Previously used process equipment can offer significant cost advantages in capital construction projects, but there are important questions to consider before pursuing pre-owned equipment
Many misconceptions persist in the marketplace about secondhand equipment. Companies worry that previously owned equipment may not be in reliable condition, leading to potential breakdowns or runaway maintenance costs that evaporate cost savings. They fear used equipment won’t match the performance or efficiency of new models, especially if technological advances have been made. And still others believe that used equipment may not integrate smoothly with current systems or may lack modern features, requiring costly modifications or leading to inefficiencies. Put another way, the main question companies grapple with is this: Are the cost and lead time savings gained with used equipment really worth the potential downside?
While these concerns certainly are understandable, the reality is that these risks can be effectively mitigated when purchasing from a trusted supplier. There is plenty of “bang for the buck” to be realized when buying used plants, systems and equipment. This article discusses some ways to alleviate concerns over used equipment, and outlines the questions that should be asked before purchasing used process equipment.
Cost and time savings
When manufacturers find the right fit for used equipment, the large savings in capital cost and lead time savings often come as a welcome surprise. In the author’s experience, quality secondhand equipment can save companies 50% on cost and 90% on delivery times. For companies that buy complete pre-owned systems or plants, the savings can reach 70% on cost and at least 50% lead time for engineering and equipment supply. These savings often justify natural concerns about purchasing assets that were not custom-designed for the application, but will do the job comparably at a fraction of the cost and lead time.
Used equipment may come with imperfect specifications, but it arrives at the right price and at the right time. In today’s competitive global market, time and money are two terrible things to waste. Why should manufacturers strive for the unattainable goal of engineering perfection in designing manufacturing plants when they can aim for a more reasonable target that can be in service on a shorter schedule and for less cost?
Testing and compatibility
In many cases, historical operating records and maintenance documentation can be provided when purchasing the equipment to get a better understanding of maintenance needs. Buyers can inspect the equipment prior to purchase, which may include conducting tests, such as thickness tests, run tests and hydrostatic-pressure tests to ensure serviceability (Figure 1). Regardless, there are still general preventative maintenance recommendations, such as lubrication, bearing and seal replacement that would be advisable in certain situations.
FIGURE 1. Potential buyers of pre-owned equipment can inspect the pieces and conduct tests prior to finalizing the sale
When it comes to integration with existing systems, used equipment vendors work closely with clients and, in some cases, their external consultants to assess compatibility. If needed, vendors can assist with arranging third-party customization or retrofitting solutions. This ensures the equipment fits seamlessly into operations, avoiding costly disruptions, inefficiencies or extended downtime. Often, upgrades or modern features can be added without significant cost or delay to improve efficiency, allowing companies to benefit from the latest innovations on a tighter budget. For example, updated controls and sensors can be added during installation in a buyer’s facility to improve reliability and efficiency using industrial internet of things (IIoT)-enabled devices and systems.
Ultimately, purchasing used process systems or equipment from a reputable provider is a strategic decision that must satisfy the cost and time benefits — without compromising on performance to meet the commercial need.
Assessing pre-owned equipment
When assessing secondhand equipment for potential purchase, a number of important cost-engineering questions should be asked. Below are five key questions to ask that will help to mitigate the perceived cost-engineering risks associated with secondhand equipment:
Which equipment specifications can be flexible? It’s natural for manufacturers to focus their investments on optimizing production, product quality, safety and adherence to the bottom line when asked to navigate growth on tight budgets and timelines. Often, the default for project engineers is to define tight specifications and for the team’s procurement personnel to send those specs to a variety of equipment manufacturers. The result, more often than not for companies needing to add capacity, is to select the best offer without considering used or secondhand options.
When selecting good used assets, there is often not an exact match for your specific requirement. Understanding your “must have” attributes is critical to being successful. For example, if your project scope specifies Hastelloy material of construction, would it be possible to utilize glass-lined steel to accomplish corrosion resistance while saving significant capital?
What is the maintenance history of the equipment (or plant)? Generally, the fabrication documents, maintenance documentation, operating records and previous-use information are available when purchasing used equipment from its prior operator or a from reputable source.
For current good manufacturing practices (cGMP) applications, validation and cleaning documents are made available to ensure you can re-validate and place the equipment back into service in your process. These records will give a new owner the confidence that the assets can perform as intended with the proper continued care and maintenance (Figure 2).
FIGURE 2. There are five considerations that will help mitigate the perceived risks of secondhand equipment, including reviewing the maintenance history of the equipment or plant
What visual or mechanical inspections can be done to ascertain condition? When purchasing equipment or a plant from the original owner or a well-regarded source, the maintenance records can often tell the entire story about the equipment or plant, even if the equipment has stopped operation before you can see it. Certain buyers may find more comfort in being able to perform their own tests or inspections — such as ultrasonic thickness testing on pressure vessels, hydrostatic pressure tests, motor megger testing, eddy-current testing of heat exchangers and others. In most situations, visual inspections are sufficient.
What is the reputation and quality standard of the used equipment dealer under consideration? It is very understandable that used equipment (including used automobiles) may not have the best reputation for high quality and reliability. Buyers are encouraged to carefully choose partners that offer a high level of service — ask for references, testimonials or case studies of other companies that have successfully integrated similar equipment into their manufacturing ecosystems. At the end of the day, professional used-equipment dealers want satisfied, repeat customers, and will do their best to ensure that unfortunate and unforeseen circumstances are resolved amicably. The world might be a big place in some ways, but it’s smaller than ever in other ways and bad news can travel fast.
What are the cost benefits of used compared to new equipment? This may seem like an obvious question, “doing the math” can make the value proposition of used equipment clear. The author’s extensive experience in the industry focusing on qualitative improvements of used equipment, along with thousands of discussions with people across dozens of industries, has shown that running the cost-benefit numbers can solidify the potential time and cost savings (Figure 3). A host of considerations are important in quantifying the costs and benefits, among them: savings in initial capital outlay compared to buying new equipment; potential maintenance and adaptation costs; and in some cases, the energy efficiency of used equipment versus newer models.
FIGURE 3. A thorough cost-benefit analysis of secondhand plants and equipment can quantify the potential cost savings
Quality, reliability and service life
A major reason why engineers might hesitate to specify used equipment is the misconception that it is inherently inferior in quality, reliability or service life compared to new equipment. However, most types of industrial equipment are robustly designed to last for many decades with proper use, inspection and maintenance. This is another reason that maintenance histories, when available, are so useful.
Often, used equipment is available on the market after only short periods of use, or even no use at all, due to changing or canceled projects. Used equipment can be inspected to determine wear and damage, and components reconditioned and updated with modern controls and safety features at a lower cost than purchasing new. In many cases, used equipment can be just as reliable as new equipment, with the added benefit that its performance history is often available. Engineers can review data from previous operations to gain insights into how the equipment has performed over time. Access to such data are not an option when purchasing new.
The key to successfully integrating used equipment into most capital projects lies in design flexibility (Figure 4). Engineers can specify slightly broader operating ranges, allowing for minor deviations in parameters, such as temperature, pressure or flowrates. In many processes, especially those that are noncritical or don’t require extreme precision, these deviations do not materially affect the overall performance or production outcome.
FIGURE 4. The key to successfully integrating used equipment into capital projects is design flexibility
Process engineers and chemical engineers are trained to ensure that systems function within specific design limits, and this often leads to conservative choices. However, by recalculating the operating ranges of a process to accommodate used equipment, engineers can provide their companies with significant cost savings without negatively affecting the production process.
In some cases, larger equipment could be procured to accommodate growth. Used equipment that was designed for higher-capacity operations, more features, or built with higher grades of metals could easily fit into a system operating at lower thresholds. This inherent flexibility allows companies to leverage pre-owned equipment that might not have been an obvious choice initially, but that functions perfectly within the specific context of their operations and is “future-proofed” for continued growth or a different product slate. For example, having a larger Hastelloy agitated nutsche filter dryer in an active pharmaceutical ingredient (API) pharmaceutical plant, where a smaller 316 stainless-steel vessel is required, can give a manufacturer the future potential of processing more acidic materials.
Another factor to consider is that most batch-type process equipment technologies used today have not had significant design and efficiency changes since nearly a century ago, reducing their obsolescence. For example, heat exchanger and reactor designs used in process manufacturing today have been the same for nearly a century. Only incremental improvements have changed those types of equipment, and those changes have arrived mostly through improved controls, sensors and instruments.
The other truth about process equipment is that with proper operation and maintenance, high-quality process equipment is built to operate well beyond its stated useful life — even when it has been running full time.
From petroleum refineries built in the first half of the last century, through specialty chemical and pharmaceutical assets dating to the 1970s, it has been proven that most static and rotating equipment, with proper care, can far outlive their designed 20- to 30-year operating life.
Industry examples
The author’s company has a long track record of case studies from around the globe that illustrate the potential cost and lead-time benefits that can be realized with pre-owned assets. Here are two examples of cost-engineering cases using pre-owned equipment:
The first involves the sale of a world-class ammonia plant from a canceled project, in which all the engineering and equipment fabrication was completed at the time of the project cancellation. As unlikely as it seems, brand new, unused equipment had either been delivered to the plant site or was awaiting shipment from vendor shops. None had yet been put into operation.
The client was able to reformat the site-specific engineering to meet its site conditions and install the plant on the other side of the world. This client is now one of the leading producers in its space in its country.
The final price tag for this project was less than half of the original project cost, which had initially been proposed as a new greenfield build budgeted at $600 million. It also should be noted that the timeline of the project from start to finish was under three years, during the COVID-19 pandemic, whereas the build-new projection was five years.
In a second example, at the equipment scale, a U.S.-based custom-manufacturing customer had an urgent project for a specialty chemical. The company could not wait the quoted 40 weeks for a brand-new glass-lined reactor and their client was unwilling to commit to a long-term supply agreement over which the client could amortize the high cost of new equipment.
The customer purchased a secondhand glass-lined reactor that had been pressure tested, spark-tested, gearbox-rebuilt and repainted at 50% of the cost for a new reactor. The time to delivery was just three weeks after the order, allowing them to win the contract and deliver product ahead of schedule and with reduced capital expense.
Environmental impact
Capital cost is obviously only one concern when cost engineers make the new-versus-used evaluation. Increasingly, companies are looking beyond price tags and leaning into broader goals like sustainability, efficiency and community impact (Figure 5). Choosing good used equipment can play a crucial role in achieving these objectives, especially for businesses aiming to minimize their environmental footprint and foster economic regeneration. This increased awareness of the circular economy has become a powerful motivator in today’s market. More and more companies are aiming to reduce waste and extend the lifecycle of their industrial assets.
FIGURE 5. Choosing good used equipment can have impacts that go beyond cost, including in areas related to sustainability and community impact
What might be the impact of employing pre-owned equipment on sustainability? Consider the following:
• According to the John D. and Ellen T. MacArthur Foundation (Chicago, Ill.; www.macfound.org), a global charitable organization that funds a variety of projects on sustainability, climate, social justice and others, the circular economy could create a $4.5 trillion economic opportunity by 2030. The foundation’s approach favors keeping materials in use significantly longer than in previous generations to reduce the need for raw-material extraction, manufacturing and transportation – all of which are energy-intensive processes.
• Research published by the International Energy Agency (IEA; Paris, France; www.iea.org) indicates that the manufacturing sector is responsible for nearly 24% of direct CO2 emissions from the global energy system. By targeting good, used systems, companies can achieve their expansion goals while minimizing their carbon footprint. For example, the reuse of equipment in capital projects can reduce carbon emissions by up to 70% compared to sourcing new equipment.
• A study by the American Chemistry Council (ACC; Washington, D.C.; www.americanchemistry.com) found that for every direct job in the chemical industry, 7.5 jobs are supported indirectly in the broader economy. By investing in used equipment, companies can quickly restore jobs that were lost when plants were idled, providing a boost to local employment and economic stability.
The “reduce-reuse-recycle” approach has become increasingly important in the chemical product marketplace, driven by rising consumer expectations and regulatory pressures. The European Union, for example, has set ambitious circular economy targets as part of its Green Deal legislative package, aiming for a 55% reduction in greenhouse gas emissions by 2030.
This shift to sustainable practices is not just about corporate responsibility – it is also about economic sense. Reducing, reusing and recycling save companies money and deliver a power driver to local economies.
By focusing on these benefits — sustainability, community revitalization and cost savings — companies can make smarter decisions about their capital projects. And when the time comes to add capacity, considering used equipment is more than just an economic choice for cost engineers. It’s a commitment to a more sustainable future.
Edited by Scott Jenkins
Acknowledgment
All photos appear courtesy of IPP
Author
Ross Gale is the vice president at International Process Plants (IPP; 410 Princeton Hightstown Rd., Princeton Junction, NJ 08550; Email: [email protected]; Phone: 609-586-8004), where he is responsible for finding and creating opportunities to repurpose existing manufacturing assets globally. He also leads Gale Process Solutions (GPS), an IPP sister company that manufactures and sells new, world-class alloy process equipment and process units, and Universal Glasteel Equipment (GPS), a supplier of new and rebuilt glass-lined equipment. International Process Plants is based in Princeton Junction, New Jersey. The company has operations in 15 countries and boasts an inventory of 18 complete plant sites, 110 complete process plants and more than 15,000 process equipment pieces in warehouses in the U.S. and Europe.