Often the best deals and business decisions happen when you’re doing something that seems crazy to other people and even a little bit crazy to yourself. As used machinery dealers, putting our money down to stock old, dirty machines that we’re only interested in for resale, we have to have chutzpa. To some people, the business model seems a bit ridiculous, but it’s how we eat.
These days I often question if it even makes sense stocking machines. Often we make a good profit brokering machines we’ve spent no money on, selling them right off the owner’s floor.
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Interview Highlights
Stocking machines requires risking your cash, so you have to have some big self-confidence. It requires you to believe that you’re smarter than other people, which is an important trait to make clever business moves. But as you can imagine, it could also lead to doing some very stupid stuff.
Seeing other used machinery dealers out there rolling the dice on old equipment makes me feel a little more secure specking on machines. If we were the only ones buying other people’s discarded treasures, I’d be more nervous doing it. But still, most of our dealer contemporaries don’t buy the same junk we buy—Legacy Hydromats, Davenports, Acme-Gridleys—some as old as American presidents. Obviously it’s not really junk. Otherwise we wouldn’t buy it. I’m just trying to sound dramatic.
Anyway, even when a deal seems REALLY interesting, it’s easy to question yourself. Why hasn’t anybody else bought it? Are we really smarter than other people out there who aren’t specking on screw machines built in the ‘50s by companies that don’t even exist now?
And why is someone selling these machines? Do they know something we don’t? Or do they just have other things they want to focus on besides worrying about maximizing the value their old iron that they’ve already written off?
In any case, our biggest deals these last few months have been selling a bunch of Davenports, New Britains, and Acme-Gridley multi-spindle screw machines. I’m not going to lie, I was not enthusiastic about Graff-Pinkert’s recent purchase of a group of these machines out of a shop in the middle of nowhere.
As Rex and my Dad, Lloyd, plotted their bid on the machines, I thought back to the last New Britain Model 52 we owned. It was actually a really nice machine that came with a lot of spare parts. We ended up selling it very cheap after it sat in our warehouse for four years. I also thought about the New Britains in an auction we had two years ago that sold for nothing.
Yet last month, we still had the audacity to buy more of the same kind of machines, but this time it worked because we bought the machines right and sold them quickly for bargain prices.
It was easier for Rex and my dad to pull the trigger on old sexy ugly iron like this because they were around when these machines were mainstream, when their resale was paying my college tuition. But the reason the deal was a success was that other people didn’t know about it, and other people weren’t stupid enough or smart enough to buy it.
Meanwhile, we have some beautiful relatively late model CNC Swiss machines that have been sitting in our warehouse for two years give or take. We bought them during a period when everybody was dying for Swiss, so it felt like a safe move at the time. We thought we were clever when we imported them, but we weren’t. We were following the herd, the same herd that has their own similar machines taking up warehouse space right now.
We need more deals that others overlook. Deals where we’re competing with ourselves rather than other dealers.
We need to learn about more types of machines, get out of our comfort zone, and try to not think like other people.
I’m trying to take inspiration from some unconventional deals we’ve done in the past. Some were really profitable and some weren’t, but they were still worth doing. I always love to think about when we bought our first INDEX MS32C at an auction in Australia. The machine cost $70,000 to ship to Chicago, but then we sold it to shop in Italy for a huge a score.
I’m also thinking about one of Graff-Pinkert’s most memorable deals from before I joined the business. We had several Eubama transfer machines that we just couldn’t sell, so we traded them to Tony Maglica, the owner of Mag Light for 23,000 flashlights, several thousand of them monogrammed with Graff-Pinkert’s name. I think it took us about 20 years to give all of them away, but they were interesting high quality swag for customers. It was a much better solution than scrapping the machines, and it was just cool!
When our B2B magazine Screw Machine World started in 2000, we put copies in the bathroom stalls at IMTS. Did it lead to subscribers and advertisers, who knows. But I know it was fun, a bit crazy, and it energized us. It’s the kind of thing that makes me feel alive. The kind of thing I need a hell of a lot more of at work.
What do you know more about than your competitors? What could you do that they might be afraid to do? What could you do that they would think was crazy?
Question: What was something crazy you did at your company that you’re proud of?
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5 Comments
We purchased our 1st Hydromat in 1986 when our Ford buyer told us we had to cut our prices in half or he would resource our work. Ford was 70% of our sales. He actually resourced the largest spend part 1144 steel with a +-.0004 tolerance on a step. I “bet” the supplier who he resourced it to would fail running it on a 8.1 Eubama. We won the bet (if you want to call it that ) when the other supplier failed to deliver.
I think brokering is a great idea. No different than real estate. I am a licenced real estate broker in Indiana. We generally get 3%+- which is negotiatable on either end of the transaction. Most deals take 90 days to close. Very similar to selling a machine.
Thanks, John!
As usual, astute.
I love that you’re not afraid to try stuff. In fact I can tell it excites you to try stuff, even if it might not necessarily be necessary.
One of many similar stories from my ‘out of the box’ thinking in my shop. A local company put an old cnc lathe outside their plant. I drove by it for months. Finally I inquired and bought it for $2000. Refurbished it and retrofitted a used but much better cnc control. Time but not much money invested. I ended up using that machine to make parts for the company I bought it from, and it returned much profit to me with some sweat equity invested. No new machine payments, ever. I’ve always had fun shopping at the scrap yards for usable stuff others throw out. But that’s just me……ha.
Great story, Fred.
That’s the kind of thing I want to be doing more. Just take initiative when you’re inspired and do what someone else overlooked!
30 years ago I was schlepping around in a scrap yard on a cold spring day. I saw a Number 2 morse taper shank sticking out of the semi-frozen mud. I walked over and kicked it, it moved a little but didn’t seem like a drill bit which I thought it was. After more kicking but less budging, I found a 3ft long piece of pipe. Put the pipe over the taper shank and pried. And pried. Then up out of the ground came a mud caked Ettco Tapping Head. I paid less than $5 for it. Surprisingly it was not rusty or corroded. Cleaned it up, still using it in the shop. I do smile a bit every time I use it.