Used machinery market witnesses boom amid crisis

The market for used machinery is booming and major international dealers of used machines predict a sharp increase in supply.

Speaking to Emirates Business, Manfred Stein, Managing Director, WST Stein, a leading dealer of German used machinery, said the numbers of old machinery entering the market has been going up.

"We have already seen the impact of the recession in major industrialised countries of Europe and America. Its real impact on machinery manufacturers will be felt only after a year. This year we expect more European and US companies selling their machinery in the international market," he said.

Peter Nelien, Managing Director, Nortec Maschinentechnik GMBH, another German company, said: "By March 2009, we expect the market for used machinery to grow rapidly because new investors will look for used equipment to save money. In Europe, new machines are used for 25 years but when big companies change their product ranges and models, the machinery gets outdated.

"Most automobile companies change their models within six years and the machinery used to produce one model is dumped in the used machinery market. This is a trend in all other big industries."

A number of used machinery dealers from Germany are chasing buyers in the UAE and other Arab countries. "Germany has about 200 big companies dealing only in used machinery. In Europe, there are 3,000 such companies, which have been thriving from the new wave of industrialisation in Eastern Europe. Nortec is a leading dealer in second hand Engel injection moulding machines and robots," Nelien said.

He said with the economic recession, companies, especially in Eastern Europe, Russia, Asia and Africa, will get bargain deals. "The price of a 12-year-old Engel moulding machine is €15,000 compared to €50,000 for a new one. Asia and Africa have been big markets for used machinery. Now companies are buying Chinese and Korean machines, which are available at the same price as a used European machine. However, they do not realise that quality and after sales service facilities are lacking," he said.
Now even the European machinery makers have set up plants in China, Taiwan and Hong Kong to produce cheaper machinery.

Ritchie Brothers Auctioneers, (RB), a global player in the auctioning of used machinery, trucks and construction equipment, had record volumes at its last international auction.

An official spokesman of RB said its final unreserved auctions of 2008 recorded gross proceeds estimated at $3.57 billion for the year, a 12 per cent increase over 2007's gross auction proceeds, making this the largest year in the company's 50-year history.

Buyers from as far away as the United States, Singapore and India purchased almost 1,900 used and unused equipment, from cranes and wheel loaders to a wide range of trucks and cars.

RB also entered into a new three-year, $250m credit facility with several banks to give the company long-term flexibility and access to capital to support future growth initiatives. The firm now has available credit facilities of approximately $550m.

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