Used Process Equipment vs. New

Used Process Equipment vs

Used Process Equipment vs. New

The processing industry involves some of the most complex machinery of any industry in the modern world. Each machine must be able to successfully perform its task, or the whole process shuts down and bottlenecks form. With many options available, each purchasing manager must make a number of difficult decisions in order to best field his "team" of machinery.

Like a team of personnel, the goal of a machine line is that the whole becomes greater than the sum of its parts. Each piece of equipment, working efficiently and in unison is able to do its job to effectively produce an output far better than could ever be done alone. One of the decisions that a company must make when purchasing this equipment is whether to buy new or go with used. While there are advantages to buying a brand new machine (i.e. most modern technology, newest features, longest warranty), they are often outweighed by the value of used equipment for the following reasons:

1) Cost. This item is the most obvious. In almost every industry that is not antique collection, used items are available at a much lower rate than those that are brand new. Used process equipment is no exception. Whether it be filters, conveyors, generators, heat exchangers, whatever - used items can be purchased at a significant discount compared to their newest editions. In a down economy, this cannot be ignored. This is especially true in an industry that has been hammered as hard as any during the past two years. Heck, if we have learned anything from the Great Recession, it is that we need to do a better job of controlling costs and maximizing efficiency when things are good as well.

2) Reliability. This may seem like a bit of a misnomer. New items are always less likely to break down than older ones...right? Well, not really. Newer items are typically given only limited testing and often arrive with many bugs. Used items, on the other hand, have already proven their worth once over. In order to be re-sold, they are put through rigorous testing so that their continued performance can be assured (provided that you are buying from a reputable company). It is a bit similar to a sports team. The hot shot rookie is often the best athlete and offers the biggest upside of anybody on the roster, but the grizzled veteran is more likely to produce night-in and night-out. New equipment also comes with a superior warranty, and you will definitely want that because odds are that you are going to need it.

3) Depreciation. The resale value of equipment plummets by its greatest amount during its first few months of use. Essentially, the first time you use it, you'll never get full price back for it again. However, depreciation for machinery that has already been on the market for a while is significantly less. The difference in value for a machine that is used eight years compared to when it was only seven years old is not nearly as significant. This saves you in unrealized accounting costs and makes it more likely you will be able to recoup your investment should you need to go a different route. Actual (as well as accounting) flexibility is another aspect that cannot be ignored in modern business during a down economy.

So, if you are looking at used processing equipment and need to purchase a filter, heat exchanger, pan dryer, or anything else - I strongly suggest that you look at your used options and weigh the pros and cons of them vs. just assuming that you need to buy new.

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