

In regard to the question, "Will it last?," used equipment is proven to have the same long and productive life as a new machine. In fact, many used machines have the reputation to last for years while still out-producing and requiring less maintenance than new machines.

Building a Relationship with a Used Equipment Dealer

As a company continues to grow, it will begin to need machines with greater capacity that can produce more product more quickly. Floor space will begin to exist at a premium as decommissioned equipment congests production and storage rooms. The hours and effort required to divest this surplus equipment then becomes a fulltime job. Storing large machines or trying to sell them is not an option for most since space and time will likely be what a manufacturer and its employees can least afford. It is the business of used equipment dealers to find end users for surplus machinery while simultaneously locating and delivering up-graded equipment. Outsourcing this chore allows a company to concentrate its immediate business rather than equipment relocation.

Additionally, as independent sellers, equipment dealers have no agenda for selling specific makes or models, and recommendations are usually based solely on the dealers' knowledge and past experiences with machines. Plus, if customers for a manufacturer's surplus assets have not been located in the timeframe allotted by a company's schedule, used equipment dealers may offer to buy or trade used equipment for their stock inventory.

Natural product companies may question if buying used equipment is buying someone else's headache. However, changes in contracts, increasing demand for new products and changes in product form or packaging are just a few reasons why companies are forced to divest themselves of used equipment that is otherwise in excellent condition. An experienced equipment dealer will know when and where these divestments will take place and pass on the information--and value--to customers.

Todd Benney is the vice president of sales and marketing at Gold Coast Equipment, a used equipment supplier. He can be reached at[email protected].