Screen Printing - August/September 2012 - (Page 12)

T H E D I G I TA L D I M EN SI O N NEW OR USED? Rick Mandel Mandel looks at the pros and cons of buying new or used printing equipment in his interviews with well-known industry experts. Rick Mandel is president/owner of the Mandel Company, a 120 year old, family-owned graphics firm. He is CEO of the Screentech Division, specializing in large-format color separations prepared for the screen printing industry, large-format color separations for the P-O-P industry and large-format digital printing. He has been a speaker for SGIA, SPTF, and POPAI and is a member of the Academy of Screen Printing Technology. He is a 20-year member of SGIA. W e have chosen a profession that is by its nature a capitalintensive industry, and that can present a problem. Graphic software to take in clients’ files requires on average a thousand dollars of upgrades every other year, and the actual workstation (Mac or PC) needs to be replaced every three or four years. Naturally, the newer software is optimized on the newest boxes. You can almost hear the cost accumulating: cha ching! Secondly, printing devices range from $20,000 to a couple of million dollars in cost. This cost does not stay stagnant, and digital equipment should produce a return on investment (ROI) within three years. Devices may become out of date or too expensive to maintain after that time frame. Lastly, the service costs can pile up for all printers. Yet being without a service contract is similar to playing roulette with your client. Even if we put together a third-party service network to take care of printers, problems arise. So, how can you maximize your investments on equipment and service, while maintaining a level of expertise and production? As you can imagine, beauty is in the eye of the beholder. Original equipment manufacturers (OEMs) have the statistics and logic behind new equipment purchases, while smaller printers often take a used equipment direction. The importance of knowing what you are getting into is important for both approaches in this economy. costs for debt service and service contracts can be a huge nut to crack, though offer fantastic throughput if the work is consistently there. Thoughts on used equipment Because digital is constantly changing, buying used probably puts you two generations behind the latest and greatest. From a service and support viewpoint, if it is your first piece of equipment, used is likely to be a disaster. If you are adding to an existing fleet of presses or replacing a press, adding a used press of the same make and model would seem to be a safer bet. “Basically, I would frame the decision around a business strategy,” says Bob Travis, owner of Inkworks. “If I am a new entrant to digital printing, expecting to capture new opportunities, I would suggest new equipment. It is difficult to be compelling with second or third generation technology. If the strategy is to convert existing business or expand current digital business, investing in used equipment that matches existing capability, would allow for a seamless implementation at lower cost.” A monthly nut for the addition of a $250,000 device would be approximately $15,000 (debt service, service contract, one additional employee). This could equate to an additional $300,000 of sales yearly to deal with this expense. Per month, this would equate to 250 sheets of 4 x 8-ft product. For a smaller company, down time could be a scary cash drain, though larger companies could handle the peaks and valleys of such choices. Chip Basse, president of Albert Basse Associates, directs his thoughts to the client, “Our clients are demanding higher quality than the quality that some of the older machines are capable of, so that is part of our decision making.” Buying new equipment has many positives, as John Heiser, president of Heiser Sign and Graphic Services, has said. With new equipment, warranty support is usually better. New equipment, the latest technology (and refinements), and reliability follow. Negatively, the price and uncertainties of your return on investment are also part of the buy new decision. The actual make up of the company and the personality of the ownership plays a large part in the new vs. used choice. Mike Altreuter, VP with Global Imaging, elaborates: “Having sold both new and used digital equipment during the last seven years, I recognize the benefits of both. New buyers tend to be risk averse, they need to have guaranteed service response time, want the latest features to stay ahead of the competition, want a tight rela- What experts say about new equipment Buying a new digital printer has the advantage of current technology, a warranty time frame to work out the bugs, and access to techs within the OEM, though hefty service contracts are required on the high-end production devices. Bill Kujawa, president of BK Marketing, says, “Buying new is a difficult ROI unless you have a client or a contract. Buying new will also make you paranoid because a newer, faster, better presses will soon be in the market.” Therefore, buy new for specific needs of a client or clients. Build it and they will come is a philosophy that’s long gone. Rather, build it when the need is present. Joe Shondel, past president of SGIA, echoes Bill’s message that relate to high-speed digital presses. “Unless your business is profitable and growing, these types of fees (service contracts) are very difficult to amortize over the course of a year and still many repairs are still not covered 100%.” Monthly 12 SCREENPRINTING

Table of Contents for the Digital Edition of Screen Printing - August/September 2012

Screen Printing - August/September 2012
Contents
Newsworthy
New Products
Strategies for Navigating the Regulatory Maze
New or Used?
Thin Is In
Color-Management Aids
Performance Equals Profits
A Look at Dye-Sub Printing for Garments
Shop Talk
Classifieds
US & Canadian Directory
Advertising Index
Editorial Insights

Screen Printing - August/September 2012