When to Choose New Versus Used Equipment
Even with decades of experience, deciding whether to buy new or used equipment isn’t easy. We often recommend used equipment when the project allows flexibility, especially since new equipment has longer lead times. Internal company engineers may often challenge used options, but as long as drawings and related build information are provided, that obstacle can be overcome. In some cases it is challenging to even secure a reliable used source due to inconsistent market conditions. Our industry can be unforgiving, even for experts. New equipment is advantageous in terms of warranty or maintenance aspects. If there is no comparable used equipment on the market to fit the needs of a project, it might make sense to go with new equipment (instead of utilizing older used equipment that may require parts repair and cause time delays and expense overages). As a rule, new equipment generally costs at least 50% more than used, but when the market shifts, those numbers can vary. For example, during COVID-19, used equipment was selling at new prices due to extended lead times for new products. As a result, many firms were reluctant to sell off any idle assets for fear of downtime and the need for various replacement components.
One disadvantage of purchasing new equipment is sometimes the lack of customer support for parts and service. This can be a real disappointment and unfortunately a risk with any new vendors.
How to Find Used Equipment
Although there are plenty of websites out there selling used equipment, personal relationships remain more advantageous for finding used equipment in the end. In seeking used equipment, most individuals will start with a Google search, which generally guides them to numerous options like a used equipment dealer, auction site, or a private seller. Sometimes, the key is simply knowing where to locate certain items, especially if they are not openly advertised. It’s a tough market where reliability is key, but even the most seasoned professionals face significant setbacks.
Logistics Considerations
When it comes to logistics, many variables must be considered, from coordinating trucking and transportation to overseeing the disassembly and reassembly of equipment. Handling permits for oversized loads, scheduling transport, and setting up equipment at its final destination are all part of the process. This includes any paperwork needed for out-of-country transactions. It is recommended to hire a contractor who can handle teardown and setup, ensuring that the equipment is safely delivered, installed, and ready to operate with minimal downtime. If choosing to handle these items independently, it is crucial to ensure that insurance requirements are met, up-to-date, and in place. Trust but verify! Too many situations have led to litigation due to lapses in attention to workers’ compensation coverage or the lack thereof.
Why Price is Not the Most Important Question
People often focus too much on price. In reality, reliability and the long-term relationship are more crucial, especially for repeat purchases from the same seller. Reliability often correlates with cost when it comes to used equipment. In this industry, experience shows that getting paid for your equipment is never guaranteed. We recommend full payment before shipment with a 10% hold back upon satisfactory delivery. Payment is also critical if it is handled electronically. Fraud cases are up significantly from where they were last year and most targets are companies not normally engaged in their regular course of business. It is essential to assess whether handling potential risks independently is preferable or if hiring a dedicated company is the best route.
Due Diligence: How to Assess the Condition
Evaluating equipment requires trust in the people involved. Third-party inspections are certainly the best way to provide an unbiased report of assets. Technology has made assessments more straightforward, with platforms like WhatsApp allowing communication with clients abroad. Cloud-based platforms are excellent for providing detailed photos, drawings, or any documents associated with the item in question. Most due diligence is investigative. It is crucial to understand that every state differs in how Uniform Commercial Codes (UCC) are filed. Most equipment will have a serial number, and a UCC may need to be cleared. This holds true regardless of whether the asset is a cash purchase or financed. Additionally, in some special cases, equipment may be tied to a property with an existing mechanic’s lien, complicating the situation. These issues generally need resolution before equipment can be removed. Although similar to the above actions, injunctions can be even more complex, impacting the removal of items until settlement. In rare circumstances, some firms have lease agreements with property owners, so it’s essential to confirm there is no pending litigation. This is yet another obstacle that must be navigated, even by seasoned professionals in the industry.
How to Prepare an Asset for Sale
Preparing an asset goes beyond cleaning and documentation. Does it need to be reconditioned in any way? Some sellers choose to offer items “AS IS,” while others invest time and money in refurbishing. This does not necessarily mean a quicker sale. The key is locating a party in need of the idled asset or ensuring that they find the “for sale” advertisement. Be prepared to spend a considerable amount of funding on various platforms normally on a monthly basis. Most sellers choose 3-5 different stages to showcase their equipment in hopes to reach the biggest audience. There is no guarantee of exposure, as it ultimately depends on SEO, and each marketing channel differs. Specific search terms on Google or Yahoo will yield a range of search engine results. Once an advertising medium is selected, sellers often assume buyers will pour in, but the reality is navigating through low offers and numerous companies interested in sub-advertising the item. The objective is to avoid a potential game of Battleship with your asset or prospective purchase.
A common challenge is when companies advertise your equipment without obtaining your permission. This often happens once the equipment is posted on the internet. We once had a radial conveyor stacker represented for a client, flew down to inspect and take photos. Later finding out that a broker tried to sell it back to our client. Even water marked photos are not safe in today’s age.
Unfortunately, despite thorough preparation, many sales still fall through. This could be due to a lack of buyer inspections or other unknown factors. Be prepared to dedicate significant time to fielding calls, emails, and various time-consuming roadblocks. Another consideration is whether the buyer is tax-exempt in the seller’s state. Simply adding “not responsible for any taxes or fees” in the sales document may not suffice. Checking with each state on a case-by-case basis is advisable. In most cases the Tax is payable in the State where the item is delivered. Ensure you conduct comprehensive due diligence!
Larger corporations may handle these situations independently, with dedicated legal departments in place. However, this can become a disadvantage if legal involvement becomes excessive. For example, purchasing an installation from a big company on their property may involve demands of a 25% deposit for “property damage.” In such cases, rigging firms should already have insurance policies to address potential issues. If you were to agree to these terms then you potentially might lose 25% of your investment per a lawyer’s interpretation.
Smaller companies may also choose to handle equipment transactions themselves. The drawback is that they often have fewer resources compared to larger corporations. In these cases, hiring a firm to represent the company’s best interests may be beneficial. Each situation is unique, and there is no one-size-fits-all solution.
Case Study
Reclaim Source once handled a large gear for a roller mill inspected by a millwright for a client. After all the paperwork was completed, the item was shipped to the plant for immediate installation, as the plant was down. The millwright then claimed there was a crack in the item and refused to install it. Another gear was promptly located, shipped, and installed. The client, however,
demanded a refund on an “AS IS, no warranty” item and even threatened to bypass Reclaim Source directly to the supplier. Fortunately, thanks to strong relationships, the supplier declined to engage with the client directly. Experiences like this highlight who is truly worth maintaining long-term business partnerships with.
Ultimately, transparency is key. As long as the seller accurately represents the asset and the buyer adheres to agreed terms, most transactions are relatively smooth. In general, trusting one’s instincts helps navigate the often-uncertain waters of the equipment marketplace. Each transaction should be approached with a strategy that suits individual needs, and success will follow.
Reclaim Source Corp. is an industrial equipment supplier providing turnkey services. With a background of more than two decades in scrap metal recycling and brokerage, the company specializes in industrial demolition, ranging from chemical to mining sectors. For more information about their services, visit ReclaimSource.com.