A Twisty Tale in the Machining World

By Lloyd Graff

This is the story of a cold saw that tells us how the used machinery business sometimes works and sometimes doesn’t.

Two partners bought a deal with a small assortment of machine tools in Arizona. They chose to auction the equipment off in the worst possible market, the spring of 2009.

The most valuable piece in the sale was a Kaltenbach KMR100AP cold saw, new in 2004. The partners in the auction had figured the circular cold saw would bring $30,000 at sale, but for an assortment of reasons including ineffective advertising, an out-of-the-way location and abysmal market conditions, the machine could only get a $5,000 bid at the sale. The sellers felt that price was ridiculously low in light of its superb condition and $125,000 replacement cost.

The owning partners squabbled after the disappointing auction. One partner, a California machine tool dealer, wanted to put the saw into his working inventory, but the auctioneer wanted to get rid of it as soon as possible. Graff-Pinkert had a customer who was interested in the saw, but his business was horrible because of the automotive downturn. He was too fearful to pull the trigger, even at a low cost.

Then the owners of the saw put it up for sale on eBay. The dealer planned to buy the saw himself if it sold for less than $20,000, but another dealer who specializes in saws won it for $25,000 and shipped it to his Midwest location.

He put a price of $69,500 on the piece and began waiting for the right user to come along and buy it.

Meanwhile, the automotive supplier who had coveted the saw for $20,000 back in April but had had no money for it, has called back all of his layoffs and has renewed interest in it. He also is considering buying a new Japanese saw with a year’s guarantee for $110,000, though his shop lieutenants still prefer the used German one for half the price of the new one.

The Midwestern dealer has told us he would take $50,000 for the KMR100AP cold saw, to which Graff-Pinkert added a 10 percent markup to our client.

Question: What would you do if you were the potential buyer of this machine? What would you do if you were the selling dealer?

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