Used equipment may be the answer in difficult financial times
By Ron Perry, RPA
In difficult financial times it can become even more challenging to fund capital expansions. Plant managers, financial officers, and procurement departments may need to look beyond new capital acquisitions and consider purchasing used equipment with their limited funds in order to fulfill anticipated production needs. This option becomes particularly attractive with late-model used equipment increasingly available as many high-tech companies cut back on production and look for ways to raise capital by liquidating assets that are under-utilized or no longer needed.
When deciding whether to purchase used vs. new equipment, there are three major factors of equipment ownership, all with pros and cons, associated with used capital equipment.
Price: The market for used capital equipment would probably be 50 to 85 percent of the original selling price depending on age, condition, performance, and appearance. However, high-tech, performance-based equipment can be very difficult to appraise for fair market value. Settling for lesser quality in appearance or performance, thinking the equipment can be enhanced or upgraded it once in an operator’s possession, can prove to be more costly than anticipated. Original manufacturers’ parts and service may increase the overall cost to a final price greater than what the same system would have cost if new, then or even now.
Delivery: Once located, used capital equipment should be immediately available, although sometimes the seller may prefer to continue to use the equipment for a specific product run or timeframe. Buyers should make sure availability and final condition of the equipment is fully defined. Bear in mind that disassembly, packing, moving, reassembly, and recommissioning can be delicate, complicated tasks. Original packing cartons and documentation may not always be available. Extensive damage can result if critical components are not adequately protected in transit and properly reassembled.
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