Where once the print business owner filled a factory with equipment and worked it until he retired, more recently the approach was that equipment had to be pensioned off after a handful of years and replaced with new machines that boast more sophisticated functionality. That created a busy and effective market for secondhand equipment.
But since the GFC, the industry has failed to reach its previous levels of activity. Many predict it never will. This has hit secondhand dealers.
Paul Carthew, director of specialist secondhand machinery company Printmac, summed up local sentiment by saying: “There’s no business confidence. People don’t buy when they’re scared. There’s also uncertainty politically. We were hoping the change in New South Wales politics would put an impetus into everything but nothing has really changed since the change of the baton there. And with the economic situation and the industry outlook, people have got their hands in their pockets.”
The used machinery market would at first seem to be an attractive place to shop at the moment. Money can be saved by buying used equipment, and the high dollar makes the pricing of some overseas machines a relative bargain.
“There has been an increase in enquiries for used machines as printers struggle to keep their costs to a minimum,” says Margaret Lucas, director of As New Print Machinery. “The combination of the high Australian dollar and global economic problems has certainly had an effect. We find printers still have not caught up with the real market value of their machines. There has, however, been an increase in local companies considering near-new machines to keep their overheads down.”
But there is a conundrum for the secondhand market, as Craig Huckstep, director of Allied Printing Machinery, points out. There is a symbiotic relation-ship between the new machinery market and the secondhand market. For the secondhand market to thrive, there needs to be a healthy new machine sales market. As a rule, printers trade out older presses for new ones. The problem is that the new equipment market has not recovered from the GFC. Sales are sluggish.
“We need the secondhand and new markets to work together. You can’t buy secondhand machines unless someone is selling new machines,” says Huckstep. “And there aren’t many new print shops opening. It’s tough for the new equipment sales guys as well at the moment. It’s not what it used to be, and you’ve got to adapt and change to meet it. It’s a mixed bag.”
Paul Carthew says: “This recession is different to any others because usually people look to secondhand in a recession to save money, but with the lack of confidence, nobody’s buying anything. Stock is taking a lot longer to shift.”
Slow market
Rajiv Rawal, director at S&N Brothers Machinery (SNB) in Sydney, says the impact of a slower market is plain to see.
“There has been a very low turnover in equipment in Australia lately. Machines from companies that have closed down are often going overseas and are not being bought here. They’re not going into the local market, and are not replaced by new machines,” he says.
Heidelberg sees the sale of used machinery from closed businesses has added just a small impetus to an otherwise slow market.
“I think it has helped to keep up a supply of equipment that might not otherwise have been available,” says Shane Hanlon, general manager of remarketed equipment at Heidelberg Australia & New Zealand.
“But decreases in new equipment sales have led to an inevitable decrease in traded-in equipment coming onto the market. Of course, if equipment is sold too cheaply by the banks or finance companies, it can have a detrimental effect on the asset value of similar equipment.”
Conversely, used machinery sales have not had a major impact on new equipment sales, according to Hanlon.
“Surprisingly, the ratio has stayed consistent over the past three or four years and we don’t see much change to that in the coming 12 to 18 months. When we sell new, we are typically trading out two or more presses,” he says.
All the used machinery dealers ProPrint spoke to agreed that buyers want equip-ment that is just a few years old, well maintained, and decked out with tech-nology that boosts efficiency in the print shop. Older, less automated machines are not very attractive. These are usually sold overseas, often in Asia and on the sub-continent, but the high dollar has hurt that trade as well.
“We are seeing middle-of-the-road equipment drying up, while very old or very young equipment is much more readily available [here],” says Hanlon. “There is a limited market in Australia and New Zealand for older equipment, which means it used to be exported. However, the high Australian dollar is making this less attractive at the moment. The newer equipment also has a limited market. Buyers in mature markets like ours want to see a bigger price gap between new and almost new before considering a used machine – thus the limited availability of the middle priced and aged equipment.”
Carthew agrees that the high dollar has given machinery sales an advantage, but not enough to turn around a slow market.
“The high dollar is an advantage to both new and used buyers. I used to bring in container loads of machines and sell them, because there was business confidence even though the dollar was a lot lower then. Now there isn’t any confidence, but there’s probably not been a better time to buy than now,” he adds.
“Late-model, low-run presses are commanding a premium because there aren’t many of them around. So at the moment, the advantage of buying a new machine, if the deal is right, is fantastic. Traditionally, used presses have been around 50-70% of new value. Late 2005 and newer presses are holding their value now, and with the high dollar some sales of new machines have been done instead of secondhand deals.”
The digital effect
Digital engines have had an impact on the market as well, hollowing out the bread-and-butter A3 press market by gaining a higher market share of print runs while boasting a lower entry point in price.
“The used machinery market in that size does not look very positive for the near future, however, it may be a different situation if digital technology settles down,” says SNB’s Rawal. “The digital market is moving very swiftly; in the past 10 years, the technology has moved very rapidly, so the secondhand market for digital equipment is not very strong at all.”
As New’s Lucas sees the tight supply of late-model offset machines continuing. She suggests that the local used market needs to take a broader perspective to better adapt to current conditions.
“We need to be competitive in a global sense, given that the world is increasingly becoming smaller. And we are seeing Chinese and Taiwanese brands of finishing equipment being purchased more frequently. There is more than one buyer for certain machines, particularly the later model machines. However, their ability to actually get finance is the determining factor. Financial institutions are hesitant to lend for older machines, and even when they do consider the newer machines, there is a greater amount of equity required. Also, manufacturers have reduced the price of new machines to cover costs, not to mention the fact that some have been manufacturing in less expensive countries.”
Shane Hanlon advises that buyers should deal only with reputable second-hand machinery dealers, especially if looking overseas.
“For some dealers, this has been the toughest time they have ever experienced. This has led to some desperate actions, and we see some goings-on in the world market that are very disturbing. Buyers need to be more cautious than ever when dealing with some used equipment dealers. We are hearing of scammers asking for deposits on presses they don’t even own or have any connection to. Last week, a customer in Australia was offered a press that was damaged in the Christ-church earthquake, without the potential buyer being made aware of its history.”
Despite what appears to be a glum market at the moment, Craig Huckstep is confident that reputable secondhand dealers have a solid future, sometimes in the unlikeliest places.
“There are fewer customers around, but if we buy the right stock there is still always someone for it. Mind you, we’ve sold more old letterpress machines and Heidelberg platens in the past few months than we’ve sold in the last 10 years!”
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