DDIN Library

EQUIPMENT: Upgrade vs. Buy New

Details: Written by Robert Larson

I have read many articles about rebuilding or retrofitting an existing piece of equipment vs. purchasing a new piece of equipment that replaces an older piece of equipment. Having been a diemaker and a diecutter for many years, I have had many opportunities to go through the exercise of trying to determine what was the best course of action to take. Was it better to upgrade a particular piece of equipment or should we bite the bullet and go out and purchase a new piece of equipment. Could the older piece of equipment be upgraded with some newer more efficient component parts or new controls?

There are several important factors to consider:

F Has the technology advanced so that a newer piece of equipment is far more efficient, has a

lower operating cost and has faster operating speeds?

F Does the newer version of equipment have advanced computer controls that make it easier to

operate?

F Is the newer version more cost effective to operate?

F Could the older piece of equipment be upgraded or retrofitted to improve its operations was

compared to a newer piece of equipment?

These are all basic questions that have to be addressed and considered. In my past manufacturing and converting experiences, I have been faced with these same questions. Just because a piece of equipment is old, does not necessarily mean that it is not operating properly in production facility. Many people hate to get rid of that older faithful machine. The bottom line is usually an economic decision. Is it worth putting money into an older piece of equipment? After investing in an upgrade or retrofit, will the upgraded piece of equipment satisfy production requirements in the future?

To illustrate the point let us take a look at your desktop computer running some CAD program or possibly a Windows Office suite of programs. Just because you have a three year old system that may not have all the latest bells and whistles of a new Windows 7 super charged computer, does not mean that you present system is not doing the job for you. To go out and purchase a new super duper model, may not improve your computing capabilities at all. You probably can still so what you have to do with your three old systems.

Now there is an alternative. You can upgrade your computer. In my office I have several computers that have gone through generations of upgrades. I now have a cable modem, CD-ROM burner and other accessories. I have had internal boards upgraded and much more memory installed. This has been less expensive than replacing the whole system. Of course, I had a computer guru service type person to guide me along the way in my quest to upgrade my systems.

Let’s propose a hypothetical manufacturing situation. You have a wire EDM machine used to produce close tolerance parts in hardened tool steel for close tolerance cutting dies. The machine is 10 years old. Its original cost was $195,000. Its maximum cutting speed is 10” per hour in one inch steel. The machine has been totally depreciated. By adding a new controller and upgrading the several other components, the speed rate can be increased to 15 inches per hour, a 50% increase in productivity. The cost to upgrade the equipment is approx. $10,000.

The newest EDM Machine in the marketplace has operating speeds of up to 30” per hour in cutting 1” steel. You can purchase a new faster machine in the area of about $ 125,000. An added benefit of the newer model is that the EDM cut finish is much finer than in the older model. This is important to a diemaker.

I called my cousin, Jerold Larson at Pioneer Dietex Corp. He and I used the old EDM in our Boston Cutting Die Company. In his present company he has new versions of EDM equipment. He told me that he had the feeling that the older equipment was better built. The piece of equipment just kept working, month after month.

His new EDM machine is much faster, provides a better finish, but he estimates that it costs him $3000 to 4000 a year in maintenance. If one of the circuit boards needs to be replaced, that is a major added cost and this has happened. Jerry close to upgrade to a faster, more efficient system. Over all it made economic sense for him to move on to a faster EDM machine. I am certain that he investigated the option of upgrading his original EDM machine. He told me that today, you can buy a similar original EDM machine at 10” per hour speeds for about $ 35,000 and upgrade to for faster speeds for about $ 10,000. He obviously chose to go with a newer model.

Just being old does not necessarily mean that a piece of equipment is no longer a valuable piece of equipment in your workplace. I have seen a number of older diecutting systems that have been upgraded and retrofit with new parts that are still going strong today. They are still very efficient and have a place in many diecutting situations. Many shop people know all of the intricacies and trick of the trade to keep these pieces of equipment humming each day. When comparing the output per shift of diecut parts in some of these older pieces of equipment, they are comparable to newer diecutting systems. One consideration is the availability of spare parts. I have seen some companies that will buy a second machine at auction, just to be used for spare parts.

One major consideration is how efficient is an older piece of equipment vs. a newer piece of equipment. I run into this situation in many cases when I do a consulting assignment in a diecutting situation. The problem presented to me is that a company cannot produce die cut parts as cheaply as a competitor. The answer in many cases is that the converter is still using older less efficient equipment or the wrong type of diecutting equipment to minimize their costs and improve productivity.

No matter how much they try to upgrade or improve their present equipment, they can never be as efficient as someone else who has invested in the best type of equipment to get the job done at the lowest cost per cut piece. Many companies just do not want to invest in new equipment. They live with their older less efficient equipment and then bitch about not being competitive. This same scenario is true in many manufacturing and converting situations.

That brings me to one important consideration when it comes time to replace or upgrade any equipment. When it is time to scrap the older equipment and invest in the latest state of the art equipment. In today’s challenging marketplace, a major consideration has to be minimizing labor costs in any operations. If you are using a labor intensive piece of machinery, it may be time to consider investing in a more automated system that requires less labor. For example, many people in our industry can relate to the old manual milling machine. We used several Bridgeport milling machines for many years. We had highly skilled employees who could make their milling machines create intricate solid milled clicker dies. To watch one of these expert machinists hand milling an intricate die design was a thing to see.

Today go into many shops and you will see a computer driven CNC machining centers that can perform many functions automatically. Now the skill has been transferred to a person programming what the machining center is supposed to perform. You no longer need that person spending hours performing manual tasks. The cost of a modern tooling center is a logical decision to reduce labor costs.

The same scenario can be seen in laser dieboard cutting machines. When lasers first came into steel rule die shops to cut dieboards, it was necessary for a skilled operator to be constantly monitoring and tweaking the controls to maintain a uniform kerf in the dieboard. Today, laser systems have self diagnostic systems that replace the person constantly monitoring the laser cutting operations of the system. The laser machine operator is now free to perform other tasks. He may just be programming the next job while a present job is running.

Let us look at the older vs. newer laser dieboard burning systems in use today. Ten years ago, it was common to have 600 watt laser systems. Today, 2000 watt laser systems are far more efficient faster. Does every shop need 2000 watts of power to satisfy production requirements? The answer is no. Smaller shops can get by with 600 or 1000 watt machines. It all depends upon production requirements.

What is a major consideration in older systems is upgrading the controller to allow for more efficient operations. Adept Automation in Manchester, New Hampshire has developed new controllers and a kerf control systems that seems to be a logical solution for upgrading older laser systems.

Now with all that I have said so far in this article, let’s go back to the basics and look at your options in upgrading your present equipment. There are several levels of upgrading any piece of equipment, Let me explain.

RECONDITION: You can recondition a machine. This usually entails cleaning the machine and repainting the machine. Any broken parts are either repaired or replaced. The goal of reconditioning is to put the machine back into its original specs or condition. You still have the same old capabilities of the machine, but everything is working properly. The machine was the same old machine, but now it was in excellent working order. It still had some valuable life in it before it would be replaces or sent to the junk heap.

REBUILT: A rebuilt or remanufactured machine entails a complete disassembly or tear down of the piece of equipment. I can remember times going through the facilities at Hudson Machinery Corporation in Haverhill, Massachusetts and observing their people rebuilding various pieces of equipment. They would have baskets of parts with all of the many parts of a machine. Each part was cleaned and inspected. Each piece was repaired or replaced as needed. The many elements of the machine was painted to look like new. All the parts were then re-assembled. The machine was checked out and was then in its original condition and would work in an “as new” condition. This piece of equipment could be expected to perform for a number of years.

UPGRADED: An upgrade or modernization of a piece of equipment is improving the original piece of equipment into a new level of operations. It is adding onto the core of the old machine new and more modern elements that will improve the operational efficiencies of the equipment. For example, let take that old manual milling machine that I discussed earlier in this article. By adding a CNC controller, the machine could be automated. This was a definite improvement over the older manual operations. It was in many cases more cost effective than going out a purchasing the latest state of the art automated milling machine.

When upgrading a machine, you have to consider the following factors:

F Upgrade component parts with newer off the shelf parts.

F Add safety devices to provide warning/monitoring systems for safer operations. Also check

OSHA and ANSI regulations to insure that the newly upgraded machine conforms to all new

safety standards.

F Install new electronic drives that replace older mechanical drives.

F Utilize new materials such as nylon & urethane parts or special alloys ect. to replace older

components in wearable parts such as guides, wear strips, pulleys, rollers and wheels.

F Install new state of the art controller systems to improve the operations and controls of the

overall system.

Performing a complete upgrade on a machine is a task that a specialist or equipment rebuilder should tackle. It is generally not within the capabilities of most companies to attempt such an upgrade process. It is wise to consult with a machinery expert or a company that specializes in upgrading equipment. I have seen instances where a company may attempt to strip down a machine and upgrade component parts to that machine. Generally, this may be more expensive that having an expert do the job for you.

When you do decide to take the path of upgrading your equipment take a good look at the cost of upgrading the equipment and what improvements that you will attain in increases functionality. Has the operational speed of the equipment increased? Has the upgrade reduced your labor commitment for that piece of equipment?

Once you have answered these questions, now compare the investment that you would have to make to purchase or lease a new state of the art piece of equipment. Now it is decision time. Upgrade or buy new. Perpetuate the old with an update in its system or possibly benefit from installing a new system.

One final thought. That is how you position yourself compared to your competition. Is you equipment up to the level of sophistication of your competitors? Can your equipment produce as efficiently as your competitors to attain lower over all operating costs? After all, in business, the company that has the best equipment with the best trained personnel is often the winner. Are you using 15 year old system when your competitor is using a new state of the art system?

I have raised a lot of questions in this article. You are the only one that can provide answers depending upon your own manufacturing or converting situation. One important consideration is in conclusion, is the item of increased depreciation of equipment purchases that the government is currently offering. It is intended to increase the sales of new equipment. Check out this item with your accountant.