Posted By: Andy Kamashian | Posted On: August 21, 2018
Buying New vs Used Machinery — What Are the REAL Costs?
New machinery dealers are aptly trained in the machine tool sales profession. Training covers not only the features and benefits of their equipment but also on the tactics and strategies employed to work the emotional needs and fears of a buyer. How else are they going to get you to pay two to three times more for a new machine over the cost of a used one?
They are conditioned by the circuit sales trainers through countless seminars and training sessions to observe and listen to a buyer’s needs. But, even more so, they’re trained to read between the lines to see the buyer’s real motivating triggers—or, better put, their fears—and then exploit those fears. They are trained to heighten your fear with wild and ridiculous "what if" scenarios that could happen if you bought used machinery and then pounce with the perfect solution—a new machine from their sole selected supplier. Somehow, the machine not only solves all of the worries (that they themselves helped create), but also is supposed to provide you with the security and protection your company needs to survive. They are trained to help foster and create such a fear of the "unknown" that you actually will seek security and will be willing to two to three times more for their exclusive new machinery offering.
Two to three times more? Yup, it really is, and why? Why is the price double that of a good late model used machine? Profit! Profit to the OEM, profit to the distributor, and profit to the salesman. The typical OEM makes a whopping 30-40% distributing the machine within North America (after all, they have to pay for those slick Demo Centers in Chicago, Los Angeles, etc.) and the local sales rep (distributor) makes another 10-15% (some in excess of 25-30%) on average. That's 40-50% of the price on a new machine that you are paying for the ability to be in the elite club of new machinery owners.
Is it really worth it? What are you really getting extra for all the money you're spending?
Are You Getting Better Service?
The first thing buyers think about is service. They assume they will make one phone call and get a seasoned experienced service tech with parts in hand on their doorstep the next morning. How could they be so naive? Service techs are only dispatched after countless hours of troubleshooting with your operator over the phone—and, likely after several different parts are shipped and tried out. Used machinery is serviced EXACTLY the same way by the OEM.
So, what's the advantage again? What is the actual cost? What does a full-year warranty on a machine tool actually cost vs. the price you are being offered to be able to purchase that new machine? What is the value of service? Current controls? Current design, etc.?
All have value and, typically, what we find is that a one-year warranty to cover parts is worth about $5,000-$7,000 on a new machine. A service tech visiting your plant in that year 2-3x is a cost of about $4,000-$7,000 to an OEM or even less to a distributor and the factory will typically send you the parts and instruct you how to replace them yourself—that way, they save service time. Factor in installation and training and, all told, a brand new machine with all the latest technology includes a cost of under $20,000-$25,000 for all these "extras" that you may not need, or want, but pay for anyway when you buy a new machine.
So, what if you could tailor-make your used machine purchase to just pay for the services you need and want (and not the ones you don't)? With used equipment, you do just that. With used machinery, you’re buying à la carte and can include just about anything you want in the purchase and eliminate the wasteful things you just don't need. Want to add freight and installation? No problem. Need training? We can do that, too, and add just about any service you need to make your purchase go smoothly and stay within a smart budget.
What about the other factors a new machine offers? Surely, a new machine is safer, more accurate, and performs faster? Well…
Do You Get Better Part Accuracy?
Most buyers think “surely, my new machinery dealer will guarantee part accuracy on a new machine, right?” NO! No manufacturer on any machine tool will ever guarantee your part accuracy. They only guarantee the machine’s positioning accuracy—and, that’s only at the time of installation (or, for a limited time). This leaves you to ensure all factors such as leveling, material, tooling, fixturing, etc. are taken into account. Sure, if you press them hard enough, they will make some loose claim of accuracy on your floor, but they’ll never guarantee it; time and time again, part and part again.
- Scrap a big job because the machine didn't hold the tolerance? Not their fault.
- Lose a customer and can't make those huge machine tool payments? Not their fault either.
Used machinery can be just as accurate as new and save you tens or hundreds of thousands of dollars.
Is Safety Improved with a New vs. Used Machine?
Surely, they will guarantee that the machine meets OSHA standards? You will hear/read terms like "OSHA" "EU" or "CE compliant," but can you get a written guarantee? OSHA standards tend to vary from state to state, machine to machine, and process to process. In many ways, the interpretation of OSHA standards are up to the OSHA inspector themselves.
What about state county and local safety and regulatory requirements? Surely, the manufacturer takes that into consideration... right? Nope, wrong again. Read the fine print on their sales agreement. They are not responsible for state, county, city or local regulations (like UL listings, electrical standards, hazardous wastes, etc.) that YOU may end up being stuck making their machine meet. Don't be fooled—whatever you buy, YOU are responsible for it on your floor, in your plant.
How About Performance?
Surely, the new machine dealer will guarantee part cycle times in production at your facility...
Wrong again. Furthermore, what will they guarantee, if anything, six months after it's installed? How about two years? How about five years down the road? A quality used machine can likely perform just as well as a new machine for much, much less.
Will They Guarantee That New Machine’s Performance for Five Years?
Nope, never! Instead, they will cajole you back into the fear factor of your "older technology" machine breaking down and entice you with the "latest technology" that promises you the world in new production numbers. They will tell you all about the limited support they have available and some, after 10 years won't even offer to support your equipment—thereby leading you right back into the old machine fear trap again.
So what do you get when you buy a new machine? The ability to establish a beautiful relationship with your distributor and OEM. Well, actually, it’s a debtor/creditor relationship with your distributor and manufacturer/importer. If you want to be blind to the actual costs because you need that false, warm and fuzzy feeling—that you THINK you can make a phone call and have a tech at your door with parts in hand the next day—then, by all means, pay double (or more) and buy new.
You will find out very quickly that "warranty" has three completely different meanings:
- One to your salesman (he's telling you everything you want to hear);
- Another one to you (you're hearing everything you want to hear); and
- The real one; the service department from your machine tool supplier (they tell you the truth and it's not always pleasant).
There is not a new machine out there that can beat the value of a good quality used machine that you inspect as being fit for your specific needs. You pay for only what you need! Not for fancy demo centers, lunches, luxury cars, golf outings, and sales seminars. All of the same services can be purchased on a used machine the same as a new one—usually for far less, too. The difference is with used machinery, you have the option of picking à la carte, or just what you need and not what you don't.
At Southern Fabricating Machinery Sales, we maintain a vast database of regionally-placed independent service engineers that are factory trained to provide great service on used equipment in a timely manner. We make our resources available to you when working with us. We provide the absolute best value in manufacturing with a quality repurposed machine tool AND access to our network of support specialists who are available and ready to help you meet your needs and save your bottom line.
Keep your money in your pocket! After all, you're the only one watching out for it now, aren't you?
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