Krauss-Maffei Corp. lease plan gives machine buyers options
Leasing is a great option when it is time for a new automobile. Now the same reasons we lease cars — lower cash outlay, the ability to afford better quality, the possibility of upgrading every three years — can apply to plastics processing machines.
It includes KraussMaffei Berstorff extruders and KraussMaffei and Netstal injection molding machines.
KraussMaffei uses the terms lease and rent interchangeably. “With either term, the only thing the molder is responsible for is the monthly charge,” said Paul Caprio, president of Krauss-Maffei Corp. in Florence, Ky.
The lease, which generally runs three to five years, can be structured to include service and spare parts by factory technicians and insurance for mechanical problems caused by operators, lack of lubricants and other breakdowns. At the end of the lease, the processor can buy the machine or turn it back in.
The lease can include auxiliary equipment, as long as it has residual value at the end of the lease.
Caprio said there is no out-of-the-box lease contract. Details depend on what each customer wants, he said.
“Most leases will run from three to five years because that is the typical length of our customers’ molding programs,” Caprio said. “With this financing program, he can commit to the machinery for only that period.”
Caprio said the lease program should also appeal to molders that cannot afford the higher cost of a KraussMaffei or Netstal machine and might otherwise be forced to buy a cheaper press. “The out-of-pocket cost for our rented machine will be about the same as the cheaper machine, but he will be getting a world-class machine,” he said.
I first heard about renting injection molding machines in 2015 during an interview with Helmar Franz, then executive director and chief strategy officer for Haitian International Holdings Ltd. in Hong Kong. He even suggested that resin makers might eventually give processors molding machines as long as they use their resins.
Kudos to KraussMaffei for offering the innovative program. Don’t be surprised if other machinery makers follow, particularly those selling more expensive machines.
One factor that makes the program work for KraussMaffei is the scarcity of KraussMaffei and Netstal machines on the secondary market. KraussMaffei is a part owner of Gindumac GmbH, a global dealer in used industrial machinery.
“When the Krauss or Netstal machines pop up on the secondary market, customers are looking for them,” Caprio said. “We don’t see a problem with taking back a machine at the end of a lease.”
With the high residual value of KraussMaffei Group equipment, the company can offer affordable rates to its renters, Caprio said.
It will be interesting to see if the lease option catches on with U.S. processors.
“I think it is a strategic, individual choice for molders,” said Kent Houser, CEO and owner of injection molder Cobra Plastics Inc. in Macedonia, Ohio. “Cobra Plastics feels that owning is better than leasing. This might not be true with all molders, as they try to employ their cash in other aspects of their operations.
“The bottom line is that any machine builder that offers both leasing and purchase has a marketing advantage over those who don’t,” Houser said. Cobra Plastics operates several machine brands, including KraussMaffei and Netstal.
Rick Kibbey, president and COO of Thomson Plastics Inc. in Thomson, Ga., said he thinks leasing is a great option. Thomson Plastics has purchased eight Borche injection molding machines in the last 18 months.
“I have talked to Krauss-Maffei, and they have great equipment,” Kibbey said. “Would that interest us in the future? My answer would be yes. There is a big need to replace the fleet of injection molding machines, so anything machinery makers can do to help with the financing side of it is great.”
Harry Smith, owner of Automation Plastics Corp. in Aurora, Ohio, especially likes the idea that the lease can include regular maintenance from factory-trained technicians. “Those guys are experts, and you can count on them doing a good job.”
He said the service feature, as well as the ability to turn the molding machine in at the end of a lease, differentiates the deal from financing through a bank, which he typically does.
“If you trade the machine in for a new one, you are staying up with the latest technology,” Smith said. “Plus, it prevents you from running a machine until it is so old it no longer has value.”
Caprio said one U.S. customer has taken advantage of the new program thus far.
“Ninety-nine percent of our customers have their own capital and own sources for financing,” Caprio said. “They don’t ask us for assistance. But we are letting all our customers know there is an option. Whether they take it or not remains to be seen.”
Ron Shinn, editor
About the Author
Ron Shinn
Editor
Editor Ron Shinn is a co-founder of Plastics Machinery & Manufacturing and has been covering the plastics industry for more than 35 years. He leads the editorial team, directs coverage and sets the editorial calendar. He also writes features, including the Talking Points column and On the Factory Floor, and covers recycling and sustainability for PMM and Plastics Recycling.