Over the last few years, there has been a subtle but continual groundswell leading to a resurgence in American manufacturing. According to PricewaterhouseCoopers, a number of factors, such as the increasing cost of Chinese labor and rising transportation costs, are helping to make on-shoring a more appealing option for U.S.-based manufacturers. While all of these elements point toward a more sustained period of growth for the manufacturing industries, what does it mean for those looking to start new businesses or expand their current operations?
One of the most appealing aspects of a resurgence in manufacturing is the ability for companies to access a more readily available secondary market for equipment. During the recession, businesses were frequently holding onto any excess capital in an attempt to cushion any further dips in the economy. Now that a skilled labor market is at the ready and demand is increasing, manufacturers are beginning to replace older machinery – freeing up used machinery for new or expanding businesses.
At odds with what most are seeing in everyday headlines, some of the biggest gains in manufacturing from this secondary market have been from small businesses. As larger manufacturers turn to smaller companies to create the specialty parts they need to repair and expand their own operations, in turn, smaller businesses are seeing a boom and need for more equipment themselves. But just because demand is growing doesn’t mean negotiating has to go out the window.
Know The Value
While there is a definite uptick in manufacturing it’s important to remember that there’s still room for negotiation. While sellers shouldn’t be willing to give away good, used machinery, it doesn’t mean that buyers can’t demand a fair market price – which has definitely shifted in a post-recession business climate.
Do You Have Everything?
There are often dozens of options that can be added onto a more basic piece of machinery. Sellers should clearly disclose any attachments, accessories or software that may or may not be included. Buyers also need to be clear in what they expect to be included with their purchase. If there are components that definitely need to be included don’t hesitate to write those items into your purchase agreement.
Be sure to check out our earlier post on buying and selling used machinery for more tips on negotiating your next machinery or equipment transaction.