Used-machinery dealers have struggled with the same dynamic that plagues new equipment makers: a soft market, especially for injection presses, that has driven down prices and demand.
Now, used-machinery dealers have some good news and some bad news for their counterparts in new machines. First, despite a spate of plant closings and auctions, there does not seem to be a glut of late-model used equipment lurking out there that will have to be absorbed before people return to the new-machine showrooms.
The bad news? Plastics processors ran at only 76.6 percent of capacity in December, so they have little reason, and not much capital, to spend on machines.
``The glut is in the molders' plants already,'' said Robert Risbridger, president of Plastics One Inc. in Wallingford, Conn.
Used-machinery officials say there is a pool of good used machines, just not a gigantic one. While some resellers say business is starting to pick up, others say just the opposite.
``I've got 14 machines in my warehouse right now that are 1997 or newer, and we're having difficulty finding buyers for those,'' Risbridger said.
He said the used machinery backlog started to appear in 1999, when trade-ins, returns of leases and auctions began to outpace the number of machines exported from the United States or taken to the scrap yard. The large number of new machines sold in the late 1990s also fueled the used backlog.
New-machine sales dropped off in mid-2000, hammering new-equipment makers. According to the Washington-based Society of the Plastics Industry Inc., U.S. injection press shipments continued to sink in 2001, dropping 40-50 percent from the 2000 level. Sales of blow molding machines and extruders also have plunged.
Machinery makers responded by cutting production and jobs.
The recession has forced many customers to clamp shut their wallets, crimping sales of everything from replacement screws to used machines. In a recent Plastics News survey, 75 percent of processors say they expect their capital spending to be about the same or lower for 2002. Most firms expecting to buy machines say the motivation is to boost quality or productivity (44.1 percent). Only 27.6 percent will buy machines to add capacity, vs. 28.3 percent that have no plans to buy machinery this year.
Meanwhile, clearance-sale deals from new-equipment makers, desperate to reduce their inventories, have trickled down to the used-machine side.
Even with the ``great-time-to-buy-a-machine'' prices, sales still are sluggish, resellers said.
``There's no general upgrading of equipment that we can see. The phone calls that we get are people who say, `I just got a specific job and I need a machine for that job,' '' Risbridger said.
He said attendance at auctions has been sparse.
Steve Schroeder, president of Epco Machinery LLC, agreed. The Fremont, Ohio, company attends auctions to pitch its remanufacturing services.
``We've been to auctions where some machines aren't even bid on,'' Schroeder said.
Risbridger joked, ``My business is so bad, even the guys that don't pay aren't buying.''
Even so, several resellers said business seems to be picking up.
``We've seen our activity level increase substantially since the beginning of the year,'' Jack Clarke, president of Arlington Plastics Machinery Inc. in Elk Grove Village, Ill., said. ``When people first start crawling out of the foxhole, the first place they start looking at is used machinery.''
Clarke said used machines just a few years old are getting a little harder to find.
``A lot of the glut that people are referring to is just machinery that is so old it's not going to be sold anyway,'' he said.
Jim Buhl, vice president of sales at Plastics Machinery Technology Inc. in Richmond, Ind., said 2001 ``was not a good year for the used-machinery business.'' But he added: ``We are seeing some increased activity here in the first of the year. I see the market making a turn and things starting to stabilize and pick up a little bit.''
At KD Machinery Inc. in Scottsdale, Ariz., Sean Reid said buyers want machines 5 years old and newer for ``killer deals.''
``The people that are doing it are people who are ready to pull the trigger anyway,'' said Reid, KD's plastics machinery sales manager.
Last summer, Dennis Paradise left HPM Corp., where he was vice president of sales, to head the plastics machinery division at used dealer Federal Equipment Co. in Cleveland. ``When are we finally going to see a turnaround? I don't know if we have or not, but I can say that I'm more optimistic today than I was 60-90 days ago,'' he said.
Paradise said the number of used machines available for Federal to buy has started to slow a little - an indication that the economy may be picking up. He said that used, large-tonnage injection presses are hard to find.
Meanwhile, Risbridger said used auxiliary equipment is moving, as processors try to spend a small amount of money to become more efficient.
``Auxiliary equipment continues to sell at a rapid pace and for strong prices,'' he said.
Peter Tordy said some types of blow molding machines are selling.
``Enough used stuff is going out so that the better inventories are disappearing,'' said Tordy, president of Blow Moulding Parts & Services Inc. of Concord, Ontario, which focuses on blow molding machines. ``Both the PET and the accumulator-head markets are ripe to take off,'' he said.
The market for used machines to blow mold detergent and shampoo bottles is poor, Tordy said.
BMPS moved to a larger, 30,000-square-foot building last year.
``Pricing has gone down dramatically,'' said Neil Kruschke Jr., chief executive officer of Stopol Inc. The Solon, Ohio, company links buyers with used equipment on the seller's plant floor. ``Not a lot of the equipment that is from the 1980s is selling. You can get 1990s equipment for the same price as what you used to be able to get 1980 equipment for.''
He said Stopol has to work harder for sales, and buyers are negotiating hard on things like trucking, rigging and even small items like a hopper.
``People are really watching down to their last dollar,'' he said.