M. Ferrara & Sons - News

My grandfather was a tool maker. As a young man, fresh from his apprenticeship program he went to work for a company that was struggling to mass produce a product that they thought was going to take the consumer market by storm. However, since the company was cash poor at the time, the owner offered to pay partial wages in company stock. Grandpa declined the stock, collected his wages and started looking for another job. Who knows what that Bell Telephone stock would have turned out to have been worth in the long run?

The moral of the story is that you can never tell what impact technology will have on your income. The proliferation of the fax machine, portable phone technologies, and most recently the Internet, have impacted not only our productivity, but the way we establish and maintain relationships with our customers.

While fax and phones have become critical as sales tools in the machinery business, the Internet is quickly developing as a full-blown marketing tool. In the case of fax, phone or even email, the primary use of these technologies is the extension and streamlining of the sales process. Whereas the Internet has become an alternative place in which to transact the entire business process.

The question we are now faced with as machinery dealers, is how to best develop this new marketplace. Initial evidence seems to indicate that the bulk of the consumers purchasing on the Web are buying retail goods and services for use in the private sector. Since the acquisition and sale of used capital equipment, has primarily been handled by used machinery dealers, the new tools and trends that e-commerce offers have begun to provide new opportunities to sell machines.

But a good portion of our business has always been the relationship type of sale, and more dealers are finding out that the trendiness of e-commerce won't sell a half million dollar machining center all by itself. The answer to where the market is heading lies somewhere between the traditional knowledge of the machines and their market, and managing the information of larger stock listings.

Our business is one of shrinking margins and diminishing opportunities. With most machine tool manufacturers discounting heavily in order to book business, and many of them taking used machines off the market for reconditioning in order to keep their production facilities operating.

For buyers, it can be a dual edged sword. If they're buying for additional capacity without trading out last generation equipment, the benefits usually outweigh the costs. However buyers who expect to recapture a large percentage of the original value of their late model machines have been finding that most machines are not in strong demand, or are competing against low end new machines. Speculation in used machinery is probably at an all time low, further depressing the value of existing equipment.

These paradoxical conditions, greater market access Vs. Lower potential resale value, aren't necessarily the death knell of the Used Dealer. However, the level of a dealer's in-house stock, as well as what they choose to speculate on, will continue to give way to an approach that is more marketing intensive than inventory intensive.