Get Out Your Checkbook

Recovery is ongoing, and despite tightened credit markets, now is a good time to invest in capital equipment.

Nothing remains of 2009's economic tidal wave except the bad memories of what it was like during the Great Recession. Financial reports still don't paint sunny pictures of the current situation, but the economy is improving, albeit slowly (for more on the state of the package printing industry, go to p. 14). For companies that waited for economic conditions to improve before making a major capital equipment purchase, now is the time to start investigating, at the very least, in earnest.

"When you add together an improving economy with low financing rates, it sends a signal to business owners to evaluate strategic reinvestments in their companies," says Linda Reed, national program director, PNC Equipment Finance. "New equipment has the potential to increase production and efficiencies and, ultimately, can deliver to the bottom line."

That said, navigating today's credit waters is not what it was in the late 1990s and early 2000s. Back then getting credit was easy, but that's not the case today. Lenders have tightened up, and disclosure is the name of the game, as lenders ask borrowers to reveal more and more. To secure financing, printers must be prepared when they meet with their banks or financing companies.

It's a good time

Despite the tightening of the credit markets, now is a good time to consider a capital equipment purchase, although some warn that printers must be in the right position to buy. "Right now is an excellent time to be looking to upgrade your plant, as eventually the interest rates will go up," asserts Reed. "Many customers have decided it is no longer cost-effective to keep fixing older and less-efficient equipment. By purchasing new equipment with today's rates, they are actually saving on repair bills, labor, turnaround time, and product waste."

Jim Dugan, vice president, financial services, Heidelberg USA, Inc. and David Roper, president, Alliant Capital, agree that it is an opportune time to upgrade if the situation is right.

"It is a good time for those who are well positioned to buy," says Dugan. "Financing rates are exceptionally good and manufacturers' pricing is good as well. But, obviously you've got to have the need also."

Roper adds, "It all depends on their book of business. If companies are looking to buy equipment, it's important that they have the revenue to support it, especially if they are going to finance it."

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