Secondhand in big demand
Friday, October 30, 2020
Since the last recession secondhand equipment has become a popular option for many printers. Buying secondhand minimises investment risks and enables printers to buy kit at a price that might otherwise have been outside their financial reach.
In the aftermath of the recession caused by the Covid-19 pandemic it’s anticipated that more print companies will look to buy secondhand.
But will there be sufficient stock to satisfy this demand and what do printers looking to splurge on secondhand kit need to know before they take the plunge?
Many secondhand dealers thought that given the sheer scale of the lockdown and the impact on many industries including print of the Covid-19 pandemic there would be a glut of printing machines hitting the market.
However, to date this anticipated flood of machines hasn’t materialised. “To the contrary it increased the demand for it [secondhand machines] and reduced the availability,” says Loic Delor, managing director at Josero. “Lots of people were looking for used kit, but a lot of people withdrew their kit off the market [and are] willing to hang on to it until the horizon is clearer.”
Mark Sheldrick, managing director at Direct Press Marketing, also anticipated a flurry of machines hitting the market, but so far supply secondhand stock has been fairly limited. “More people have been asking for their kit to be valued and in some instances machines have come to the market over the last three to four months as a direct result of the situation with Covid-19 as people have assessed their business requirements,” says Sheldrick.
Although the expected flood of secondhand machines has not yet occurred, dealers anticipate that by the end of the year the steady trickle could turn into a torrent.
“I’m sure once the furlough scheme is withdrawn some serious decisions will need to be made by printers in the UK in terms of where capacity is going to be over the next 12 months,” says Sheldrick.
“We expect quite a few companies to throw the towel in which should bring quite a bit of kit to the market from receivers and auctions,” agrees Delor.
Peter Flynn, managing director at International Graphic Supplies, also thinks the termination of the government’s furlough scheme could act as a catalyst. “I think what’s happened is they [the banks] are not going to close companies at the moment because it would be seen as a PR nightmare for them,” he says. “They’re waiting on November when the furlough scheme finishes and then they will look at the circumstances of individual companies.”
In addition to the growing prospect of banks and finance companies selling machines that have been repossessed from printers who are in financial distress, more kit could hit the market as printers re-evaluate their business and equipment needs.
“A lot of people are in state of flux,” says Sheldrick. “Many printers of a small to medium size are evaluating what direction their business is going and whether they can do their jobs with the kit they’ve already got or maybe they could take two machines out and put one in thanks to the productivity levels of machines stepping up.”
Some are already making difficult decisions about the future. “We are seeing B3 and B2 printers phoning up saying they want to sell their litho press and CTP because they want to move into 100% digital,” says Flynn. “We’ve had four or five calls like that.”
Regardless of the individual circumstances driving an equipment sale all sellers need to keep their expectations in check given the current financial turbulence.
“I think sellers are going to have to be realistic about market price for equipment at the moment and that goes for finance companies as well who will be selling equipment,” says Ian Bendy, UK sales director at Exel Printing Machinery. “Price is going to be more about what the market is prepared to pay for a machine in the current climate.”
Price is an even bigger issue when it comes to buying used digital presses. Flynn says the price of digital machines can drop like a stone and cites the example of a 2013 press that sold for £128,000 brand new and today he’s selling – in good condition – for just £8,000.
“In terms of the used digital market there are some really good value machines around,” he says. “The key is you have to find someone who can service and support the machine and offer the consumables that go with it.”
He adds that buyers of used digital equipment also need to make sure the “software isn’t locked out”.
As for his general advice around how to buy secondhand machines Flynn advises potential purchasers go and see first hand what they intend to procure.
“We won’t sell a machine to someone unless they come and see it,” he adds. “We ask them to come visit us and bring their own jobs so that they can run them on the machine to make sure they’re 100% happy.”
Sheldrick concurs, adding printers should look to purchase used machinery from dealers who have a long track record. “There aren’t many of us left today and very few have their own engineering divisions like we do,” he says. “Word of mouth references are good and you should look at the financial stability of the people you’re buying from.”
Delor says it’s also important to remember that just because you buy a lower-cost machine the associated maintenance and repair costs could be substantial.
“Same as if you buy a Bentley continental GT,” explains Delor. “You can get a 10-year old one for £20,000 these days, [but] it still will cost you new Bentley money to service it or fix it. Roughly speaking manufacturer maintenance cost on big kit is always around 10% of the new price per year, so if you buy a £30,000 used flatbed UV that was £300,000 new, you could be looking at the price of the machine per year for a manufacturer service contract. Yes you can go with independent support engineers like us, which will greatly reduced the overall cost of maintenance. It won’t reduce the cost of the parts though.”
These kinds of significant pitfalls are why it’s vitally important buyers of secondhand equipment find the right dealer partner – particularly if they are buying a secondhand machine for the first time and feel nervous about whether or not it’s the right thing to do.
In the past Plymouth-based Pepper Communications always preferred to buy new kit - mainly because it would benefit from a two-year guarantee plus extended warranties, which enabled it to lock down cost rates and budgets. However, recently thanks to the pressures caused by Brexit and the increase in the purchase price of new equipment Jake Whitford, operations director, says the company has started to explore secondhand options.
Pepper’s main secondhand investments have been a Heidelberg XL 75 and a Heidelberg XL 106, both with Inpress Control. The latter machine was the most recent investment and was bought to replace a B1 Heidelberg XL 105 and B2 Heidelberg XL 75 presses.
“This investment was analysed carefully and we decided that on paper it was achievable to produce the output required from both existing presses and with room to grow more business,” says Whitford. “Within two months the XL106 had settled in and all of our operators were able to produce work with a 30% increase in efficiency overall.”
He adds that it was thanks to an existing relationship with Ray Keane from reseller Albion Machinery and specialist print insurance broker Print Insure that helped these investments work. “Without these crucial components I think we would have far less confidence in the investments of used machinery,” says Whitford.
One of the biggest and most interesting secondhand deals of recent months was Manchester-based Browns Print’s purchase of a Heidelberg Speedmaster XL 106, which came all the way from Brazil.
While some might baulk at not being able to kick the tyres on a piece of used kit, help is at hand from the dealers. David Watson, sales director of White Horse Machinery, which sourced the press, says: “Obviously Browns couldn’t go to see the machine. We employed Heidelberg in Brazil to run test prints and assess it, and they also videoed the dismantling and loading process.”
The 2018 ‘Push to Stop’ five-colour XL 106 cost Browns £1.6m, but it is expected to deliver significant efficiency gains. Managing director Danny Baldwin says: “We are taking an XL 75 five-colour out, and the XL 106 will go on that bed.
“Then we will have our 10-colour XL 75, which is a phenomenal machine doing 1m-plus impressions a week, alongside the new XL 106. We will have the same capacity on two presses as we would have done on three.”
The purchase was majority funded through a CBILS loan arranged via Compass Business Finance and Close Brothers.
Pocklington-based NorthWolds decided to buy a newer upgraded Lithrone press as its existing Lithrone was “getting a little long in the tooth” and NorthWolds needed a coater for the type of work it was printing, explains managing director Gurdev Singh.
He says the decision to buy secondhand was made following careful consideration.
“We decided on the secondhand Lithrone because it was not a step too far and filled our immediate needs at a reasonable cost risk to the business particularly on the basis that we would upgrade again in two to three years depending on digital kit viability for us,” says Singh.
As for any other printers currently weighing up whether or not to go down the secondhand equipment route Singh offers the following sage words: “My advice would be don’t be too hasty and wait for the right machine. Check it out and do a good inspection, but above all buy from a reputable supplier who will work with you to ensure a professional install.”
Positive decided to buy a secondhand Heidelberg Suprasetter after its 14-year old Screen platesetter gave up on them. “We knew that identifying a secondhand machine with a relatively low age and exposure time would fit the needs of our fast moving pre-press studio,” says Mike Sullivan (left), production director at the Surrey-based company.
Sullivan adds the Suprasetter has given Positive’s pre-press studio an improved Prinect workflow with faster plate output than the previous machine. The firm has also moved to a processless plate which has also removed the requirement for a gum unit.
“I would advise anyone looking for a secondhand machine to find a dealer with a good reputation as the machine installation and colour curve settings for your presses are critical,” says Sullivan. “Also request when and how often the diode lasers have been changed on the machine offered.”