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When Seeking Production Equipment, Should You Buy New or Used? (Part 4 of 4)

“I'm looking to acquire a piece of production equipment for my laundry, but am undecided about whether to buy it new or used. What information should I consider as far as total cost vs. benefits are concerned? I want to make sure I'm comparing apples to apples." HEALTHCARE LAUNDERING: Richard Hoelscher is the associate director of linen services for Parkland Health & Hospital System, Dallas, and oversees the laundering of more than 10 million pounds of healthcare linen annually for four hospitals. With three supervisors, he’s responsible for 75 workers in production, repair, packing and distribution.
While some items such as ironers lend themselves to be a more logical choice for purchasing a piece of used equipment, other machines might also be appealing.
How does the machine fit into the overall work flow or system operation? The choice should be based on risk analysis and total cost/benefit of ownership or ROI calculations.
Gather information, or make your best educated guess, about acquisition cost, installation, remaining life expectancy, required maintenance, service/parts availability, energy/utility consumption/impact, expected production, labor requirements/savings, production quality/customer impact, disposal cost/scrap value, opportunity costs/value of money, and space requirements.
If the used equipment poses a significantly greater risk of injuring an employee or otherwise shutting down your operation, it may not be a wise investment. Used equipment is often preferred, however, when there are long lead times, questionable justification or a lack of qualified service for new equipment.
Someone knowledgeable and trustworthy should inspect the used equipment thoroughly. Steel becomes brittle after being heated and cooled many times. Look for cracks, welds, patches, corrosion and wear.
When I bought and sold used equipment, I passed on some equipment that had been in a fire, only to see it later claimed to have been rebuilt when all that had been replaced were the paint, lights and belts.
I’ve seen dryers with shells held together only by the exterior paint because of corrosion.
I’ve moved ironers built in 1916 and have seen them function quite well in a new plant. Sometimes, older equipment such as ironers and presses that were built with heavier materials has outlasted much newer machines.
A long-term warranty is only as good as the company that backs it up. Hold back enough money until guarantees are met to assure compliance. Even for companies that have been around for a long time, recheck their credit before agreeing to long-term/high-dollar contracts.
One of the easiest ways to compare costs versus benefits of different options is to add all savings and benefits each year while subtracting all costs involved each year throughout the lifetime of both options. This includes the time value of the money and total replacement/disposal of any equipment that won’t last as long as the other.
Research the equipment and all options. Determine how they fit into your organization’s short- and long-term goals before buying anything, new or used.LINEN SUPPLY: Bill Kartsonis is the president of Superior Linen Supply Co., Kansas City, Mo. He’s the immediate past president of the Kansas City chapter of the International Executive Housekeepers Association (IEHA) and is a Master Hotel Supplier certified by the American Hotel & Lodging Association (AH&LA).
Many commercial laundries always buy used equipment; new equipment is too expensive. Depending on the condition and age, you can save 50-90%! I believe used is oftentimes even preferred over new in the case of flatwork ironers. Your ROI is much quicker.
If one is or has a capable mechanic and is familiar with laundry equipment, then the risk of buying used can be low. If not, you should budget for repairs or rebuilding of the piece. Besides that cost, one must budget time, as it can take months to get equipment online.
Manufacturers have technicians of limited availability who can perform the work it takes to make the used equipment work. Almost all used equipment requires some work to get it running. At the least, expect to replace worn belts and bearings. You may have to rewire, replace the electronic controls, and transform voltage. Then you have to install it.
An alternative to buying used is “fully refurbished.” If the piece has been truly rebuilt and certified, then the savings may only be 30%, but you will have a piece of equipment that you can get online quickly and confidently.
Whenever you buy used, you need to know from whom you’re buying. You’re better off buying through a reputable dealer, but this has limits. Often the dealer is simply brokering the piece. The used machine has been removed from service and cannot even be hooked to power and air to see if it works, so you can’t fully evaluate its condition. You’re buying “as is” with no guarantee.
New-generation equipment may be more productive than the older model and can actually pay for itself. However, business is reportedly very good for manufacturers, so you could wait some time to receive it.
 

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