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Remanufactured Decision Making

Engineering operations director offers take on remanufactured washer-extractors

CLAREMORE, Okla. — For several years now manufacturers have made available remanufactured washer-extractors for use in industrial laundries. This has been met with a high level of success. 

As the economy soars, businesses must explore every avenue to stretch every dollar of capital budget funds. Therein lies the opportunity to explore savings associated with the purchase of re-manufactured equipment.  

You can save up to $15-30,000 on the purchase of a 450-pound washer-extractor. IRS rules allow depreciation of this equipment to be taken over a shorter eight-year term, rather than the normal 10-year life applied. The savings will then not only be in a lower up-front cash layout, but also in a shorter-term depreciation.  

For instance, a new unit costing $130,000 will depreciate over 10 years at $1,083 per month. A remanufactured unit purchased at $100,000 will depreciate over eight years, or 96 months, at $1,041 per month. That’s not a huge monthly savings, but the upfront cash outlay can help a small business extend what may be limited capital funds. However, there are several caveats and steps that must be taken to determine if it is in fact what you want to do.

First, there is the internal “selling” of the concept of remanufactured equipment. Most often when one hears the term “remanufactured,” they think of rebuilt, or refurbished, or overhauled.  None of these are a condition that will necessarily help you be successful in this effort. So, before approaching your management team to sell the concept, be sure you know exactly what you are going to get for your money and that “remanufactured” is none of these.

Secondly, scope the work thoroughly. Work with your supplier, usually the manufacturer itself, to determine what is “new” and what is “old” on that machine. Most major U.S. and German suppliers of large washer-extractors limit the use of “old” materials to the frame of the washer-extractor only. That is, the guts—the drum, shaft, bearing, controls, motors, drives, suspension, etc.—are all new and state-of-the-art. You should be sure you are fully aware of what is and is not representative of the condition of the machine you are purchasing. 

When I place an order for a remanufactured machine, I require that the only used part is the frame, and that the frame is fully inspected, using X-ray, visual and other tech methods to assure it is in the right condition for another life. The manufacturer wants this, too, as you’re going to be supplied a new-machine warranty with this remanufactured machine.  

Specifying the controls to be state-of-the-art will also help you to routinely upgrade your inventory of equipment to that which will be more easily serviceable when the time comes. In many cases, converting from old relay technology to PLCs (programmable logic controllers) will be possible, and upgrading your control system to current levels will certainly be a win no matter the manufacturer you are using.  

Thirdly, if you are swapping out an old machine for this “new” replacement model, be sure to do your homework. Many manufacturers have downsized the footprint over the recent past. Therefore, if a wash alley was designed for the smaller footprint machine, you must be sure your replacement remanufactured machine will fit into place. Same goes for always double-checking your utility connections and locations.

Lastly, what to do with that old machine you’re tearing out? Everything is negotiable. Some manufacturers may offer to buy it back from you for remanufacturing, some may offer a parts credit on your account or a discount on the purchase price of the new machine, or some may just request it be sent back and use that to help lower their resale price of machines in the remanufacturing program. You’ll just have to work with your selected supplier to discover the best deal for all.

Bottom line: In my book the option to purchase remanufactured machines offers businesses a great option to get essentially new equipment at generally a great discount. And with the IRS treatment of depreciation for this equipment, it’s a win-win. 

A new warranty, a machine upgraded to state-of-the art technology and cost savings, what more can you ask?

Interested in what three manufacturers have to say about remanufacturing? Click here to read.

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(Image licensed by Ingram Publishing)

Have a question or comment? E-mail our editor Matt Poe at [email protected].