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Choosing Technological Equipment: New or Used
New or used: an important decision
Whether you're a business owner, planning to start a new venture, modernize an existing production line, a company director, a chief technologist, or in charge of procurement, this article is for you. The most crucial step towards profitability is making the right choice of production technology and purchasing the appropriate equipment.
Every entrepreneur aims to save money on equipment purchases. Therefore, when you decide to start your own business, procure or upgrade equipment, the question arises: which is more beneficial for your business—new or used equipment?
New or used: How to decide
When deciding on equipment purchases, entrepreneurs typically base their choices on the capital they have available, making price the primary criterion for selecting equipment. Business owners tend to consider only those options that fit within their budget and then compare them. Equipment and technologies that exceed their financial capacity by twofold or more are often simply disregarded. In our view, this is the primary strategic mistake of businesses. Such an approach can lead not only to the failure of the enterprise's investment program as a whole but also to irreversible, potentially fatal consequences for the development of the business or even its continued existence in an increasingly competitive market. Buying used equipment at a very low price is also not a guaranteed path to success—let's examine why.
Determine performance
When purchasing equipment, whether it's to improve a specific technological operation or to upgrade an entire production line for manufacturing final products, it is crucial to focus on the performance and technological compatibility of the machines with existing equipment. For instance, if you buy a new, inexpensive machine whose productivity is half of what the existing line requires, you effectively reduce the efficiency of your entire equipment fleet, as the line will spend significant time idle. It may be more advantageous to purchase a used but more powerful machine, thereby maintaining the synchronization of the production flow, even if it requires a slightly higher investment.
In the production of various products, there are numerous technologies, most of which originate in Europe and then spread worldwide. Today, it is possible to manufacture products using a simple milling machine, a universal machining center with minimal staff, or a full production line. With skilled workers, you can achieve good quality in any case, but a milling machine might produce 2-5 units per day, a machining center 20-50, and an automated production line 100 or more. Therefore, the key economic criterion for production should be the payback period of the investment and the share of labor costs in the product's cost that the production technology establishes, as this will determine the competitiveness of your product.
Assess options
Once you've determined the production pace, output, and product release schedule, the next step is to explore the market for the necessary equipment. It's best to start by familiarizing yourself with new equipment and the latest technologies offered by manufacturers at industry exhibitions. Don't be intimidated by prices—in fact, don't focus on them initially. Instead, evaluate which equipment and technology will allow you to produce your product most efficiently and profitably. Based on this assessment, choose equipment that is of high quality and has a strong market reputation. With the help of experts, integrate it into your production line, carefully avoiding "bottlenecks" and unnecessary equipment or machines with excessive capacity.
Consult with those who are already producing similar products on comparable equipment. After you’ve developed your plan, selected the necessary equipment, and calculated the required investment, you can start exploring cost-saving options. Begin with the most expensive machines—find out how much similar used machines cost if they are 5, 10, 15, or even 20 years old, while keeping in mind the crucial point that the technology and productivity of the equipment should not differ significantly from that of new machines.
Calculate operational life
Suppose you find 10-year-old equipment with characteristics similar to new models. The question then arises: is it worth the cost? To make this determination, you should request the price of used equipment directly from the manufacturer or from second-hand equipment dealers like FOETH. Purchasing previously used equipment only makes sense if its price is 2-3 times lower than that of new equipment, and if the technology is only slightly inferior to modern equivalents. It's crucial to pay close attention to the equipment's remaining operational life and degree of wear. Sometimes, the age of the equipment doesn’t accurately reflect its condition, and a fresh coat of paint after pre-sale preparation can conceal serious issues.
When buying used equipment, it's advisable to know where it was previously used and how intensively. For instance, if the equipment was in operation for 10 years at a large factory where it ran continuously in two shifts, it’s likely not in good condition. Such equipment might need to be decommissioned soon or require significant investment in repairs. On the other hand, if the machine was used in a small private workshop, handling small orders with only 2-3 hours of daily use, often operated by the owner himself, its wear and tear could be minimal—even after 10 years, its resource depletion might not exceed 20%. If the price of such a machine is three times lower than that of a new one, the advantages of purchasing it are clear.
Find the original manufacturer
You need to know how long the seller or manufacturer of the equipment has been in business and whether the company still exists and for how many years. If a company has been around for 70 years, then even its 20-year-old equipment benefits from 50 years of engineering experience and a solid reputation; otherwise, the manufacturer wouldn't have survived in Europe for more than 5 years. If the manufacturer no longer exists, there may be difficulties in obtaining spare parts unless another company, such as FOETH, has taken over this function.
Purchase complete solutions
When investing in a new enterprise, it’s not always necessary to assemble all the equipment into a single chain yourself by purchasing from different suppliers. Europe offers numerous opportunities for acquiring complete technological solutions and used equipment, often due to the closure of companies, including factories equipped with the latest technology. In addition to the main equipment, you can also buy a variety of auxiliary equipment, which is sometimes overlooked but is crucial for ensuring product quality and production efficiency. The cost of such factories can be as low as 20-25% of the cost of equivalent new equipment. One of the main advantages of these purchases is that the time between investment and the start of production is minimized.
The difference between used and refurbished
For various reasons—such as excess equipment, reduced production volumes, or other considerations—companies may decide to sell their equipment that is still in excellent working condition. Even if the equipment has hardly been used, it is classified as used and sold on the secondary market. This means that equipment in excellent condition can be purchased at a very attractive price.
Used equipment is often referred to as equipment sold "as is." It has not undergone any modifications. You generally purchase it without a warranty. Therefore, you are responsible for any parts that may need to be replaced and for any work required during deinstallation, transportation, and installation of the equipment.
Refurbished equipment, on the other hand, usually undergoes specific modifications to restore its functionality and resource capacity. This process involves diagnostic work, testing, calibration, and updating outdated or worn-out parts, ensuring that refurbished systems look and function like new. Additionally, at the request of the buyer, the seller may perform upgrades on the equipment. This could include enhancements such as improving specific components, replacing drives and electrical equipment, and even integrating numerical control systems or basic controllers and sensors. Suppliers of refurbished equipment may also offer their own solutions to improve usability, performance, and accuracy of the equipment they refurbish.
Refurbished systems come with a variety of warranty packages that are standard for each segment of the secondary equipment market. Typically, the warranty period does not exceed six months, and in some cases, it may be as short as three months. However, in a production setting, this period is usually sufficient to identify any major shortcomings in the refurbishment process. The necessary warranty period is determined based on statistical information and the experience of the repair and refurbishment process. After the warranty period ends, the relationship between the buyer and the supplier of refurbished equipment generally continues. For an additional fee and under a separate agreement, the supplier can provide post-warranty support, which may include periodic diagnostics, consultations, or full-service support.
Advantages of Refurbished Equipment:
Original functionality (supplier's final inspection).
Low cost.
Acceptable payback period.
Supplier warranty obligations.
Technical assistance from the supplier during installation and commissioning.
Good price/performance ratio (especially in the case of modernization).
Disadvantages of Refurbished Equipment:
Reduced remaining lifespan.
Increasing maintenance costs.
Lower liquidity.
Consider the channel
It is important to consider the channel through which refurbished equipment arrives and the location where the refurbishment work is carried out. When it comes to imports, always remember to account for customs duties, shipping, and high tariffs associated with refurbishment work, especially if it is performed in Europe. Therefore, it is advisable to choose a supplier of refurbished equipment with a strong repair facility and extensive experience in refurbishment work. It is helpful to visit their production facilities at least once (they will invite you to their showroom if they have one).
Conclusion: Go for new or used equipment?
From the above, we can conclude that: used European equipment is often as good as refurbished equipment, and refurbished equipment is almost always as good as new. When you find a used reactor, dryer, or mixer, inspect it, talk to the supplier, and request technical documentation before rejecting the opportunity to acquire a good machine at a reasonable price.
New or used equipment should be purchased from a reliable source with a proven history and reputation that guarantees quality. Carefully review all the offered options that meet your requirements. Make sure you understand the terms of the contract, obtain a copy of the document detailing all refurbishment work, warranty periods, and the type of service and assistance provided by the supplier for installation and commissioning. This will help you make an informed decision, solve your technological challenges, and achieve profitability in a competitive market.
If you need assistance in selecting previously used equipment, please contact us. We will be happy to help you make the right decision.