Pre-loved profitability: used machines can pay
Monday, February 18, 2019
With digital print having become a fixture in the industry (it hit its silver jubilee last year) you might think that as the market became established a strong secondhand market would have emerged offering the canny printer more affordable machinery.
A common place to start a search for secondhand equipment is global online marketplace PressXchange, and you will find digital presses on there, just not that many. A recent search showed 55 digital machines all told compared with over a thousand sheetfed litho machines, suggesting that the secondhand digital market is nothing like the scale of traditional kit. Out of those 55, the most common machines listed were HP Indigos, and most of the rest were were wide-format inkjets (bear in mind these are global figures, not UK only).
PressXchange founder and manging director John Roadnight explains that it wasn’t just an especially quiet period for digital and that in general the mainstream secondhand dealers just don’t get involved.
Ian Bendy, UK sales manager at Excel Printing Machinery, confirms this: “The general feeling for guys like us who focus on sheetfed presses and bindery is that digital doesn’t have much residual value and has lots of complications due to the electronics and software and the need for the support of the original suppliers.”
His view is shared by DPM owner Mark Sheldrick, who adds that if anything, as the digital market has matured, traditional secondhand dealers have retreated: “Back in the day we did get involved; there was more activity 10 years ago. The major lenders have been burned by digital and most secondhand dealers can’t be bothered as there’s not enough margin.”
However, as with so much in life, it turns out things are a bit more complicated. There are secondhand machines in the market, both in cut-sheet toner and in wide-format inkjet (see boxout), but the dynamics in each technology are different to each other, and to those in other used machinery sectors.
In the cut-sheet market, what are known as remanufactured machines, are by far the most common form of pre-owned kit available. After a stint with a customer they have gone back to the manufacturer to be stripped down to their chassis and rebuilt. There are sound reasons for that, which are ultimately beneficial for the printer, even if it looks like it’s all to the manufacturers’ advantage and locks out the secondhand dealers.
“It is hard to sell any secondhand digital kit on the open market because the manufacturer needs to be involved to ensure it is serviceable and to supply consumables and parts, including toner, fuser wires and rollers,” says Heidelberg digital printing equipment business manager Chris Matthews. “A machine bought off eBay may never have been serviced properly. Ultimately, the machine is there to make you money and when it isn’t running it can’t; and when the time between service calls reduces they start to cost us money too.”
A three- or four-year-old toner machine that originally cost £50,000 may be £10,000 or less on the open market, which sounds like a steal, but you might be robbing yourself if you went for it. As Matthews says, if the condition of the machine isn’t known to the manufacturer they will want to inspect it to make sure it’s not going to cost them money to support. They will charge for making that inspection and for rectifying any issues found. The cost of the engineer’s hours and expertise, and of the parts to bring a machine up to scratch could soon dwarf the price of the hardware, making what looked like a bargain ultimately a bad deal.
Against the uncertainty of the total costs, time taken and stress of that approach, remanufactured machines start to look much more attractive. Typically a machine will cost 20%-25% less than the equivalent new machine but the vendors argue that in most respects (and most of the parts) it is a new machine.
“We offer the R series of machines where R stands for remanufactured,” says HP Indigo marketing manager Andy Pike. “They go back to Israel and are stripped to the chassis and built back up, so essentially it’s a new machine. It won’t be the latest version, and there will be some capabilities that they can’t be upgraded to, for example metallics and HD. An R series machine could be the right solution, unless the customer specifically needs very high capacity or the latest features.”
That said, Indigo now sells remanufactured versions of its larger-format B2-plus machines, which should be capacity enough for most, and they are attracting a lot of attention from commercial printers, according to Pike.
“We do remanufactured CPs and CVs,” adds Heidelberg’s Matthews. “When a customer upgrades a three- or four-year-old machine it will go back to Ricoh in Telford for remanufacturing. The chassis is stripped right down and the motors and rollers and any other worn components are replaced.
“It represents quite an opportunity, especially for someone with one machine who wants a second to add capacity. With the best will in the world, output from different generations and models of machine will look different, so the best way to ensure consistency is to have a pair of the same machine.”
There is a finite life for digital presses (as there is for any machine), but the technology has reached a level of maturity that means there can be several years of profitable production from a secondhand machine that’s not too old. As most new machines are financed over three to five years, there are plenty of presses out there that are candidates for remanufacturing.
“Most manufacturers guarantee parts and service for digital machines for five years after the last one comes off the production line,” says Matthews. “CPs only stopped being manufactured last March, so there’s a good life left in them. There isn’t a market for first-generation machines, the Linoprints based on the Ricoh c901. Machines do get to a point where they are beyond economical repair and we offer generous incentives to upgrade.”
You may get to a point where it is more cost-effective and commercially appropriate to upgrade long before a machine reaches its mechanical limits.
“Every time a new generation comes out the print quality increases, and there are new features introduced,” says Matthews. “The click cost comes down, in part because the toner yield improves, and when that happens it becomes a financial decision.”
Of course, that point depends on the markets you’re in, the applications and the volumes produced and how you manage your financials. If your digital business takes off to the point where lower cost clicks from a new machine outweigh the lower upfront costs of secondhand, then the decision is clear. But if you’re starting out or your volumes aren’t huge then pre-owned could be more profitable.
Case study: Northside Graphics
Online printer and trade digital print specialist Northside Graphics runs four 7000 series HP Indigos, of which the latest two are the R series (remanufactured) versions. The firm’s first experience with pre-owned digital came in 2015. Two years later when it needed additional capacity it also went for a remanufactured machine, which suggests that going that route can be a good option. Due to the nature of the business it wasn’t looking for a machine with all the latest effects and embellishments, it needed a solid workhorse that could happily plough through high volumes of standard work.
When he bought the first R series managing director Gary White looked at the open market for secondhand machines as well as a machine direct from HP, before opting for the latter.
“For the difference in price between a secondhand and remanufactured presses, it’s not worth the saving,” he says.
Conversely, the difference in the price of a remanufactured machine compared to a new one represented a considerable saving that he believes is excellent value.
“Because it is remanufactured, rather than just refurbished, we knew it was essentially a new machine,” he says.
In fact, when asked what he sees as the difference between a new machine and remanufactured, his answer is simple: “Price”.
The wide-format perspective
Like other secondhand markets, superwide-format machines can be obtained for half, or less, than the price of new. You get what you pay for, however, and a low-priced machine may be less of a bargain than it first appears.
“Direct from a printer an early Océ Arizona can be as little as £2,000,” says Loic Delor, managing director of Josero, which specialises in secondhand wide-format. “If you go that way you may as well just put it straight in a skip. If you want the manufacturer to have a look at it, you’re looking at £10,000-£15,000, and an independent engineer probably won’t touch it if they don’t know that machine. Don’t expect to get a flatbed UV machine from a dealer for less than £20,000.”
Delor recommends using a specialist dealer to ensure getting a good machine and redress if anything goes awry.
“We look at the service history, usage, printheads, upgrades and software version when assessing the state of a machine. The quality can be extremely variable.”
Wide-format manufacturers aren’t geared up to take back machines for remanufacture. The machines don’t store well and once they’ve been stopped they won’t sell.
High image quality is a must for most markets, which places later machines with greyscale heads at a premium. LED UV machines are now starting to become available secondhand.