by Lori Riddle

DSC01099Today on the Think Tank we're talking about heavy construction equipment, As tank builders, we employ our fair share of this type of equipment, and it's certainly part of most jobsites where we work. 

We're happy to welcome Edward Salazar, co-owner of JED Alliance Group, Inc, to the Think Tank today. JED Alliance Group, Inc. refurbishes and sells high quality brands of used heavy equipment, specializing in concrete pumps. Edward's customers are always interested in talking about the advantages and possible challenges in buying new vs. used equipment. Today he's sharing some insight he has gained from years of buying and selling construction equipment.

How to Decide to Buy New vs. Used Equipment

Bright, shiny, and fully-loaded with the latest technology. Doesn't that get you salivating? Whether it is a toy, a car, a mobile phone, or any number of things, having the latest cool gadget is always fun. But is it prudent when it comes to business? Do you really need to buy new? Is it safer than buying used?

Buying New Often Makes Sense. But…

For some investments, it make a whole lot of sense to buy new. Computers, mobile phones, and other high-tech devices usually have a lot more features, longer life to obsolescence, and a warranty for those delicate electronics. But even when investing in technology, you don't need all the bells and whistles and sometimes don't need new. If you are buying a computer for your grandfather who emails and surfs the internet occasionally, a basic model with limited software, memory, and compute power will do, especially if you can find a used one from a local computer repair shop. But if buying for your kid who is a major fan of iTunes and gaming and headed to graphics design school, you will need that quad-core computer with 16 gigs of RAM, terabyte-sized hard drive, graphics accelerator, and hi-res monitor.

It’s the same in business. The key to making the optimal investment decision is knowing what you really need. It is not as fun as just running out and buying the latest and biggest, but it will save you money and headaches in the long run.

What Equipment Do you Really Need?

Perhaps your company is planning to begin in-house sheet metal fabrication. If you buy a CNC (computer numerically controlled) punch and break, you will have a lot of capability and flexibility. Is it worth $200K to your operations? Is your part assembly really that complex? Will the machine save you enough to pay for itself?

Frequently, the answer is, “No.” There are likely other options, like outsourcing the parts or using a series of smaller, less complex machines to do the work you really need completed. Or consider buying used equipment, especially if there is a strong possibility your fabrication needs may grow into needing a more function-filled machine.

Is Buying Used Risky?

I get this question frequently since my company buys used heavy equipment and refurbishes it to sell. Buying anything used always carries a risk. Whether you are buying a used car or a used concrete pump, you are taking ownership of something that someone else has put wear and tear on. But the risk of buying someone else's problems often can be significantly reduced making it a safe, sensible decision to buy used.

So let’s look at a personal investment example. You need a car to go to work every day. In your search, you have gotten attached to the idea of owning a Lexus. A new model will cost $40,000 to $60,000. But a 10 year old used Lexus will cost $10,000 to $20,000. Smartly, you purchase the used vehicle and to avoid being stranded on the way to work, you head off maintenance problems by getting the engine and transmission overhauled and replacing all the wearables like timing belt, shocks, spark plugs, battery, and so forth. You even treat it (and yourself) to a detailing job to freshen its appearance inside and out. So you still are under $20,000 and basically have a new vehicle. The savings over a new car is significant and the risk minimal. In fact, given frequent recalls on vehicles, the risks are likely about the same, if not better!

The same analysis applies to equipment, from office equipment to large tools to heavy equipment. The wear and tear on used equipment can be virtually eliminated by replacing all wearables, testing all functions, and completing an extensive inspection. Add a new paint job and your used equipment can look like new as well as be protected for years to come. The key is to buy quality. A lower-end car is less likely to hold up to years of use than a quality brand like Lexus.

Deciding on New vs. Used Equipment

Don't think that I am proposing that you always buy used. That would make no more sense than always buying new! Go through this process to decide what is right for you and your business:

  1. Know what you need now and in the near future.

  2. Do your research to know what models suit your needs.

  3. Compare the function and efficiency of new vs. used to ensure that older technology can support your needs and will not cost more to operate.

  4. Research costs of new vs. used including expenses to overhaul the equipment as well as availability of parts.

  5. Challenge the salesperson with lots of questions based on your research.

  6. Compare the cost of refurbished used equipment over new.

When you and your team go through this process, the right decision of whether buy new or used becomes more apparent. If used equipment can get the job done at a reduced lifecycle cost, buy used. If not, then buying new is worth the added investment.

For more information about new & used heav equipment, contact Edward Salazar at 321-251-4844.

For more information about Fisher Tank Company's field erected tank construction capabilities please visit our field construction page!

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