Once the decision has been made to relocate operations abroad the big question is, "Should I transport existing machines or buy new equipment?" In most cases, manufacturers need to answer this question for each individual piece of equipment before hiring a nearshore plant relocation contractor to help take on the gargantuan task of actually setting up in a foreign county with used equipment while controlling risks, costs, and downtime.
Below are a few guide questions that will help you determine the proper course of action:
Is the machine worth saving and how much useful life does it have left? Moving older equipment may not make sense if significant repairs are required after installation. Any parts that need to be purchased may be obsolete and may need to be fabricated from scratch.
Determine whether the equipment is still under warranty and whether that warranty remains valid in case of transportation, and especially in the destination country. Also, consider whether the supplier or an authorized service provider can provide parts, maintenance, and technical support locally.
Find out the market value of the equipment and how quickly it can be sold. Consider things like sales commissions, transportation, and tax implications from the sale. The proceeds may help offset the cost of purchasing newer equipment for the new facility.
Compare the cost of transportation, rigging, dismantling, reinstallation, testing, and recommissioning with the purchase and installation cost of new equipment.
When considering whether to move or buy, also consider if another plant within the company could make better use of it. If not the whole machine, it can be decommissioned and kept in storage for parts.
Some industrial equipment may be subject to export controls, permits, or other restrictions in the destination country. Machines with military potential and those that may emit radiation may require additional scrutiny.
Some machines can be dismantled and reinstalled easily while sensitive equipment requires specialized handling. High powered laser cutting machines, for example, may require more than basic leveling and alignment to return to operating condition.
See the relocation as an opportunity to evaluate whether newer equipment could improve productivity, efficiency or product quality while removing obsolete machinery. Ensure that there will be trained staff to operate the new equipment at the destination facility.
The accounting position of a machine can affect the financial part of the equation. Equipment that is fully depreciated may still have significant operational value while newer equipment may have outstanding financing obligations that need to be considered.
Finally, even if buying new equipment makes sense, the company must determine whether it can afford the initial investment. Relocating existing machinery may be the best option to preserve the company’s cash.
A plant relocation is more than just copy-pasting your facility to another location. You must consider the condition, value, transportation requirements, installation needs, and long-term usefulness of every machine. To learn more, visit AKIC.us.