Saturday, July 8, 2006

36 Year Perspective 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.

Friday, April 21, 2006

Putting Your Money Where Your Mouth Is!

What a great expression.

It separates the real players from those who merely reference values but are not willing to stand behind them.

Fortunately, Loeb’s values have held up and our appraisal business is strong. We have another saying around here that I think applies to our business: There is no one in the world more loyal than a banker whose collateral turns out to be there when the chips are down.

For years, Loeb has helped financial institutions and other customers with machinery and equipment appraisals in our areas of expertise, and we have delivered appraisals to more than 300 locations annually in the past few years.

On occasion, these appraisals turn into liquidations after the appraisal is complete. Each year for the last few years, we have conducted approximately 20 complete plant auctions or liquidations, some of which also involved purchasing the real estate. Last year, our biggest project was a 650,000 square-foot pharmaceutical plant located on 280 acres near Dallas. Like this one, the majority of our liquidations involve cash purchases, but some are conducted on either a commission or guarantor basis.

Because of our strong liquidity, Loeb has been able to start providing distressed loans on machinery and equipment to those who are unable to obtain normal bank financing. We have not only provided loans directly to clients, but we have purchased bad loans from many of the country’s major financial institutions on more than 50 projects. Most of them were in the U.S., and one was in Mexico.

If you’re interested in distressed loans, please do not hesitate to call me. I would be glad to walk you through the necessary steps to obtain this type of financing or to purchase these types of loans.

As always, we welcome your calls to purchase, sell, or trade excellent used processing and packaging machinery, as well as the opportunity to assist you with market value appraisals, plant liquidations and auctions.