Used assets may be a perfect solution for manufacturers

The benefits of implementing used machinery and equipment go way beyond just the environmental advantages as COO of international brokers Perfection Global, Joe Lundvick explains
 Media-fuelled US manufacturing downturn is a fallacy

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Through your daily interactions, what sense do you have for the state of manufacturing on a global scale?

What’s frustrating is that the media seems to be fuelling the idea that manufacturing, especially in the US is on a downturn; which simply isn’t true. Though the loss of jobs seems to show otherwise, manufacturing is simply becoming more automated, with fewer workers able to achieve the same level of productivity.

 My fear is that companies will stop upgrading equipment and buying machinery as they brace themselves for this ‘doomsday’ which is supposedly coming, therefore creating the downturn and vindicating the negative reports. A lot of the companies we deal with are actually doing great and achieving growth in this current climate.

How do Perfection’s services aim benefit manufacturers in the long run?

We always knew that there was a market for our services, but more recently companies are seeing it as the right thing to do, furthering their green initiatives by reusing and recycling their assets. For example, we’ve sold the same piece of machinery four or five time over, continually re-buying it and selling it on once the current user has finished making use of it.

What it boils down to is, you can buy a brand new machine for $250,000, but we may have a machine that could manufacture the exact same part for half the price, albeit in a slightly slower cycle time, which for many manufacturers is negligible.

If you can operate effectively while using used-equipment, why not save the money and make sure that you’re financially healthy and strong; you’re still making the part and satisfying customers, but you’re doing it at a lower cost basis.

How would you convey the benefits of Investment Recovery schemes, such as the ones Perfection offers?

We give clients the ability to do what they do best, dedicating all of their people and resources to manufacturing parts without having to worry about selling off used equipment. We shoulder that burden and only earn our commission once the equipment is sold, so it’s a no-cost plan.

When we sell equipment under an IR track, we aren’t doing any repairs or maintenance; we sell the machine as is. We make it available for inspection, and if it has a dent or a scratch, we make sure the buyer is aware of it. Typically the machine has been in use recently, so is in pretty good working order.

However, if we take physical possession of equipment, we take it into our 86,000sqft facility and repair anything that we think needs attention. Though we have the space to store a large amount of equipment, it makes sense to ship from situ. Most buyers prefer to see a machine where it was being run, what was the environment like, how is equipment treated there. It also helps to keep transportation costs low for all parties; the buyer, the seller and us, the broker.

Have you noticed any shifts in the way manufacturers are positioning themselves in an effort to become more agile?

We recently completed a very large deal with a customer who has taken an increasingly common approach; through his website customers can buy a laser-cut part about as easily as you could a book from Amazon. There aren’t a minimum number of orders, he will make a single part for you and has created his website to really simplify that entire process.

I think you are going to see more of these types of services moving forward with more and more manufacturers making it that easy to buy parts. Ultimately the strong will get stronger and those that can’t adapt will disappear; you’re not going to be able to sit and wait for that huge order to come through, you’re going to have to make do with what comes along and the more efficient you become at doing that, the better your business and bottom line will be. If you don’t, then you’re going to have a lot of people and machinery sat around idle, which isn’t good news for any business.

Through the service Perfection provides, you must be well positioned to see what equipment has become popular?

CNC machine tools continue to be very attractive; 30 years ago everyone was looking to get out of conventional machine tools and moving towards CNC and that demand hasn’t slowed down. If you spoke to most used-machinery brokers the hardest challenge they face is attaining quality inventory to either buy or broker. If you have a commodity-size quality CNC lathe, either horizontal or vertical, from within the last 10 years, you’re going to sell it pretty quickly.

We’ve also seen the heavy growth of laser machinery and water jets have really come on over the last decade, which I imagine will seriously gain momentum over the next couple of years.

As part of a company with global reach, what advice would you give to manufacturers in order to survive in an increasingly competitive environment?

The best advice is that if you aren’t going to use a machine, sell it. I can’t tell you how often we walk into a large facility and be shown a machine that’s sat idle for over a year, and that is literally money sitting in a corner doing nothing. For manufacturers, if a machine isn’t being used for production, it’s not making you money, it’s costing you money.

Too often manufacturers wait and forget about their surplus or idle equipment and before you know it, you’ve amassed quite a collection of unused machinery. I strive to let manufactures know that there are services available that can handle the brokering of it quickly, easily and cost-effectively. The resulting funds can then be reinvested back into the business, into new technology or just added to the bottom line.

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