Refurbished Machinery’s Growing Demand: Yea or Nay?

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By Nattira Medvedeva

Back in the 1980s, reconditioned machinery was in high demand around the world. At that time, new tobacco machinery was very expensive, there were only a number of cigarette machinery manufacturers, and only big tobacco companies could afford to buy new machines. A little over three decades later, after high-and-low demand cycles, it seems that the jury is still out on whether the demand for reconditioned or refurbished machinery could possibly be on the upswing once again.

Yea: demand is growing

The tobacco industry has faced a lot of challenges lately, whether it be new laws and regulations coming into effect, increased taxes on tobacco products, or increased anti-smoking efforts from governments and the public health sector, all of which have affected consumer consumption, and, in turn, the production and sales of tobacco products.

In their efforts to become more efficient and remain competitive in the market, many companies have started looking into buying refurbished machinery over new ones when appropriate, as the costs can be significantly different. And then, of course, sometimes it is not about the cost of the machines, but more about operations efficiency.

“We experience closures of cigarette factories and capacity adjustments in the global market,”  said Andreas Panz, executive vice president rebuild at Hauni. “Therefore, quite a lot of relocation as well as refurbishment of machinery is taking place. During the relocation process an overhaul and/or full-rebuild is often requested by customers. Hauni is one of the industry’s leading company in systems for tobacco processing and cigarette production.

“The business for refurbished machinery is growing. It is driven by the relocation of existing machines with a trend towards electrical solutions. As we jointly develop customized solutions with our clients to optimize the installed machine base, we can see an opportunity for a positive development in this sector of our business in the years to come independently of the cigarette volume trend.”

“Based on the close cooperation with our global customers, we have experienced that it is not the manufacturers, but the client’s need that determines the products and services we offer. Customer demands have driven us to expand our offerings for our large installed machine base: today we can provide tailor-made maintenance programs on site, different levels of machine modernization and partial overhaul as well as full rebuild ‘as new’ – we let our customers decide what exactly fits best their specific demands. Rather than limiting our rebuilding services, we have recently increased the portfolio of offerings in this sector,” said Panz.

“Current market trends demand global cigarette manufacturers to focus on overall equipment efficiency optimization. The latter can often be achieved by modernizing equipment, asset consolidation and making sure that existing machinery performs at its maximum efficiency. In all three cases Hauni can support customers to replace equipment where it makes sense or optimize existing machineries in alignment with specific strategic needs. The obsolescence of electronic systems is another area where we are increasingly helping our clients to upgrade machinery to maximize their reliability as production assets for the years to come,” he added.

Nay: new is next

DWA Pte Ltd., however, says that the changing trend in the market is companies now prefer to buy new machinery. DWA, one of Asia’s largest reconditioned machinery companies, saw the demand for reconditioned machinery in the 1980s, opened a company, bought a number of old machines from America and Europe, refurbished the machines, and sold them to middle and small cigarettes companies in Asia, the Philippines, Cambodia, Vietnam, and Dubai. The company has enjoyed massive growth over the past two decades. It does a lot of upgrading and  converting parts to meet market demand, namely rebuilt Protos, rebuilt Focke, and rebuilt RC4.

“With its experience and learning expertise, DWA Pte Ltd is now able to produce [a]new medium speed making machine – the S-6000 – and the 200 packing machine,” said Shinichi Hyodo, senior manager, DWA Singapore Pte Ltd.  “This marked a changing trend in the market for refurbished equipment. Instead of buying rebuilt machines, cigarettes companies now prefer to buy new medium speed machines produced by DWA Pte Ltd and the like, at an affordable price.”

Pros and cons: refurbished vs. new

One of the first questions that arise when considering whether to buy refurbished or new is the advantages and disadvantages of each. DWA believes that the benefits of buying new equipment can outweigh those of buying refurbished.

“The major benefit of buying refurbished/rebuilt/used equipment vs. new equipment is that it is relatively cheap compared to new equipment,” said Hyodo “With the advancement in technologies however, new equipment has become more popular than rebuilt machines as it is more accurate, efficient, and cost effective in the long run.”

“The spare parts business has [also] become increasingly more important as both new and rebuilt machinery require new spare parts. [DWA] also provides sale of spare parts to its customers. This serves as a competitive advantage for the company as customers need not worry to get replacements for their parts. [DWA] provides after-sales service to its customers by sending experienced technicians to install, upgrade, or troubleshoot problems. The company also sells spare parts, upgraded units, and size conversion parts. Maintaining a good relationship with its customers [and] producing high quality machines have been the key success of the company.”

For Hauni, the focus is not so much on refurbished vs. new, but rather on efficiency vs. cost.

For instance, Hauni’s PROTOS 80C is purely and simply a classic and highly cost-effective maker with a production speed of 7,200 cpm. It is also an attractive choice when it comes to producing smaller batches and brands to high quality standards. PROTOS has become synonymous with reliable cigarette makers. The cigarette production process on which the PROTOS 80C is based is not just proven technology, it is used in hundreds of factories worldwide.

On the other hand there are Decouflé’s Nano makers. With outstanding reliability, rugged design, easy-to-use technology and low operating and maintenance costs, Nano makers are suitable for use in any production facility. Fast, flexible, fitted with state-of-the-art smart components and offering excellent value, they are ideal for use in high quality production environments where efficiency is a high priority. Apart from combining all the elements of high-speed makers, Nano makers also feature compatibility with all Hauni and Decouflé units including laser and logistics items.

 “At Hauni we proud ourselves in providing best in class equipment and services while providing a portfolio of solutions for every need. It is not so much about new or rebuild equipment, rather the equation our customers have to solve is maximum equipment efficiency to optimize cost per produced unit. Several factors have to be taken into account to achieve overall equipment efficiency such as the quality of the produced product, the waste while doing so as well as the availability of the machine. A modernized installed machine or a rebuild machine provides improved equipment efficiency. The capability to provide first class OEM service solutions over the machine lifetime is another crucial element to equipment efficiency, something Hauni provides for its global customers,” said Panz.

“The level of innovation expected by the market means that demand for rebuild machines is growing continuously,” he added. “In the context of relocation projects, too, we are experiencing strong demand for measures to convert machines to new production environments. We use a rotation principle that allows us to supply the rebuild machine before we even collect the customer’s machine. This avoids production downtimes. And even if a customer cannot supply a machine for rebuilding, there is the possibility of acquiring a tailor-made rebuild machine and therefore an extra piece of security for the future.”