Bargains by the Bagful: Buying and Selling Used Equipment
This economic downturn is a fantastic opportunity for
smart shoppers to upgrade and expand material handling systems and lift truck
fleets at pennies on the dollar. Learn how systems integrators and Web sites
are working to both liquidate equipment and fortify material handling assets.
by Christopher Trunk, managing editor
Right now, it’s a buyer’s market when it comes
to used material handling equipment. There are a lot of changes: large dealers taking
over smaller ones, bankruptcies and buy-outs. “Lift truck sellers
haven’t found buyers
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these past six to 12 months, and they’re
getting desperate — either selling cheap or not at all. Gone are the days
when dealers returned 20 percent to 30 percent margins on trucks,” says
Art Arellano, president of eliftruck.com, an on-line marketplace for used,
retail lift trucks. “My site has been inundated with used trucks, and if
you’re buying retail, there are bargains by the bagful.”
“Right now, the savvy buyer has a tremendous
advantage,” says Stafford Sterner, vice president of marketing and Web
development for SJF Material Handling Inc. “So many dot-coms spent
millions of their venture capital dollars on warehouses that were never turned
on. They paid top-dollar for brand-new conveyor, which can be had at half price
— if you know where to look, whom to ask and what you’re looking
for,” he adds. SJF is helping liquidate several dot-com warehouses full
of shiny, new transport conveyor, sortation systems and other new equipment.
There is also a lot of automated storage and retrieval systems (AS/RS),
palletizers and automatic guided vehicles (AGVs) up for sale.
Business models in a changing economy
Technology has changed so fast, and that has accelerated
change in corporate business models. Just look at Amazon.com — a business
that has completely changed its market and material handling mechanization over
the past five years.
John Woodrick, vice president, customer service and support
for FKI Logistex — Alvey Systems, says material handling adapts as
businesses chase the money. He provides this example: “When Pepsi came
out with The Cube, Alvey retrofitted Pepsi’s existing conveyor and palletizers
to accommodate the new product size and packaging.” But when Pepsi’s
marketing department developed the “Cube for Christmas” with its
reflective, holographic aluminum printing on the carton, it required a custom
retrofit to all the photoeyes Pepsi had in the continental United States and
Hawaii. “There wasn’t a standard photosensor in the world that
could see that holographic reflection,” says Woodrick.
Sometimes business model changes require liquidating
equipment, even if it’s relatively new. Harvey Levin, allied products
manager, Material Handling Supply Inc. (MHS Lift), is a systems integrator who
has witnessed many business models change. “Most companies have outgrown
their facility due to increased orders. We see more distribution centers that
once sold wholesale now selling direct — even smaller manufacturers selling
to retail giants like Kmart while bypassing distributors,” says Levin.
Fast, smart liquidations
The yard sign might as well read: “Material Handling
on Sale!” Real estate agents are contacting systems integrators for help
in liquidating entire warehouses. “Realtors are looking for advice on
pricing individual pieces of equipment and systems, and we’re hoping for
subsequent relocation and retrofit business,” says Ken Johnson, vice
president, modernization sales for HK Systems. Realtors come to Johnson with no
idea what fish they’ve netted in a bankruptcy.
SJF Material Handling specializes in liquidating warehouses.
“Most buyers prefer a garage-sale approach, but we take the whole place,
which agents prefer,” Sterner says. Viable companies needing to downsize
or consolidate facilities also need advice. “Sometimes sellers, though
they paid handsomely for a monolithic system, find it’s practically
worthless due to unusually expensive disassembly cost and an inability to break
it into modular, salable sections.”
When buying liquidated goods, Sterner strongly advises you
glance ahead. “We might recommend a buyer purchase slightly larger width,
more industry-standard conveyor than he needs, because several years down the
line, it’ll be easier to sell when an upgrade or redesign of the system
is in order. Jump on modular systems. You must consider resale whenever buying
equipment, whether it’s used or new,” Sterner adds.
Lift trucks galore
Lean times and overflowing inventories typically mean good
prices for buyers, and that applies to used lift trucks, too. “With lift
trucks, not many buyers are going to snap up a used $60,000 swing-reach truck.
But a company looking to expand its fleet will likely bite for an
indoor/outdoor pneumatic truck with propane, a three-stage mast, low clearance
and a 4,000- to 5,000-pound capacity. Those are hot,” says Sterner.
“On our Web site, cheaply priced trucks sell first and
foremost over dealers requiring huge markups,” says Arellano.
“Right now the site is flush with about 3,000 lift trucks listed, each
with a photo, and those listings are 90 days old — maximum.”
Here’s how that Web site works. Warehouse or logistics
managers and dealers of all sorts wanting to sell a truck pay $10 per month,
per truck, up to five trucks, for an electronic classified listing. For more
than five trucks, the monthly fee is $99 complete. Prospective buyers use the
site for free and negotiate directly with sellers.
“A great advantage for buyers is comparing prices
on-line for the same brand, model and capacity — and the less expensive
one usually wins,” says Arellano.
For more on used lift trucks, see Lift Trucks: Rebuilt or
Reconditioned? and Caveat Emptor
When Buying Used Lift Trucks.
Rebuilt material handling systems
With every economic downturn, there’s an upturn in the
retrofit business as buyers move to used equipment and upgrade existing
systems. “At HK Systems, we’ve created www.hkreseller.com to sell
everything from individual used components to material handling systems, including
refurbished AGVs, AS/RS, conveyors and palletizers,” says HK’s
Johnson.
The firm locates, removes, rebuilds and then installs whole
systems. “Hamilton Standard had an AS/RS in South Carolina that was shut
down,” says Johnson,” and we had a Wisconsin customer with a small
budget that needed a system like that. We moved and installed the system while
upgrading its inventory control software — at 40 percent off the cost of
a new AS/RS.”
HK Systems buys used automatic guided vehicles, retrofits
them and resells. “Older vehicles typically get a new wireless control
system to replace the in-floor wiring of past decades,” adds Johnson.
When systems are upgraded, flexibility is a primary target.
New controls not only improve throughput, but they also locate inventory
better, generate reports faster and schedule events and vehicles more easily.
Reports and shuffling routines that took hours now require minutes or seconds.
Older systems can suffer from proprietary components that
are no longer supported, so replacing obsolete parts with new designs is a
major goal. Add free-fall brakes to older cranes as a safety upgrade.
Conveyor at bargain prices
SJF rebuilds all brands of used conveyor, including
transport and sortation. “If you’re buying six miles of conveyor,
we can provide a completely refurbished product at 50 percent to 60 percent of
new,” maintains Sterner. But you have to consider the practical upper
limit of used transport and sort conveyor and whether it suits your needs. A
new, highly automated system that sorts at 350 pieces per minute may be the
best answer to your company’s sortation needs, while a mix of
new-and-used might apply to transport and accumulation.
But used equipment bargains are limited. If you’re
installing a $3 million conveyor system, the majority of that cost may be in
software, controls and programming, as well as in design and engineering.
Buying some conveyor at half price only reduces overall installation cost by
some.
Alvey retrofits sortation and accumulation conveyor. It
reports that mechanical sensors on accumulation units are fitted with
photosensors for more reliability. Pop-up wheel sorters can be refitted with
new pop-up cartridges for both better reliability and improved divert roller
surfaces.
Keeping palletizers current
As products change, older palletizers can change with them.
For example, the beverage industry shifted to blow bottles, a lightweight glass
that saves money, while simultaneously doing away with cardboard dividers
between bottles to reduce packaging cost. In response, Alvey modified older
palletizers with new soft-handling features. “We put frequency controls
on the conveyor rollers to adjust speed to minimum safety, and timed cases to
slow them before stopping. There was a ton of needed adjustments,” says
Woodrick.
Another example of palletizers-to-the-rescue is paper towel
handling. Manufacturers switched from cardboard cartons to poly-bag unitizers
for the multi-roll paper towels you see in stores. “First we retrofitted
the steel rollers in our palletizers with plastic rollers, as poly bags tend to
wrap around steel,” reports Woodrick. “Then we adjusted the pattern
form on the palletizers so that slippery loads are kept stable until they reach
the stretchwrapper.” The palletizer’s box turners require corners,
and, of course, poly bags present no corners, so more retrofit was needed.
In addition to keeping palletizers up to date, Alvey
rebuilds and sells used machines.
Racks and warehouses:
Going once, twice ...
Gone! Getting the best used rack and entire warehouses full
of equipment at deep discount means being at the right place with the right
leads (from industry and real estate sources) at the right time. SJF Material
Handling and Material Handling Supply are two material handling systems integrators
that make a business out of warehouse liquidation. SJF offers many Web pages
listing warehouse contents like used lift trucks, conveyors, rack, systems and
automatic data collection equipment. The company routinely incorporates both
new and used equipment in its installations.
MHS Lift’s Harvey Levin reports about a
Philadelphia-based novelties importer/distributor. The company planned to build
a new warehouse in Gastonia, North Carolina. Levin located a bankrupt warehouse
in West Virginia filled with used rack. All the rack required was retrofitting
from single-select rack to a mixture of single-select, narrow aisle and
double-deep pallet storage rack.
Rather than move the rack to Gastonia, which would be cost
ineffective, Levin suggested the importer move its operations to West Virginia.
Levin suggested an upgraded fleet of new Crown TSP turret picker trucks and
three Crown orderpicker trucks, as well as a whole new floor layout.
MHS Lifts’ keeping a sharp lookout for a used facility
and the buyer’s flexibility meant securing the building at a deep
discount — and the rack for free.
As you can see, it takes just a little imagination to see
how systems integrators and on-line entrepreneurs can transform your warehouse
or distribution center— especially in lean times. MHM
Lift Trucks: Rebuilt or Reconditioned?
Reconditioned trucks have had: tune-up, belt and tire
replacement, repainting, lubrication, fluid change and hose replacement.
Rebuilding indicates heavy-duty work, including: engine and
transmission compression test, engine rebuilt if compression is too low, steer
axle changed due to nicks and cuts, rechrome cylinders, rechrome mast and
straighten bent body parts.
“Some dealers use these terms loosely,” says Art
Arellano of eliftruck.com, “so check the seller’s definition
carefully.”
Caveat Emptor When Buying Used Lift Trucks
“The biggest mistake buyers make is being consumed
with lift truck hour meter readings,” warns Stafford Sterner of SJF
Material Handling Inc. He says that while it’s illegal to change an
automobile’s odometer, it’s just $29.95 to replace an hour meter.
Sterner suggests searching for unmistakable signs of wear
and tear. “Don’t look at the truck’s cosmetic appearance
because it’s easy to paint and detail any truck. Lift up the hood and
look at the motor, transmission and hoses. Are they a rat’s nest of
leaks, cracks and fraying? Do the brakes pull to one side? Are there metal
filings in the transmission fluid that indicate rough handling or tooth damage?”
Add to your list:
• Appearance: Does the frame appear bent? A past
accident?
• Steer axle: Is it loose or wobbly?
• Mast channels: Are they bowed out?
• Hydraulic and other fluid leaks: How many leaks are
there?
• Tune-up: If a truck needs constant tune-ups, the
truck is likely older than the hour meter says.
• Power: Is the engine weak and sluggish? Does it
climb a grade easily? If you position the truck against a wall in a forward
position and push the accelerator, do the tires spin or just sit there? If any
of these are the case, the lift truck is tired and likely has more hours on it
than the meter indicates.
Visit www.eliftruck.com and classified print ads to locate
trucks near you. Inspect them before buying.
Eyeballing Used Mezzanines
“Mezzanines are easy to liquidate,” says
Stafford Sterner of SJF Material Handling Inc. Modular mezzanines are a big
advantage because they’re bolted together, rather than welded. Sterner
maintains mezzanines should have a standard 150 lb/square foot rating, which
meets most specs, except maybe seismic.
Clearspan height under the mezzanine is important.
“Most buyers want 10-foot clearance with 12-foot preferred. You can
always cut a mezzanine shorter, but it’s awfully hard to add two feet in
height,” says Sterner.
He suggests when buying a mezzanine, new or used, that you
pay the extra dollar for additional height as a resale strategy.
“Consider buying a 10-foot mezzanine over the 8-foot. Because later,
8-foot clear just won’t sell due to interference from lighting fixtures
and no lift truck access.”
Wire mesh or diamond plate floors are preferred over wood.
More Information
Contact:
Arrelano: art@eliftruck.com;
Johnson: ken.johnson@hksystems.com;
Levin: harvey.levin@mhslift.com;
Sterner: staffs.sjf@sjf.com;
Woodrick: john.woodrick@fkilogistex.com.
Search the Web for “used material handling
equipment” or go to:
www.sjf.com;
www.hkreseller.com;
www.eliftruck.com;
www.m-h-e.com.
Checklist of Palletizer Upgrades
It’s smart to call in the palletizer manufacturers to
upgrade a machine while in-transit or after a sale. John Woodrick of FKI
Logistex — Alvey Systems suggests upgrading for:
Safety: The hoist table travels up and down as a load is
handled. Install a new safety block to protect the worker from the hoist during
maintenance.
Reliability: Install newly designed components. “For
example, we may design a new case turner that’s more reliable and a
better choice for the site,” says Woodrick.
Flexibility: Upgrade controls for more palletizing patterns.
Controls: Consider new versions of PLCs. There may also be
mechanical sensors on old machines that can be replaced with electronics and
photosensors.
