Exercise Due Diligence (CONT’D FROM PAGE 60)
quired? This is of particular concern if the used equipment is intended to be replaced in the foreseeable future, in which case your site modifications may need to reworked extensively when upgrading to newer equipment. What is the cost of necessary repairs and upgrades re- quired prior to start-up, and what is the cost to relocate and install the equipment, including transportation, rigging and applicable fees? Installation, site work, infrastructure, and repair costs for new and used machines will likely be similar. Hence, when comparing the total installed cost of new versus used equipment, the difference between the two may represent a significantly smaller percentage of the project cost, particularly if you plan on replacing the used machine in a relatively short time frame. When balanced against the differences in features, quality, and/or longevity, selecting the used machine may be false economy. Finally, what is the anticipated resale value, particularly if you only plan to operate your pur- chase for a relatively short time? Purchasing a good used machine can be a good invest- ment and can provide needed production capacity very rapidly. However, as in the purchase of any used product, the key is in exercising due diligence to avoid unpleasant and expensive surprises. Richard Etra is a 48-year veteran of the corrugated industry with extensive experience in all aspects of box plant operations. See his contact information below.
These factors will make a big difference in your ability to maintain the equipment. Is the OEM still in business and is it, or a third party, willing to support it with service and parts? For how far into the future? If replacement parts are only available from the OEM, do they have a reputation for price gouging? What is the vintage of the electronics such as comput- ers and PLCs? Do they function fully? Does the equipment use older Reliance DC drives, or is it equipped with AC or servo drives? Are spares still available and for how long? Depending upon how long you intend to operate the machine, you may be faced with the need for costly upgrades to restore functionality now or in the future. Be sure to factor that into your decision. Furthermore, consider whether your existing tooling is compatible with the used equipment that you are con- templating, and whether tooling for this equipment will be compatible with equipment that you plan to install in the foreseeable future. What is the anticipated total cost of operation including preventive maintenance, expendables, and replacement parts? How about anticipated downtime labor and materi- al costs? Will your infrastructure – electricity, scrap system, water treatment, etc. – support the new machine or will costly investment be needed? Similarly, is site work re-
• Machinery selection • Plant layout • Project Management • Consulting
A true corrugated industry veteran with nearly 50 years’ experience, Richard Etra can help you with every aspect of box plant operation. Contact Richard today for a no-cost consultation: email: richard_etra@etracorrugatedsolutions.com ph: 917-647-9520
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April 24, 2023
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