When the pandemic hit in 2020, OEM manufacturers feared the worst and started to pare back their production of new machines and parts. Then the unexpected happened. Instead of the pandemic resulting in a collapse in the earthmoving market, there was a spike. People were spending more time at home – working and leisure time – that they started to upgrade. They either bought bigger homes or they expanded the size of their existing homes. This resulted in an increase in demand for earthmoving machinery and the OEMs were forced to play catch up. This scenario played out over a number of months and the impact was massive. The manufacture of earthmoving machinery and parts is not like opening and closing a tap – production is a complex network of suppliers, processes and logistics. The OEMs needed to ramp up production gradually and the impact is going to be felt for numerous years before we get back to normal. According to the Association of Equipment Manufacturers' (AEM) most recent quarterly survey of its members, more than 95% of construction equipment manufacturers reported experiencing supply chain issues.
So, what is the solution? The big debate is OEM versus aftermarket. If you research this online, it is easy to believe that aftermarket trumps OEM – but bear in mind that aftermarket suppliers spend more time blogging about the virtue of their parts. The bottom line is that OEM is better quality than aftermarket. This is because OEM parts undergo rigorous industry and manufacturer testing before they're qualified for use. Aftermarket parts are not built with any standards in mind. The biggest issue with new OEM parts right now is availability. Another issue is that new OEM tend to focus on later model machines.
Refurbished OEM parts elegantly address both these issues and then offer a few other advantages. Firstly, lower cost. The cost of one new piece of equipment could equate to two or more used pieces, depending on availability and demand. Secondly, you avoid the initial depreciation. New heavy equipment is no different from new cars in that the minute you drive them off the lot, they depreciate in value – as much as 20 to 40 percent in the first 12 months. Thirdly, used equipment holds its value. Although used equipment has depreciated, it can hold its value if it’s well-maintained. When it’s time to sell, it’s actually possible to get close to what you paid if you sell at the right time, to a market where your equipment is in demand.
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