Digital press resale values – time for change: Andy McCourt's commentary

As the industry moves to more digital output, printers are discovering re-selling or trading a digital press is nothing like dealing with a  traditional offset big iron. As digital presses move upmarket in build and productivity, it could be time for change, argues Andy McCourt.

Working with GraysOnline, I am constantly impressed with the resale values of certain offset, flexo and gravure presses. A fifty-year old Heidelberg 'Windmill' Platen set up for cutting and creasing can sell for $3,000; ten year old multicolour B1 Speedmasters, Lithrones, Rapidas and Rolands fetch hundreds of thousands of dollars. A more recent gearless Flexo machine has brought in over two million dollars.

Of course it depends on condition, impression count and features but it's fair to say that the established manufacturers of the hardware that keeps most of our industry going, engineer reliable machines and continue to support them through several periods of ownership. They may even include a 'buy-back' clause in the finance agreement, with a guaranteed minimum re-purchase after so many years, and with a specified usage.

To Heidelberg's great credit, when it exited manufacture of DI digital presses two years ago, the company pledged continuing support to legacy owners of QMDIs and SM74DIs, with no 'end of life' plan in sight. KBA, with its fitful Karat digital press programme continues to support these presses as if they were Rapidas or Commanders. There are only three or four Man Roland Dicowebs installed globally, but they get treated in the same way as a ColorMan.

The big H has no digital press offerings today – for the time being – but newer entrant digital press vendors could learn a lot from Heidelberg's example if they are to be taken truly seriously by the meaty end of the industry, and keep good faith with repeat customers.

Some are better than others but recent experience has shown digital presses have little value left in them after even a couple of years if the vendor does not co-operate on service contract, removal, re-commissioning and on-going support. This situation needs to change in Australia and New Zealand, as it has changed in Europe and the USA with the emergence of independent re-marketers of digital press assets. It would also appear that some vendors are treading on thin ice with the ACCC by using monopoly situations to kill the re-marketing of their machines, or make it so unattractive that no one will buy a used version for anything more than peanuts.

One victim of such a situation describes it as the 'copier salesman mentality,' where the past practices of sell, use for two years, re-sell a new model and the 'devil may care' what happens to the old one, prevail. This just won't cut it long-term in the professional printing market. It may work for office machines and even production lite units but if digital vendors have real aspirations to take on longer runs with faster presses, they need to address their after-market. And it will help them stay out of court.

The seven-year itch
Like some marriages in the film of the same name, ownership of a digital press can turn sour after seven years. I'm looking at the product discontinuation schedule for a major digital press vendor. If you bought one of their presses that was discontinued in 1998, support ended in 2005. If you bought a spanking new one last year, support will end in 2014.

If the vendor still has parts, they may make a special effort to help out with servicing but eventually you will be on your own with a useless piece of metal and plastic you can't sell. This also raises environmental concerns, but that's another issue.

One owner of several digital presses from different vendors told me:
"Buyers of used digital print equipment, look for both the certainty of future service maintenance at reasonable rates and an acceptable purchase price. By certainty, I mean a continuation of the existing service click agreement.
Most second-hand buyers wouldn't be expecting charity from the service department and if the equipment was over five years old, they would reasonably expect to pay a higher than current click rate and without a guaranteed contract period.
 
However, because vendors don't seem to have consistent and transparent service policies on used equipment, decisions on used equipment values can't currently be made with any certainty, resulting in depressed resale prices. In my opinion there is no valid reason based on service provisions, why such service policies can't be offered and operate profitably for all vendors. Why knock back new customers?"

He adds:
"While these companies are quick to portray themselves as print equipment providers, introducing amazing technology at big prices, their customer support policies haven't kept up with their new customer base (printers) and they are out of step with today's overall community expectation of fair business practices.

Their cavalier approach to denying service contacts on used equipment with it's subsequent affect on resale values, might go unnoticed in the office copier market, but printers are currently being asked to pay between $250K – $1M for digital production equipment, securing the finance by way of mortgage or personal guarantees, only to discover the equipment seems to lose 50% of its resale value upon installation!"

The computer/IT/copier industry-thinking of forced obsolescence (remember DOS?) has invaded the printing industry because the vendors do not yet understand the profitable dynamics of the global printing industry where almost twice as much used machinery is sold as new equipment. Ours is not a resource- wasteful, disposable industry; it likes to install the latest technologies but demands a channel for yesterday's assets too ... within reason.

The digital press after-market is emerging in the UK www.thedigitalpeople.co.uk  and the USA www.jjbender.com  and some governments have legislated that supplier must offer support after a specified number of years, irrespective of stated company 'end of life' policies.

It will happen here too and my tip for digital press vendors is to wise up in advance and take a leaf out of offset press vendor's books!