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 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.
Arrelano: [email protected];
Johnson: [email protected];
Levin: [email protected];
Sterner: [email protected];
Woodrick: [email protected].
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.