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Pallet Rack Purchasing Tips II

Removing the risks – buying used pallet rack and other pre-owned equipment

Certainly, you can save money by purchasing used pallet rack instead of new equipment. Are there are some risks involved? Yes! Will it likely to have a shorter remaining service life and is there no manufacturer’s guarantee? Not necessarily! A common misconception is that with used equipment you’re not really sure what you’re getting. You can, however, easily reduce and even outright eliminate many of these risks by simply dealing with the right people when entering the used market.

Here is a primer that covers a few of the basics.

There is no board that certifies dealers of used pallet rack. Used dealers are not “authorized” by the manufacturer or anyone else for that matter.

That said, the fact that some dealers of used equipment are also authorized dealers of new equipment, be it one or more manufacturers, is a good indication they know what they’re selling. Unfortunately, there is a wide variety of sellers of used pallet rack – individuals, brokers, middlemen and auctioneers. How do you know you’re dealing with a legitimate operation, and what makes an operation legitimate anyway?

Used Dealers: The good, the bad and the ugly.. and how to tell the difference.

KEY QUESTIONS & COMMON SENSE

#1) Do they stock what they sell?

There are several advantages to dealing with a dealer with an inventory, including assured delivery and easy inspection of items in stock. Even if the specific equipment you are looking for is not in his current inventory, the fact that he has one tells you some positive things about the dealer. We’ll get into them later, but they cause some dealers to give the impression of having more stock or a larger operation than they have if they have one at all. Beware of false impressions. A few years back, a self proclaimed major dealer had a web site with a picture representing his company location. The photo featured a large and impressive building in the middle of the photo. While the photo did include his building, what he didn’t tell people was his office was actually a one room office located in the shopping mall across the street and barely visible in the bottom corner of the photo.

Obviously, the best thing is to go see the dealers facility yourself, but that’s not always convenient, especially in the early stages of your search when you are looking at numerous possible dealers.

TIP: If it’s not convenient to inspect their facilities in person, go on-line with one of the various map sites like Google Earth or Google Maps (https://maps.google.com/) and enter their address. Look at a satellite photo of their location. If they have offices in their basement or a shopping center, chances are they have no inventory. If their inventory is extensive, you should be able to see it in the photo.

TIP: Beware of P.O. Box numbers and suite numbers, which often disguise a one-room office.

#2) Is it an established business?

The pallet rack business is extremely competitive and dealers with a bad reputation don’t last long.

RULE OF THUMB: Look for a company with a track record with at least ten years of business history under the same name. There is at least one such dealer in every major city in the United States.

Long term survival is not just proof that a dealer has treated their customers well. Experienced pallet rack dealers know the equipment and can tell the jewels from junk. They know industry trends and current standards. In general, their recommendations are good, their prices are fair, and they have the respect of the industry. If they didn’t, they wouldn’t be around this long.

#3) Is it a real business?

We have already talked about people doing business out of their basement or a shopping mall, but it gets worse. Some people do this in their spare time. They have a day job, which may or may not have taught them something about pallet rack. They have neither the experience to guide you in making a good purchase nor the resources to support you after the sale.

TIP: Ask for a business phone number, not just an e-mail address or cell phone number. If nobody answers the phone and you get the same person’s voice mail every time, there may be a problem. If your contact can’t meet with you during normal business hours, there’s definitely a problem.

#4) Do they own what they sell?

Some brokers are no more than deal-makers, simply flipping the equipment and doing no more for their money than making a couple of phone calls. (Hollywood is run by deal-makers these days, and you know how long it’s been since they made a decent movie.) What you want is someone who has demonstrated their faith in the quality and sale-ability of their product by investing their own money in it.

TIP: Any legitimate dealer will be happy to let you inspect the equipment. Don’t accept photos. Larger dealers may have multiple storage facilities throughout the country. If the equipment has only recently become available, it may still be on the premises of the former owners. If you are performing an inspection anywhere not owned by the dealer, ask the people there who owns the equipment, or ask for proof of ownership.

TIP: Don’t give the dealer your money to buy the equipment. Pallet rack often comes on the market because of the bankruptcy of the current owner, and if the court seizes the assets of the company you may never see your equipment or your money ever again.

#5) Is the company financially sound?

If your purchase is large enough to justify the expense, it may be a good idea to get a D&B report. The cost is $100.00 or less and can easily pay for itself many times over. This will tell you who they buy from, their payment record, lawsuits filed against them, when they were incorporated, the number of employees and the names of owners and officers – all valuable information.

TIP: If the person you’re dealing with claims to be the owner and operator but is not listed as either, this may indicate an attempt to shelter himself or his assets from previous lawsuits or bankruptcies. While privately held companies will often divulge less information that public ones, the fact is that reputable companies have nothing to hide. Use some common sense when evaluating companies. There are plenty of good people who run good companies out their and provide D&B their information. AVOID those that feel the need to conceal or shelter their histories, owners, officers, backgrounds and/or financial information. Ask yourself, what’s so shocking that they need to keep it hidden from public view?

#6) Can they provide follow-up services?

Everyone will sell you equipment but only a few service what they sell. Once you own the equipment, someone has to inspect, repair, replace, buy back, deliver, install and maintain it. If it’s not the broker, you will have to start another search for somebody who can. Ask to see their facilities and resources for performing such services.

TIP:The broker may tell you he has somebody else to perform these services. Keep in mind that adding a middleman can mean a loss of control over costs and schedules. It also complicates communication with the various people involved. Can they repair or replace items that get damaged or need repair? If so, at what price? What you discover may be pretty shocking.

#7)What is their reputation?

You can always ask for references, but be wary of the lists they voluntarily to give you. Some references are kept on a permanent retainer, and almost all of them are carefully selected.

Instead:

TIP:Ask about jobs they have performed in your area and whether you can talk to these customers. If they can’t provide names, it may mean
1) they have no track record in your area or
2) they have had service issues resulting in poor relations with customers.

TIP: Call their competitors.
Ask is they have ever heard of the company you’re asking about?
What is their reputation among other dealers?
Have they had any dealing with them?
If so, what was that experience like?

While impressions and opinions are just that, this is one instance where no news is NOT good news. Feedback like “I’d rather not say” or “NO COMMENT”, are not good testimonials.

I have always found people willing to volunteer feedback if they have good things to say while most will be reluctant to say anything bad. Usually a dealer will simply refuse to provide an opinion rather than provide you a negative report. Look for a pattern to the feedback you receive as this will provide you a good indication of what you can expect. Ask prepared, factual questions about the things covered in this report: time in business, number of employees, etc.

2 Comments

  1. Dave Brueckner July 18, 2008 at 3:39 pm

    Even the most legitimate rack reseller cannot be certain that the components were never overstressed therby compromising their capacity. Also, in many cases you cannot be certain of the original manufacturer as many racks look identical and few have identification. Over the years, higher strength steels have been used more extensively, Older components may look the same but may have substantially lower capacities. Again, it’s virtually impossible to determine the age of rack.
    Is the liability worth the savings?

  2. Dave –

    I’d like to address some of your statements here as I feel although they are good questions your conclusions are not entirely accurate.

    While on the surface, your concerns appear valid, the fact is, all of them can be addressed by referring to the RMI. The RMI (Rack Manufacturer’s Institute) sets standards that all member rack manufacturers must follow. These standards include safety considerations in regards to capacities, composition and other factors that make industrial racks safe when used properly.

    Let me address your concerns one at a time:

    1: Even the most legitimate rack reseller cannot be certain that the components were never overstressed thereby compromising their capacity.

    I would agree that nobody can control what someone does with a product whether it is old or new. That being said, all racks are designed with safety in mind. Rack manufacturers assume that consumers at times may overload their racks either by accident or on purpose. All manufacturers build additional, but not advertised capacity into their components so that if you were to put #4005 onto a #4000 rated beam, it’s not going to crumble in most cases. These additional buffers are typically as much as 20% of the rated capacity. Oftentimes, you would have to overload a component by as much as 40-50% before you would see any deflection that would permanently stress a component to its failure point.

    2: Also, in many cases you cannot be certain of the original manufacturer as many racks look identical and few have identification.

    While somebody at a consumer level may not be able to identify markings on rack components, a major rack distributor can. Markings on components were not even meant for the consumer – but for manufacturer and RMI identification. Also, styles come and go – there is a very marked difference between old teardrop, new teardrop and shaved pin teardrop and any reputable dealer should be able to identify the differences.

    3: Over the years, higher strength steels have been used more extensively, Older components may look the same but may have substantially lower capacities.

    This is simply not true. There are no rack manufacturers that are mixing titanium components with steel just to create stronger and lighter weight racks. While higher strength steels have been available, the steels needed for rack take into account several factors including strength and flexibility. The steel utilized for pallet racks has been standardized for many years by the RMI. As a matter of fact, we have found based on our own research that the older components often tend to utilize more steel than today’s on a pound for pound comparison. With the rising cost of steel and freight, manufacturers are looking to save material and weight as much as possible so that not a sliver of steel is wasted. What this ultimately boils down to is weight. If you have an older beam that advertises #4000 capacity and weighs 65 pounds and a newer beam with the same specs that only weighs 55 pounds – the older beam has 10# more steel than the newer one. Both will hold the advertised weight, but using new manufacturing methods, the manufacturer may have figured out ways to save that 10# of steel.

    The fact is, over the past 30 years SJF has sold close to if not over 1,000,000 used beams without a single failure due to any of the reasons you provide. We have sold every make and model in all shapes from rusty to brand new and have never run across a situation like the one you describe. If you are aware of an incident like this happening, please let us know because we are always interested in doing everything we can to avoid this kind of scenario.

    Thank you for your feedback.

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