According to The Institute for Supply Management, in December, the Manufacturing Index rose to 59.7 from 58.2 percent. This is coupled with the Production Index registering at 65.8 percent, a 1.9 percent increase.
This is coupled with the Production Index registering at 65.8 percent, a 1.9 percent increase. These increases signal that the U.S. manufacturing industry continues to be both driving and growing force in the economy. However, while manufacturing remains a critical force in the economy, the sector is rapidly changing and becoming more competitive. To ensure profitability, companies now find themselves under pressure for more rapid product introductions, adaptation to local market conditions, and continuous improvement to optimize costs, quality, and efficiency.
To maximize profitability, reducing overhead costs is crucial. In terms of manufacturing and fabrication, a simple way to do this is to reduce equipment, machinery, and part costs. In fact, buying used, with few exceptions, is the least expensive option and will cost you a small percentage of the original price. In our experience, the price difference between a new piece of industrial equipment and a comparable used one range between 30 to 70 percent.
For manufacturers, purchasing used equipment can be an opportunity to save money on fabrication, metalworking, and CNC machinery. Nonetheless, purchasing any type of industrial equipment, CNC machines included, is an intensive process that requires proper research and specialized knowledge on how to navigate the second-hand marketplace. However, for buyers who understand the intricacies of buying used machinery, the costs savings can be massive.
To better understand the nuances of purchasing used metalworking, fabrication, and CNC machines, this article will explain:
- The benefits of purchasing used metalworking machines
- Considerations when purchasing used metalworking machines
- How to avoid common issues when purchasing used metalworking machines
- Utilizing online auctions to source used metalworking machines
Table of Contents
- The Benefits of Used Metalworking & CNC Machines?
- Must-Ask Questions When Buying Used Machinery
- How to Avoid Common Issues with Used CNC & Metalworking Machines
- Advantages of Online Metalworking & CNC Machine Auctions
The Benefits of Used Metal-working & CNC Machines
1. Lower Cost
Typically, purchasing used CNC machines and equipment will offer the best cost-savings, usually costing a small percentage of the original price. As stated earlier, in our experience, the range of price differentiation usually falls between 30 to 70 percent of what it would cost to source a comparable new machine. Over time, the Business Development Bank of Canada suggests that this can cut overall business outlays by more than 40 percent. For businesses that are just getting started, looking to sustainably expand, or only have short-term production increases, the potential savings present a viable alternative to “buying new.”
2. Avoid Initial Depreciation
As soon as you assume ownership of a new CNC machine, like a car, it will begin to depreciate. During the first year after purchase, most industrial machinery and equipment will depreciate as much as 20 to 40 percent of its original value. After the first year, depreciation will begin to slow. The chart below displays the typical depreciation on a CNC machine over a five year period.
After the first year, due to appreciation, if the equipment or machine was financed, it is not uncommon for buyers to owe more than its actual value. Obversely, due to being fully depreciated prior to resale, used industrial equipment and CNC machines retain their value. By choosing to buy a used piece of equipment or CNC machine, you avoid taking the “hit” on the initial depreciation.
3. Retain Value
Used industrial equipment and CNC machines depreciate at a significantly lower rate than new machines. As a result, a minimal reduction in value presents an opportunity to sell the machine later without suffering significant loss in value. It’s not uncommon for the same piece of equipment to be bought and sold multiple times on the second market. In fact, many machinery dealers source their inventory from auctions and liquidations.
4. Better Lead Times
When purchasing new metalworking equipment, it isn’t unusual to be faced with lead times of up to six months. In our previous article, The Pros & Cons of Buying Used Industrial Equipment Online, we explained some of the common issues surrounding lead time for industrial machines. For CNC machines and metalworking equipment, the primary reason for such long lead times is that the equipment is usually made-to-order, or once the order is confirmed. Other reasons include may include: the OEM not having the required parts to complete the order, being backlogged with orders, as well as shipping delays. As a result, you may have to wait up to six months to receive your machine. Used metalworking machines, however, are available immediately. From purchase to delivery, it’s rare to wait longer than three weeks to obtain possession of used machinery.
5. Quality
Although you may think of used equipment as being old and heavily used, this is not necessarily the case. There are various reasons for a company to sell its equipment far before its end of life. Companies that restructure or pivot their business strategy often attempt to liquidate or sell their assets to recover capital. As a result, well-maintained, like-new equipment is often available for purchase. Take a moment to browse any industrial marketplace and you will notice it’s not difficult to find lightly used, late-model equipment at any given time. Click here for recent examples of late model machinery that recently sold on our platform.
Must-Ask Questions When Buying Used Metalworking Machines
1. What is the condition of the machine?
The best way to determine the condition of a used machine is to inspect the equipment in person. Most marketplaces will provide you with the contact information of the seller to arrange for an inspection. If a physical inspection is not possible, be sure to review all service and maintenance records for the machine. Most businesses keep maintenance or service records; such documentation can help you determine if and how well the machinery was well cared for. If maintenance records are unavailable, photographs and videos can provide visual cues as to the machine’s condition, as well as demonstrate the machine’s capabilities and features. Other documentation you may want to request is a record of operation, or a time sheet detailing how long the machine was used. In some cases, a machine may have a built-in spindle timer that provides this information.
2. Which materials was the machine cutting?
Aluminum-only means less wear and tear, while harder materials and metals such as cast iron mean more. If the machine has a history of cutting harder materials, the best thing to do is review any documentation related to them machine’s service and maintenance. The seller should be able to provide this information and field other questions, such as if cutting fluid was used to protect the machine’s tooling when cutting hard metals. From there, you can determine how the machine’s history may impact the future role it will play in the productivity of your business.
3. Why is it being sold?
Reputable sellers are typically willing to provide information as to why a piece of equipment is being sold. A common scenario is a large organization liquidating equipment that is new or barely used because of a pivot in their strategy or as part of a restructuring process. As well, it isn’t uncommon for a failing or failed business to liquidate their assets to recover capital. In other cases, a business may look to upgrade their equipment. In such scenarios, the equipment being sold will likely be in good condition and be listed at a competitive price. Caution should be applied when purchasing equipment from an unfamiliar seller that is unwilling to provide information concerning the reason for selling.
