Effective and reliable plant machinery and equipment are vital to running a successful and efficient operation. However, the procurement of such tools is often no small job, especially given the significant costs of such pieces of kit, writes Rob Symons, Director at CRJ Services
The decision of whether to hire or buy plant machinery can be complex, with several considerations required when it comes to understanding the right approach for your business.
Because no two operations are the same, purchasing machinery outright is the best option for some, whereas long-term hire will likely make more sense for others. The following three considerations are therefore really important in assessing the most productive and cost-effective method of procurement for your firm.
One of the most vital considerations that operators should review is just how much they’re planning on using the machine, and for what duration of time.
The more you plan on using a piece of equipment, the more likely it is to need regular maintenance and repair work, which brings its own issues. Downtime can cause serious disruption to operations and have significant financial implications.Therefore, without a fast, reliable engineering solution within reach, ownership of a machine that is likely to need servicing could easily leave you without vital equipment.
When hiring, providers will often offer a wraparound service, meaning that machines can be repaired or replaced within the cost of the contract. This means peace of mind for operators using a machine quite intensely. For example, CRJ operates a swing programme which means that it will replace any machine within 24 hours where required. When renting, you are securing a machine for the length of a contract, but when purchasing outright, you are purchasing one specific machine. Only through hiring are you guaranteed to have a working machine without the possibility of needing to invest in a replacement during this time.
Additionally, if you are using a machine regularly and for a long period of time, its resale value will fall dramatically, should you wish to move this on or upgrade at any point, which makes an outright purchase a less appealing proposition.
However, if your usage is minimal, purchasing the machine might be a more cost-effective and better solution in the long run. Buying ensures that you are not bound by any minimum usage charges that rental agreements may impose, which can accumulate and change over time. Moreover, owning the machine means you have complete control over its usage and can tailor it to your specific needs without any constraints.
Money talks
A significant factor influencing purchasing decisions for all businesses is their financial situation and confidence in this moving forward. Challenging economic times come with unprecedented levels of uncertainty and this can have a rippling effect through all levels of an organisation.
The outright cost of purchasing plant machinery can be significant, and this outlay may be unappealing if you lack financial security or confidence in your business’s direction. Therefore, spreading the cost over a longer period provides more short-term security and doesn’t have the same impact on your cash flow.
That said, over the period of a hire contract, the overall cost will prove greater than that of an outright purchase. If you have the capital within the business and are confident in your financial position, purchasing equipment outright is technically the cheaper option.
People Power
Another factor influencing whether to hire or buy plant machinery is the presence of internal resources to support machine ownership. If your business already has on-site engineers and experts, then the need for wrap-around support from a rental service isn’t quite so important. But this support team should be well-versed in the workings of the particular piece of equipment. Otherwise, you may be taking capacity away from their other tasks and still experience longer downtime than is acceptable for your operation.
Without this in-house support, hiring – with its added service that providers like CRJ offer – is much more appealing as at some point, most machines will need some attention. What’s more,the cost of downtime without a readymade service solution can quickly eat into the savings made by purchasing a machine outright.
Making the Decision
The decision of whether to hire or buy plant machinery is far from straightforward. There is no right or wrong answer and the best option will depend on your specific circumstances. However, by considering these factors you can make an informed decision that is right for your business.
Sometimes this decision is dictated by other factors. For example, some company policies may simply outline the procurement process – and for others, they may wish to hire before they buy, which many providers will offer.
Overall, the most important consideration will likely be around usage. Understanding how you are going to use the machine – and for what duration – is likely to be the key factor in whether hire or purchase is the best option for you.
In any case, by speaking to CRJ or an alternative provider of plant machinery and equipment, you will be able to discuss your requirements in detail and be offered further guidance on the best solution for your operation.
