Used equipment vs. new asking the right questions: depending on your company's needs, used assembly equipment can often be a better buy than brand new equipment.As 2001 has come to a welcome close and we look forward to a better 2002, plans are being made all over the electronics manufacturing This article presents a typical manufacturing process of an electronic assembly. Component manufacturing Components such as resistors, capacitors and integrated circuits are generally made by specialized contractors. industry to prepare for the day when our market comes back. The feeling is to be cautiously optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op . The consensus seems to be that manufacturing activity will increase, but at a cautious rate. Last year saw an unprecedented mothballing Mothballing The preservation of a production facility without using it to produce. Machinery in a mothballed facility is kept in working order so that production may be restored quickly if needed. of electronics manufacturing equipment by original equipment manufacturers (OEMs) and electronics manufacturing services Electronic manufacturing services (EMS) is term used for companies that design, test, manufacture, distribute and provide return/repair services for electronic component and assemblies for original equipment manufacturers (OEMs). (EMS) providers. As inventories increased and booked orders dwindled to a trickle, assembly companies realized they were severely over capacity. The result was a massive cut to not only machines and full assembly lines, but entire facilities. The question now arises of what to do with all this equipment. Much of it is still sitting in warehouses and former assembly plants. Some machines are still in their original shipping crates Crates (krā`tēz), fl. 449 B.C., Athenian comic dramatist. He is said to have introduced into comedy themes other than those of personal satire, and he was one of the first to show the comic possibilities of the drunkard. from the OEMs, and much of this equipment has been written off the books not recorded in the official financial records of a business; - usually used of payments made in cash to fraudulently avoid payment of taxes or of employment benefits. See also: Book and cannot be put back into production. This overcapacity o·ver·ca·pac·i·ty n. Too great a capacity for production of commodities or delivery of services in relation to actual need: the problem of overcapacity in many large industries. has created a perplexing per·plex tr.v. per·plexed, per·plex·ing, per·plex·es 1. To confuse or trouble with uncertainty or doubt. See Synonyms at puzzle. 2. To make confusedly intricate; complicate. situation, especially for EMS providers. They simply cannot dump these hundreds of millions of dollars of manufacturing equipment into the used market. That solution would result in severely reduced prices of this equipment, thereby tearing down one of the most significant barriers to entry that EMS providers have: the immense capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. needed to build and outfit an assembly facility. If small startup companies The creator of this article, or someone who has substantially contributed to it, may have a conflict of interest regarding its subject matter. It may require cleanup to comply with Wikipedia's content policies, particularly neutral point of view. could purchase one- or two-year-old assembly and test equipment, much of which is state-of-the-art, for 15 to 20 cents on the dollar as compared to new equipment, the existing EMS companies would have created competitors with a much lower cost of capital. Conversely con·verse 1 intr.v. con·versed, con·vers·ing, con·vers·es 1. To engage in a spoken exchange of thoughts, ideas, or feelings; talk. See Synonyms at speak. 2. , as bleak as this scenario may sound, the current capital equipment market creates an opportunity for all PCB PCB: see polychlorinated biphenyl. PCB in full polychlorinated biphenyl Any of a class of highly stable organic compounds prepared by the reaction of chlorine with biphenyl, a two-ring compound. assemblers This is a list of assemblers. Hundreds of assemblers have been written; some notable examples are:
This reasoning seems to make a solid case for buying used equipment, but that option may not always be true. No question, a great deal of late model, lightly used equipment is available on the market. However, in some cases, this used equipment may not fit a company's needs, and new equipment must be considered in the purchase decision. When deciding between new or used equipment, consider these points. Technology Technology must be considered for all products expected to run on the line, for what is required for line speed (beat rate), specific component issues and desired quality levels. If any single board has a density factor, a particular component or components, or special handling requirements that older machines cannot address, then new equipment may be the only alternative. However, be careful that your company's true needs for that machine and the products you plan to run on it are all that is considered. Used equipment dealers, provided they deal with multiple machine manufacturers, should not cloud your decision with marketing hype just to move the latest technology machine. If two-year-old technology will meet your needs, a reputable used dealer will offer that advice and supply that machine. Desired or Expected Profitability Often, the decision of new or used comes down to the expected profitability of the projects that will be running on the line. The mix of products may not have the profitability levels necessary to support new equipment. After return-on-investment (ROI (Return On Investment) The monetary benefits derived from having spent money on developing or revising a system. In the IT world, there are more ways to compute ROI than Carter has liver pills (and for those of you who never heard of that expression, it means a lot). ) analysis, the financial numbers may show that profitability is marginal or negative with new equipment, but the profitability becomes acceptable when less expensive used equipment is purchased. This point is especial es·pe·cial adj. 1. Of special importance or significance; exceptional: an occasion of especial joy. 2. ]y true today as EMS providers are considering projects that 18 months ago would have been rejected due to minimum profitability objectives. Strategic Plans This point is fairly evident when considering new or used equipment. In what direction is your company heading in the next three to five years? Are your plans to be on the cutting edge of technology, or is your niche in older technology and mixed component assembly? What is your company's strategic marketing direction? Warranty Warranty is one of the major differentiating factors between new and used equipment. All equipment is going to have problems and need service or repair. Buying new gives buyers piece of mind in that when problems occur, the factory will provide support and repair, at no or minimal cost to the buyer. Usually, buying used means as-is, where-is or with a minimal warranty. When considering used equipment from a dealer, check to assure that either the OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and will support this equipment or that the dealer offers some type of service and support. Many larger value-added used equipment dealers have their own service teams and may also offer service contracts. Reputable used dealers have working relationships with equipment OEMs. This relationship can be highly valuable to the buyers of used equipment. Latest Support Software This issue is very important and potentially very tricky. When choosing new equipment, you should carefully consider your company's long-term plans for the equipment. Software transferability issues can dramatically affect the resale value of that machine, if you decide to sell it on the used market at some future time. Some software vendors have no policy or they completely support transferability. Others legally require that all software be wiped off the system prior to any sale, thereby rendering that equipment almost worthless on the used market, except to sell it back to the manufacturer. Read the contract carefully before buying new equipment so you fully understand the ramifications ramifications npl → Auswirkungen pl of divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). when the time comes Adv. 1. when the time comes - at the appropriate time; "we'll get to this question in due course" in due course, in due season, in due time, in good time . When considering used equipment, understand the status of all software on the system and the transferability of those systems. Training All new equipment OEMs offer training for their customers. So the question is: How can the buyer of used equipment get trained? New equipment OEMs should provide this training because it is in their best interest. Bought new or used, if that equipment breaks down or if the operators cannot operate it as designed, the OEM's name is still on it and its performance will reflect on that OEM. Many larger, value-added used equipment dealers offer factory-certified training on many lines they sell. You should seek all available sources for this important part of owning this equipment. Availability/Lead Time The availability of both new and used equipment is highly dependent on market conditions. Eighteen months ago, new equipment lead times from many manufacturers were running up to 18 weeks and more. Today, most new equipment vendors can probably ship immediately. The same condition is true with used equipment, but with a twist. If the current owner is a manufacturer, then the equipment will most likely be immediately available. Some exceptions do exist, such as the sale of equipment from a planned future shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down . If the used equipment is coming from a dealer, make certain yon understand its availability. Require proof that the equipment is available. Some dealers or brokers will sell machinery they do not currently own or have access to immediately. This approach is not wrong if the dealer/broker informs you that this machine is speculative and they intend to find it on the market. If the dealer/broker markets the machine as immediately available, require proof in writing of this fact. This proof can be in the form of serial numbers, photos or just your trust of the dealer. Price and Payment Terms This section will focus on pricing and payment terms flexibility, rather than the more obvious question of comparable purchase price. Once again, as with lead time, price and payment terms are negotiable NEGOTIABLE. That which is capable of being transferred by assignment; a thing, the title to which may be transferred by a sale and indorsement or delivery. 2. . In today's market, they are much more negotiable, with both new and used vendors, than they were just one year ago. The option to lease equipment should be available from new equipment OEMs as well as established, full service used equipment dealers. However, payment terms on the used market are usually full payment in advance, or upon delivery, installation and passing of diagnostics testing. Some used dealers may offer terms to their best customers, but that is the exception, rather than the norm. Elasticity of price also highly depends on market conditions. Most new and used equipment dealers are quite hungry today. Some new equipment OEMs are offering financing or leasing with no payments of up to a year, no-cost features and add-ons, service contracts, deep discounting and other financial incentives to buy. Almost anything is possible, so you should ask. However, the used market is classic capitalism at its finest. The laws of supply and demand are highly visible. Machine values can literally change overnight, based on demand and availability. This condition is not because of shady dealers selling used equipment, but simply due to availability of specific equipment on the open market. Company Reputation As with all major purchases, check the reputation and references of the company before you buy. Do they openly display customer references and testimonials? How long have they been in business? What is their reputation for handling complaints? In the case of used dealers, what kind of business is it? Do they have a facility where they actually take title to equipment, clean and refurbish re·fur·bish tr.v. re·fur·bished, re·fur·bish·ing, re·fur·bish·es To make clean, bright, or fresh again; renovate. re·fur , and service? Do they have a warehouse? Do they actually have the equipment in-house or are they representing a seller in an exclusive contract? If the equipment is not in their own warehouse, have they personally inspected the equipment? Where is the equipment currently located? Is it available for your inspection? Equipment Service This point, quite obviously, applies to used equipment. Whether buying new or used, these precision machines are highly complex and will need servicing. Who will perform this service? Are they factory trained and certified See certification. ? What is their response time? Is phone support available? Do they offer service contracts with scheduled preventive maintenance The routine checking of hardware that is performed by a field engineer on a regularly scheduled basis. See remedial maintenance. preventive maintenance - (PM) To bring down a machine for inspection or test purposes. See provocative maintenance, scratch monkey. visits? More factors must be considered when buying new or used equipment than just wanting to pay a lower price. If the decision is made to buy used, whom you buy from must be equally important. Used brokers and dealers often have the same reputation as used car dealers and aluminum siding companies. But, this opinion is rarely warranted. The vast majority of used equipment companies conduct their business with a high degree of integrity and honesty. How honestly a used equipment seller answers your questions will give you a good understanding of the integrity by which they do business. The decisions really are what type of used equipment company and what level of ancillary services are needed in making this purchase. You should also be aware of OEMs who "bash" used dealers or who do not support their own used equipment. OEMs have been known to regard used equipment dealers as sharks Sharks may refer to:
Leeches are bloodsucking worms with segmented bodies. They belong to the same large classification of worms as earthworms and certain oceanic worms. Leeches can primarily be found in freshwater lakes, ponds, or rivers. that steal business. In actuality ac·tu·al·i·ty n. pl. ac·tu·al·i·ties 1. The state or fact of being actual; reality. See Synonyms at existence. 2. Actual conditions or facts. Often used in the plural. , based on the reasons above, buying new equipment is often not even considered. However, many OEMs recognize the value of reputable used equipment dealers and have mutually beneficial Adj. 1. mutually beneficial - mutually dependent interdependent, mutualist dependent - relying on or requiring a person or thing for support, supply, or what is needed; "dependent children"; "dependent on moisture" working relationships with them. Buyers should look for OEMs who support their equipment, no matter how it is acquired. Conclusion Today's economic situation calls for consideration of used equipment in almost all purchase decisions. A glut glut pronounced as rut, slut Vox populi An excess of a service or skilled labor in a particular area. See Physician glut. of late model used equipment is available on the market. So many of the reasons to buy new equipment (technology, speed, flexibility) also apply to the used market, where machines can be bought for a few cents on the dollar as compared to new equipment. Equally important is the used equipment company with whom you decide to do business and form lasting and beneficial relationships. Steve O'Neil is the director of marketing with Lewis & Clark Inc., Nashua, NH; e-mail: soneil@lewis-clark.com. |
|
||||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion