Demand of secondary machines in machinery market


Every year companies redesign, upgrade and retool their manufacturing operations. Used machinery from each industry is placed on secondary market. In secondary market; brokers, dealers and exporters market it to interested consumers. Secondary machinery may be the proper alternative for small companies who are looking to expand capacity. Generally the machines comes in secondary market are in good condition as companies have decided to upgrade machines for higher capacity and advanced technology.


Used machinery plays a crucial role in developing countries and also branches of highly industrialized countries. Demand is specially high for used metal-processing machines. Used machines for food processing are in second position. Machinery for processing plastic products and textiles, as well as packaging and printing, are highly sought-after.


As per Mr. Andre Wissenberg and Mr. Jan Rottgerung of Oerlikon Textile - "The textile machinery market is most complex and the appraisal differs regionally. Therefore, it is difficult to answer this question clearly and distinctly. Only so much: The production of certain yarn counts by means of second-hand machines might definitely be reasonable for some countries or technological applications. For the today's demands on the end product and thus on the export-oriented yarn producers and against the background of the considerations of productivity, quality and energy costs, a second-hand machine is no alternative to a new, innovative machine, e.g. from Oerlikon Textile. Mr. Reinhard Furrer - Stubli Sargans AG says demand of secondary machines is low compare to new ones. While Mr. Toru Suzuki from Toyota Industries Corporation says There are lots of medium/small size weavers who still operate old shuttle looms. Mostly from such weavers there is certain demand for second hand machines.


Now a day Second-hand machinery business has generated its own service sector. There are a number of firms specially work for this industry like, specialist freight forwarders, auction houses, leasing, financial and certification companies, companies offering data banks, and firms offering dismantling and reassembling services or even upgrades and retrofitting for plant and machinery.


Factors considered by companies before going for secondary machines


1. Price


The price of second hand machines depends upon the use. It could vary between 30 to 70% below new machines. As per Mr. Toru Suzuki from Toyota Industries Corporation - The main motivation factor for companies is low price of second hand machines. Generally for high quality machines there is not much difference in production quality through out the machine life this argument is supported by Mr. Andre Wissenberg and Mr. Jan Rottgerung of Oerlikon Textile by stating example of Oerlikon machine "Compared with new low-end machines, high-end second-hand machines from Oerlikon Textile are definitely more than an attractive alternative. Our machines have been convincing by their quality and their long life for decades. We also ensure a long-time supply of high-grade spinning components in the original part business sector. Thus, a second-hand Auto Coro or Autoconer from Oerlikon Schlafhorst is certainly the better alternative to the recently appearing "low-cost suppliers" in the textile machinery market."


2. Availability and Delivery time


It is obvious that second hand machines are easily available so need less delivery time, while new machinery / technology have high demand. Companies have pending order for that, so generally it will take 3-4 months to deliver machines. There is no pending order for used machinery, which leads companies to go for second hand machines. Mr. Reinhard Furrer - Stubli Sargans AG says limited investment power, no bank credits available,  immediate availability of machines, machines requested for a small part of production only where productivity is not deciding or for articles with low demand.


3. Installation and Transport cost

The transportation cost of secondary machinery is negligible compare to new machinery as generally companies can get imported secondary machinery from local market. Installation time and cost required for used machinery is also low compare to new machinery.


 

4. High profit margin


One major reason to opt for secondary machinery could be higher profit margin. Generally straight line depreciation principle is used in business. It is easy to see that if old machinery is available at their linearly depreciated price, it is profitable to buy used machineries rather than new one. The more used the machines are, the better investment they can make. And it is assumed that in all economies for any machine material cost, production period and productivity of machine is same.


5. Performance of second hand machinery


It is obvious that performance / productivity of machinery fall with the age. But in underdeveloped economy labour cost is low, even skilled labour cost is also low. The maintenance cost is also low compared to developed economy. So the final output is almost same.


6. Other factors


The other advantages of used machineries are reliability, favourable financing terms, comprehensive after-sales service, and the quick availability of spare parts. "Second-hand, but first-class" slogan used by second hand machinery dealers now a day to attract consumers.


Conclusion


Mr. Andre Wissenberg and Mr. Jan Rottgerung - Oerlikon Textile says "The second-hand machinery market will never be able to replace the new machinery market because the demands on the end products and primarily on an eco-friendly production increase from year to year. We at Oerlikon Textile are banking on quality and on a resource-saving production (e-save) that meets the customers' demands and the market needs."


Mr. Reinhard Furrer - Stubli Sargans AG says "No, in contrary, if I know - as a buyer of new machines - that a used machinery market exists, I can count on the possibility to sell my machines as secondary machines later as they are no longer used. As a consequence, a secondary machinery market can support the new machinery market."


Mr. Toru Suzuki - Toyota Industries Corporation says "We do not think it is killing new machinery market. Sometimes second hand machines open doors for new customers. Because second hand machines require more spare parts or conversion parts than the new machines, and by establishing the relation with new customers through parts business, we may be able to expect chances for new machine business with such customers."


Reference:


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