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Equipment Purchases: New vs. Used


November 29, 2013
By Philip Nickerson

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“Even a free pump may end up costing you more than a shiny new cast stainless steel volute with all the latest bells and whistles.”

By Philip Nickerson

I love a bargain, but my wife often reminds me that “it’s not a sale unless you need it.” And she’s right.

The bargains I find on aquaculture equipment are usually due to shopping around or buying used or scrounging.

But even with scrounging, there is still a cost to consider. Even a free pump may end up costing you more than a shiny new cast stainless steel volute with all the latest bells and whistles.

Things I often buy used

There is one brand of pool pump that is mass produced and that I am very familiar with. It is easy to repair, or to train others to repair. I have to admit to buying these new, buying these used from online classifieds, buying parts for them from eBay, and even picking them out of local lobster pounds’ roadside garbage on occasion. The point is, if you are familiar with any piece of equipment, many of the lifetime cost factors can be nailed down with specificity.

Pipe and fittings have proven to be a very good bargain in the past, especially PVC valves. Contamination may be a concern, but proper cleaning can be done cheaply.

In general, if the item is a mass-produced commodity, there is a good chance that used is a financially viable option.

Things I buy new

Used electronics are often very inexpensive and there is a reason for this. It is extremely difficult to be sure that they work until you spend hours learning how to program them and the money to hook up a test. And it can be very difficult to troubleshoot them if they don’t work. Like anything else, it really comes down to whether or not you have the tools and expertise to keep it running. The recommendation here is “buy new.”

But, the new-vs.-used debate is too complex to ever be resolved on a general basis. It will be a case-by-case discussion for most, if not all, items. The critical metric in making such a decision is “lifetime cost.”

 Lifetime cost includes cost to purchase, cost to install, cost to operate (energy for example), cost to maintain, cost to dispose, and cost of risk. Simply compare lifetime cost of buying new and of buying used, and you have the answer.

Here are the factors I weigh when buying equipment or when recommending that others buy.

Purchase price

Up-front purchase cost has less of an impact than one might think on lifetime cost. Where it really comes into play is when one knows that the used piece of equipment is in “whole” condition and is an exact match for the new version being considered.

An often overlooked portion of the purchase price is your time. How many hours are you willing to invest in purchasing this item? Is the potential savings worth 10 hours of searching for maintenance history of an item in online forums? Or searching for a used version of the equipment in the classifieds? Or sending you or your staff to pick up the items?

Cost of risk

Risk cost can be quantified by looking at differences in insurance impacts or in warranty cost. For an aquaculture operation, part of the risk to consider is whether an unexpected failure can cause product loss. If so, cost of risk can escalate quickly and needs to be weighed carefully.

Cost of risk can be offset by having a ‘back-up plan.’ Monitoring the equipments output and/or setting up an alarm system to respond in case of failure can mitigate cost of risk. Be aware of this cost.

Many aquaculture operations deal with risk via redundancy – installing a spare pump or filter as a ‘back-up’ to the one in use. Include this cost in your buying decision. If you do install redundancy, some of the other factors can also have a lesser impact.

Installation costs

Given the highly varied and highly specialised equipment found in hatcheries, install costs can be significant.

One heat pump we built at Scotian contains used evaporators and condensers we had on site – zero purchase price. But each of the 12 exchangers used had four refrigerant connections and two water connections to make. That is 72 ‘outlets.’ Consider that 48 of these are copper and require braising, reducers, elbows, tees, to be completed, and we ended up with over 1000 joints to weld. Since we had neither the equipment nor the expertise for braising on staff, this bill was not small. Not for the fittings, and not for the contractor’s labour.

Electrical parts and labour also form a significant cost today. Given that a hatchery has multiple areas where both electricity and water are present, electrical safety must be uncompromised.

Installation costs can be offset by hiring solid technical staff if a hatchery is large enough to support one.

Operational complexity cost

As much as we all love fish farming, sometimes we want to take a break, even for a few days. Consideration must be given to difficulty of operation and how difficult training new staff may be. Equipment that requires daily attention because it was purchased at a bargain basement price may end up costing more than was saved initially.

Operational energy cost

Energy is quickly becoming one of the most expensive items contributing to lifetime cost. And one of the most complex. Heating and cooling equipment, and pumps that operate 24/7, are both areas where energy costs quickly drown out purchase price considerations.

In a 24/7/365 operation, a new pump can chew up energy costing more than its purchase price in a year.

And in both cases, there are measures to be taken that can dramatically affect energy costs. At one lobster pound this year I was able to reduce energy costs 76% by recommending new chillers and some changes to the pumping process. Energy-saving devices are becoming more numerous each day. It almost always pays to look into the cost of energy of hatchery processes with an eye towards reducing energy consumption.

Maintenance cost

Maintenance is possibly the hardest cost to quantify. Most equipment comes with a ‘recommended maintenance’ schedule from the manufacturer. So, preventative maintenance is not the problem.

Reactive maintenance is the great unknown. If you are buying multiple units, predictions get easier. But unless you can get inside this used piece of equipment (perhaps visually in your head) and have the knowledge to inspect each component, you can’t compare whether a used item will stand up to the same application as a new item.

Bottom line: if it failed or needed replacement parts, can you get the parts? Can you do the repair yourself? Can you afford to have this item not operational for any reasonable length of time for repair?

Philip Nickerson, P.Eng. is the Technical Manager and Engineer for Scotian Halibut Limited in Nova Scotia, Canada. He also owns and operates an aquaculture design and operations company – Aqua Production Systems Incorporated. To continue discussions from the article, contact him at: philipnickerson@gmail.com


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