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XWaehirxePofnt"Industr ia l Maehinery Fxperts

PmrfrSnx CIf u$emmffishinerw$mxpsTHE belief that the used machinery sectorwould prosper in times of emnomic crisishas been somewhat ofa paradox. Theeconomic slowdown over the past twoyears has had a profound impact on theretail price of new machinery with reportsof prices coming down by as much as 30%.Contradictorily; used machinery prices haveresisted falling at the same rate and timingas those of new machinery; hence thegap between the respective asking priceshas narrowed, making the price of usedmachinery less attractive than in previousyears.

The main reason for this price deprecia_tion is that whilst used machinery sellersbase their asking price according to thebook value; the price of new machineryis determined according to supply anddemand. When demand is high, prices areset at a lot higher than book value. Whendemand significantlydecreases (e.9. dueto economic crisis)then the prices of newmachinery will be sig-nificantly lowered soas to shift the supply.

These prices arelowered to such an ex-tent that they are very

lndustrialists can reapmanifold benefits if theycan lay their hands upon

the right type of usedmachinery at the

right price.

. A strong presence of OEM after-sales in amarket will boost the sale of used machin_ery for that particular brandlf we take the example of plastic ma-

chinery factors that affect the price of usedplastic machinery include brand, auxiliariesand other equipment accompanying theused machinery; age of machine, state ofmaintenance, extent of refurbishing, docu_ments available, and whether the machineis in dry cycle or dismanfled.

Due to the above factors; price variationis evident throughout different regions in theused machinery market.

Expedise in judging the usedrnachinery rnarket is pivctalAs a buyer you need to know if the usedmachinery you're interested in is ofered toyou at the right price. lt is well advised totake the help of an experienceo assessor

who can place atangible figure on thevarious aforemen-tioned influencingfactors. You cansave an appreciableamount, and moreimportantly; getapprised ofthe bestdeal for you whilst it

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machinery that is being sold direcfly by theOEM; and not by a dealer. Whilst such ma_chinery might preliminarily cost more; it ismore likely to be refurbished, fully working,and carry the OEM's guarantee.

There are valid reasons for the highdepreciation of used machinery. The risksassociated with purchasing any second_hand item will always affect the demand,and then there are always logistics andengineering costs to take into account.Nevertheless, industrialists can reap manFfold benefits if they can lay their hands uponthe right type of used machinerv at theright price.

$elling process must irc dsnewith forethoughlAll these factors are as important a con-sideration for the seller as they are for thebuyer. Sellers ought to bear in mind that adismantled machine will immediately lose50% of its value in comparison to an identi_cal, yet assembled, used machine.

A dismantling job carried out withoutthe OEM's involvement will likewise bringdown the price/value. The revenue flowfrom the sale of used machinery is certainlynot insubstantial, yet most companies donot have a specific department dedicatedto plan and execute the sale of their usedmachinery. In a hurry to release useful floor

close to the price of the book value thatused machinery is being sold at. Moreover,for different sellers, the same machinerymay yield varying prices because of differ_ent depreciation techniques used.

Supply & demand affected byrnany factsr$To compound issues further, the demandvs. supply scenario is fluid, and can oftenchange without notice. Factors that affectthe demand vs. supply include:. Induction of new technology which canfree up the machinery that uses existingtechnology for the reseller market.

. A shortage of new machinery in a particu_lar market can make used machinerv anattractive proposition.

. Regulatory changes in one region canrender old machinery non-compliant inthat particular location, but retain its use inother markets.

is available by choosing the services of agood broking firm.

A broker in the know will be able toquickly assess whether going for the cheap_est machinery available is best suited foryour needs. Very often it is not quite theright solution. Furthermore, an agency thatspecializes in buying and selling can judgeand value the impact of a major technologyadvance on the price of existing technology;often the introduction of new technologycan devalue used machinery much morethan what the book value will suggest.

Expertise in judging the used machinerymarket is pivotal on acmunt of the highfragmentation of the market and its manyvarying aspects. For instance, in the usedbeverage machinery segment, the marketvalue of expensive machinery is far lowerthan the book value; in some cases asmuch as 75% less than the book value. Anexpert would be able to alert vou to used

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Sellers of used machinery oughtto bear in mind that a dismanUedmachine will immediately lose S0% ofits value in comparison to an identical,yet assembled, used machine. A dis_mantling job carried out without theOEM's involvement will likewise bringdown the price/value

space on the shop-floor, the selling processcan be carried out without forethought andhasty decisions made.

An experienced broker will always havea clear idea about the aspects that are ofparticular consequence for different brands,machinery type, and markets. This js aninvaluable insight available only to expedsand it can make a huge difference to bothsellers and buyers.

Information acquired by tne assess_ment of the direction in which the market ismoving gives one the leverage to pre-emptscenarios and get valuable first-moveradvantage. Very few brokers have thewherewithal and skilled manpower to studyand forecast market behaviour oaseo onmarket size, number of machines enteringthe market, market value indicators, marketshare of various brands, etc. Whether youare rnterested in selling or buying used ma-chinery you should get rn touch with thosethat can do this.

JUNE / JULY 201 1 33

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