Cost vs Value: Deciding on a new or used equipment purchase

Lets face it, purchasing equipment for your business can be a daunting task. It does not matter if your company only requires a single forklift or if you are looking to acquire an entire fleet of various equipment types, it is still a very important decision regardless. Ultimately forklifts and other industrial equipment are just “tools” for your company to complete your required day to day tasks. For the purpose of this article we will be focusing on forklifts explicitly, although the same logic and concepts of decision making can be applied to other type of equipment like scissor lifts, articulating boom lifts, sweepers/scrubbers, etc.

The biggest decision when it comes to acquiring the right piece(s) of equipment for your operation is deciding on whether to purchase new or purchased used forklifts. While each individual operation will have its own requirements, below we have laid out a couple points to assist in making the purchase decision on new vs used a little bit easier.

When to Purchase a New Forklift:

Run-time hours required: when it comes to making your decision for new forklifts vs used forklifts, one of the biggest decision driving factors should be based on the amount of run-time hours you are expecting out of the equipment. If you operation will require more than 1,500 hours of usage per year then a new forklift purchase should be your consideration. With higher cycle operations used forklifts should not be considered. The initial upfront cost of purchasing new will pay dividends in the long run. Putting used equipment in a high cycle operation will cause additional break downs and maintenance costs in the future.

Harsh or abusive environment: The environment in which the forklift will be operating should be another large factor in your decision making process. For operations like metal foundries, recycling operations, and lumber yard, a new forklift(s) should be the only consideration. similar to applications with high run-time hours, attempting to save a little money on purchasing used equipment upfront will do more damage in the long run than it will good.

Eliminate upfront cash expenses: For companies that are not actively involved in purchasing or do not have an recurring need to purchase forklifts, the price of purchasing a new forklift can be a surprise. Most companies do not realize that even the smallest 3,000lbs capacity forklift can cost as much, if not more than a brand new car. Coming to this realization can push companies to look at used equipment options to save some money upfront. The key component that is missing by going to a used forklift, solely on the thought of upfront expenditure, is that it is normally a direct cost out of pocket. Used equipment generally has very few options for financial merchandising. By purchasing new forklifts, there are several options in the financial merchandising realm that can largely eliminate upfront expenses. Think about it like buying a car, how often do individuals or companies for that matter go and purchase a car outright in cash? Not very often. Most cars are set up on a finance plan with full ownership option at the end or a fair market value lease can be structured with generally three options at the end… extend the lease, turn the car in or buy the car at fair market value. Forklifts can be financed and leased in the same manner with even more options like skip payment leases, fixed purchase options, etc. Not to mention the invaluable benefits of capitalizing on the IRS Section 179 tax depreciation benefits.

Advanced technology: with the way our technology advances in the current age, another great benefit of buying new is the fact that your company will have access to the most up-to-date technology on the market. Whether that technology is for operator comfort and safety or if it is a technology to improve run-time utilization and efficiency, new forklifts will keep you company on the bleeding age of your industry.

When to purchase a used forklift:

Light usage: If your company plans on utilizing a forklift less than 1,500 hours per year, in most cases a used forklift will be a great option for you. This generally applies to fleet users of 5 forklifts or less than operator normally only a single shift operation during the day. In cases like these, a used forklift can be a great way to get through day-to-day operations without spending a ton of budget money on equipment. Keep in mind though, a good used forklift will normally be 40% to 60% the cost of a new forklift but you will need to put some money aside in anticipation of future repairs.

Normal/Clean operation: For most warehouse applications and light-duty outdoor applications, a used forklift is a viable option. Sticking to the light usage rule mentioned above in tandem with a clean facility can generate a long life cycle, even for a used forklift. When buying used, plan on spending the proper amount on a good planned maintenance program rather than just looking for lowest PM price available. Again, buying used saves some money upfront but most used equipment is being sold for a reason. Budget accordingly for a good service program and you can eliminate or at least identify major issues before they shut you down.

No need for the most up-to-date technology: If your operation can get by with just the “standard” specification equipment and there is no need for the most up-to-date options available, buying used forklifts is a perfect option for you. Many companies do not require custom built or bleeding edge technology to complete their day to day tasks. Forklifts are just tools for many operations so purchasing a used forklift that is 5 to 10 years old with only the proper safety equipment, reliability and good run-times is all that’s needed.

Risk VS Reward: As mentioned a couple times above, buying used equipment can sometimes be a risk. When used lift trucks are available on the market, they are normally there for a reason… the same way cars are. Sometimes you get lucky and find a diamond in the rough and it can be very rewarding over purchasing a new lift truck but often times you will need to be prepared to invest some additional budget money into repairs. If your company is comfortable with taking the risk of buying used, it can be a great avenue for you to acquire equipment.

We can’t stress enough that each and every application and facility can have different requirements and they should all be taking into account before making a purchase decision. Don’t get caught up in pure acquisition cost but rather, purchase a piece of equipment that will truly support your operational needs. One of the best ways to make sure you get getting the right equipment for your company is to complete a quick Application Survey and review with your team. Remember, think about not only the initial cost but also the value that a new or used piece of equipment can bring to your application. We often get caught up in upfront cost when the consideration should be total cost of ownership over the life of the equipment for your company. After your decision is made, do not forget to complete a pre-shift inspection form prior to every shift of usage to stay safe and OSHA compliant.

This came from my website http://www.forkliftdata.com