May 24, 2022 PAO-02-022-CL-05
The chemical industry has been a leader on environmental issues, but there is much work ahead. Climate change and overall environmental issues present increasing threats to business continuity. As a result, investor, regulatory, and consumer pressures are mounting.
Procuring used manufacturing equipment is a greener way to acquire needed chemical processing equipment. Used equipment is much less expensive, avoids the long lead time of buying new equipment, and reduces a chemical company’s carbon footprint by utilizing machinery already manufactured.
In fact, Federal Equipment Company was recognized by BASF’s Annual Supplier Awards program. Being nominated for BASF’s Supplier of the Year Award in Sustainability was a great honor and decidedly reinforces the importance of used equipment within a chemical company’s overall sustainability strategy.
Because of investor pressure, many specialty chemicals companies restructured their portfolios to focus on fewer, more focused product assortments over the past decade. As a result, many of these companies became highly efficient specialists in their areas of product focus.
However, as the pandemic created widespread market disruption, some chemical companies found themselves lacking capabilities and capacity in high demand market segments. Many specialty chemicals companies learned from the massive market disruption of 2020 and are once again diversifying to help minimize risks and increase resiliency.
Of course, moving into new product lines and capabilities often requires different equipment. Purchasing used equipment has become an excellent option for companies working to move quickly. Additionally, the lower cost of used equipment is yet another risk mitigation strategy, particularly for companies with product portfolio strategies still in flux.
To say the COVID-19 pandemic has and will continue to disrupt supply chains is an understatement. There have always been substantial lead times for the purchase of new equipment. However, lead times are much longer and more unpredictable because of supply chain disruptions.
Increasingly, manufacturers of all sizes are turning to Federal Equipment for operational continuity purposes. When a piece of equipment needs to be replaced, especially when the need is unexpected, specialty chemical manufacturers don’t have the luxury of waiting for new equipment. Used equipment can be online in a matter of days, rather than the 12–18 months or longer lead time for new equipment.
New equipment lead times are long because of disrupted global supply chains, and used equipment is often difficult to find. As a result, specialty chemical customers often turn to Federal Equipment’s extensive knowledge, experience, and connections for help sourcing needed equipment.
Although this article has already mentioned timing, price, and speed, they are so important that they bear repeating. There may not be time to wait for new equipment for companies adding new lines, capacity, and capabilities. Used chemical processing equipment can significantly benefit manufacturers when the unexpected need to replace equipment arises and can help them avoid operational disruptions.
Finally, the cost issue speaks for itself. Used manufacturing equipment is simply less expensive—typically half to a third of the cost of new equipment.
As mentioned, many specialty chemicals companies are diversifying their product portfolios and taking advantage of new market opportunities. Equipment often must be secured to build out new capabilities. Using used equipment allows specialty chemical companies to be more agile, offering the flexibility to expand and alter production capabilities as opportunities arise.
Specialty chemical companies frequently optimize their product portfolios, and ongoing merger and acquisition activities change physical plant strategies. Therefore, newly available used chemical manufacturing equipment commonly enters the market. Used chemical tanks, used heat exchangers, used chemical reactors, and many other categories of used chemical equipment are purchased by buyers across the diverse specialty chemicals industry.
The reasons specialty chemical manufacturers are increasingly turning to used chemical equipment are as diverse as the industry itself. However, disrupted supply chains’ increasing lead times for new equipment, the desire for cost reduction, the need for flexibility and agility, and the increased importance of sustainability are leading many specialty chemical companies to rethink the role of used equipment in their equipment procurement strategies.
Additionally, executives across the specialty chemicals industry turn to Federal Equipment to help them to sell used industrial equipment.
To learn more about how Federal Equipment Company can help, visit our used chemical processing resource page.
Steve Nelson returned to Federal Equipment Company in 2021 having last worked for the company in 2004. A US Navy veteran, Steve has been in the equipment business since 1983 and has excelled in many aspects, including auctions, liquidations, and buying machinery and equipment. Mr. Nelson is in charge of identifying opportunities to buy, auction, or liquidate idle and surplus equipment in pharmaceutical, chemical, and other material processing industries.