Running on demand
Dealers of used and refurbished can making equipment are continuing to see a strong demand for their products. Alec Peachey reports
US based OKL Can Line specialises in the refurbishment of Ragsdale and Standun bodymakers. OKL has been manufacturing replacement parts and providing service for the can making industry since 1984. The company offers a wide range of new and refurbished parts and assemblies for bodymakers.
“We believe that delivery date is a driving force in deciding whether to go with new, refurbished or used equipment,” says Jim Woods, manager, sales and field service. “Can makers are driven by their customers delivery demands and that is a deciding factor when buying new, refurbished or used. Used or refurbished equipment is usally best when adding machines to an existing line.”
Around 75 per cent of OKL’s overall business is concentrated on refurbishing equipment either through repair parts, complete rebuild kits, or complete rebuilt bodymakers. “We generally have four used frames that have been reworked and are ready for assembly on our floor,” adds Woods. “We also keep two new frames in inventory at all times. In addition to the frames, OKL has a minimum/maximum inventory on all spares for general customer requests.”
OKL has carried out projects for a number of the major can makers including Ball Corporation, Crown, Rexam, Silgan Container, Metal Container, Can-Pack, Kian Joo, Shandong Packaging and Great China Metal.
“I would say there is now a bigger demand from can makers for refurbished equipment compared to new,” explains Woods. “Unless you are putting in a new line or starting a new can making company, the tendency is toward refurbished or upgraded equipment.”
Going forward, Woods believes that demand for used and refurbished equipment will continue to grow.
“Due to OKL’s engineered innovations that reduce maintenance costs, manpower, and customer downtime, we feel confident that demand will continue to grow,” he says. “The problem is, used machines are becoming more difficult to source. I expect we will see more refurbishing of existing machines.
“OKL has been an innovator in the industry for many years and owns patents on a number of applications that are now being used on all bodymakers. We will continue to lead the industry in research and development in the hope of bringing improved and more ecologically friendly products and ideas to the can making business.”
Container Fabrication Machinery
The president of Container Fabrication Machinery (CFM), the world’s largest dealer of used can making equipment, says there will always be a demand for new equipment.
Gary Alexander doesn’t agree with the view that demand for used and refurbished equipment is now stronger than the need for new.
“There is always possible new equipment sales, even with tight capital expenditure guidelines that are
currently in place due to the recent worldwide economic downturn,” he says. “Anytime you can show improved output, reduced labour, reduced metal usage or quality improvements over existing technology, you will find buyers for new equipment. There will always be a need for both used/refurbished and new improved can making machinery. Tough economic times require both new and used machinery dealers to find new solutions that are cost effective and deliver value to the industry.”
Supplying the market
However, the US company is still finding that demand for good quality used can making machinery is as strong as ever.
“In the more developed markets such as the US and Europe, many customers are looking for fully rebuilt machinery,” adds Alexander. “In parts of the world with low domestic labour costs, they generally want “as is” machinery due to their lower internal costs for rebuilding.
“Currently the used market for two-piece beverage can making machinery has the highest demand with easy-open end conversion operations for end making running a close second. DRD two-piece equipment is third highest in demand followed by three-piece can making machinery.”
Last year CFM joined forces with MEM Holland to allow both companies to offer a more complete service in the area of used equipment. They agreed to share technical knowledge, support and their available inventory to can makers.
“We continue to work successfully with MEM Holland,” notes Alexander. “Reciprocal referrals are a big part of this. The main advantage is really on the buyer’s side in this relationship. Customers searching for machinery not currently in stock at whichever of the two companies get the added benefit of having a second source to review the enquiry. This way if either company has what is required, then the customer gets what they need.”
Can Making Solutions
Competition from Asian machinery constructors has led Can Making Solutions to adapt the way it operates.
The company, which is based in Spain, deals in used can making machinery, tinplate and decorating equipment.
“Competition from this area is affecting us mainly in the semi-automatic and low to medium speed range machines,” explains Wim Sturm, a partner at CMS. “This leads to semi-automatic machinery being a low or even a no margin product. Because of this we mainly stay away from semi-automatic machines (except for existing stock). European new machinery manufacturers are competing strongly with their prices to compete with Asian manufacturers leading to very competitive prices. This means that we are pressured to offer at competitive prices and remain as an alternative to new machinery.”
A buyer’s market
Sturm says the market has changed and now suits buyers.
“We notice that buyers are shopping around more with competitors as well as new machinery constructors,” he explains. “Furthermore, sellers of used machines (our providers) do their homework and have a good idea of the residual value of their machines. The combination of this leads profit
margins to be under pressure. We tend to purchase fast moving stock now and try to minimise investments in slow moving stock.”
Due to the challenges in the market and the modest size of the company CMS is careful not to
specialise in any specific equipment.
“Because of the broad range of machines we deal with and the modest size of our company (just four employees) we cannot be a specialist in the complete range,” remarks Sturm. “We are specialised in sourcing equipment solutions for our clients. This means that we will try to accommodate any requirements our clients have by searching for fitting machines in either our stock or in the market to solve their needs. Furthermore, we cooperate with various specialised workshops throughout the Iberian peninsula to accommodate overhauls, repairs, or upgrades for the various types of machines we sell.”
Recently the company has experienced higher demand for aerosol can making equipment and for large sheet size printing and coating equipment.
Sturm acknowledges that the profitability of the metal packaging industry has been under increasing pressure due to the rising cost of raw materials (tinplate).
“The banking world has become more demanding with regards to giving out loans and credit. In our experience this leads to can makers having less financial possibilities to finance replacement machinery and new projects for which they would opt for used can making machinery,” he says. “Replacement of machinery is ongoing although we notice that can makers tend to postpone these investments as long as possible. We try to accommodate as much as possible in offering the most suitable machinery solutions at competitive prices for our clients.”
Despite this demand is still strong overall. “Demand will remain as we are convinced that the can making market is here to stay. The Middle East, Asian and South American markets are expected to grow,” Sturm says. “European and North American markets are under pressure and we will see less growth here, if any. Whether demand for used equipment will grow in all growing markets we are not sure because of competition from new equipment from Asia for mainly the Middle East and Asian markets.”
It seems as though demand for used and refurbished equipment will always be there. With plenty of suppliers vying for business from can makers competition remains healthy.