Saturday, July 8, 2006

36 Year Perspective on Changes in the Used Machinery World

36 YEAR PROSPECTIVE ON CHANGES IN THE USED MACHINERY WORLD

As I sit here celebrating 36 years of buying, selling, appraising and financing used machinery, I started thinking about all of the changes that have occurred in our industry during my career.

WARRANTIES – What a great success this program has been. 36 years ago, the buzz word was “as is – where is”. Today every machine offered from our and most of our competitor’s warehouse inventories has a guarantee associated with it. These guarantees are posted on everyone’s website and provide comfort for used machinery buyers so that whether they buy a machine “as is”, running or rebuilt, they have a complete understanding that the dealer is standing behind what it sells.

As an example, I often hear our salesmen saying to customers “if you get the machine from Loeb and have not inspected it, and decide you don’t like the color it is, you have the right to return the machine”.

36 years ago, the Used machinery business was a rough and tumble industry and through my association with the Machinery Dealers National Association, I am proud to be a part of this change.

QUALITY - 36 years ago, there was a market for just about any machine in any type of condition. Many customers had mechanics that were happy to work on Saturday to try to rebuild the machine and bring it back from “the dead”. As long as they could buy a used machine cheaply, they were happy to put this type of labor into the machine to bring it back to their standards. Today, that type of sale is non-existent. It is non-existent because the marketplace has said that there is no market for that type of machinery and over the last 25 years, most used machinery dealers have improved the quality of its inventory significantly so that it is almost 100% of the time possible to show a customer a machine under power running in our rebuilding facilities during their inspection.

TECHNOLOGY – The changes in technology are too numerous to mention but during this episode of reminiscing, I realize that what has really changed the most is our ability to keep track of machinery that is coming up for sale in the future so that well equipped dealers can start looking for customers today for a future delivery date. Early on in the beginning of the machinery business, I remember stories about my grandfather and great-grandfather sitting at the kitchen table at night sorting 3x5 cards keeping track of what customer wanted what and what customer had what for sale. Times have definitely changed!

In closing, it is hard to imagine what the future holds. As the technology improves, relying on reputable middlemen will become more and more important to customers in my opinion. The margins in our industry of course will be pressured and the reputable dealers with a quality reputation and quality machine in their inventory in my opinion will always survive.

The proof of this in my opinion falls back to the original Star Wars movie where the Jawas, in their brown robes, traveled the world and sold used Robots like R2D2 and 3CPO.