If you have press machinery at your factory or shop that isn’t working as well as you’d like, you might be wondering if you should upgrade and buy new or repair what you have. This is a common question for many different types of equipment, but it can be difficult to decide. Let’s take a look at the pros and cons of each.
Maintaining Old Equipment Vs Buying New: Which is Better?
In this blog post, we’ll compare the pros and cons of maintaining your factory press or buying a new one. However, these considerations will apply to many different types of equipment. If you’re not sure whether you should buy new equipment or repair your current equipment, these considerations may help.
The first question you should ask about your equipment will determine right off the bat whether or not you have a choice between keeping what you have or going with something new. Can your current machine be fixed? Old equipment can become so outdated that replacement parts are no longer available for the issue that needs fixing or if they are, they are difficult to come by, adding extra part costs or downtime. Even if you determine you can fix the problem to extend your machine’s life this time, you should consider whether or not it makes sense to pay for maintenance now when the machine may be completely obsolete in the near future.
This is one of the first considerations when it comes to deciding between maintaining old equipment vs buying new. How well does the equipment work? Does it still serve the purpose you need it to? Can it be fixed?
If you’re considering maintaining old equipment, you may have noticed that your current equipment works, but not always in a reliable way. When this happens, it can be easy for wasted time and maintenance expenses to quietly add up.
By contrast, new equipment will perform as you expect, or even better than expected. If your new equipment is a step up from your current equipment, it can improve production significantly. You can speed up production time, decrease defects, and improve manufacturing overall.
A list can help measure more exactly the time and money spent with the old equipment, which can help you measure more accurately whether or not buying new equipment or maintaining your old equipment is ideal. You might record the following:
- Maintenance time
- Replacement parts
- Defective products
- Materials loss
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As technology progresses, equipment continues to become faster, safer, and more effective. By contrast, old equipment, as it wears down, generally slows down, the technology and safety features become out-dated. In most cases, safety features or technology on old equipment simply can’t keep pace with evolving safety standards or production requirements.
Refurbishment can, in many cases, update old machines and bring them into accordance with modern-day requirements. This process can also update controls and technology, improving the performance of the machine overall. However, it’s important to think about future plans for your operation. If there is a possibility for growth or expansion of your operation, older equipment may not offer the same level of scalability compared to new, updated machinery.
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There are many different aspects of expense to consider when deciding between maintaining old equipment vs buying new equipment. One of the main factors at the forefront of buyers’ minds when it comes to buying new equipment is the initial expense of the machinery itself. However, it’s important to balance this against the expenses incurred by old equipment as well.
The previously mentioned list can help you measure the expense incurred by maintaining old equipment. It’s important to measure each of these costs as accurately as possible, or you may end up spending more towards your current equipment while also missing out on opportunities offered by new machines.
The time spent maintaining old equipment should be considered within the expense equation, but there are also other important factors relating to time worth noting. Some of the costs related to time or efficiency can be harder to calculate exactly, and might be difficult to put an exact amount on.
- Production: Old equipment often slows down. This can easily slow down production and these slow-downs might not be immediately apparent.
- Opportunity cost: Employees that spend time maintaining or fixing old equipment are often removed from other tasks, which can add to delays and inefficient use of labor.
- Unexpected downtime: Downtime for regular maintenance, especially when it becomes frequent, can become costly in itself. However, unexpected downtime can be even more costly. Unexpected downtime often requires more expensive maintenance work, expedited replacement parts, lost work time, and, of course, lost productivity.
Keeping common replacement parts like extra cylinders and seal kits in your tool crib can help mediate downtime whenever it occurs, but for very old machinery that may experience repeat issues and need maintenance attention time and time again, buying new will be the best option to minimize these time costs and inefficiencies.
Tax considerations are another important aspect of maintaining old equipment vs buying new. If you have not met optimal spending for the tax season when your equipment malfunctions, tax breaks from larger equipment purchases may significantly balance the cost of investment for new machinery. Tax laws allow business owners to reduce their taxable income and thus reduce their tax burden by the depreciation of valuable assets. If your current machinery has already met its depreciation lifespan, opting for new equipment will restart that cycle and can lead to significant tax savings over the following years that will help mitigate the cost of investment.
Bonus depreciation is another important consideration. In 2002, the Job Creation and Worker Assistance Act introduced bonus depreciation, which allows businesses to deduct more in the initial purchase year than typically allowed as an incentive for new commercial purchases. Until the end of 2022, businesses could deduct up to 100% of a purchase cost in the initial year of use. 2023 brings with it a schedule for bonus depreciation phase out, with initial investment allowances dropping to 80% for 2023 and lowering each successive year. If you are currently considering the purchase of new equipment, understanding this key tax benefit and utilizing this special deduction allowance while it’s available may be a tie breaker.
There are many factors to consider when deciding between maintaining old equipment and buying new equipment. If you’re considering buying a new press or refurbishing a current press, contact us. Our experts can help you with either option, and help you approximate cost considerations.