To stay ahead, every firm needs to invest for the future. This investment can take the form of skills, research, premises or machinery and equipment, which essentially represents a choice between capital and labour. It also does not have to be one or the other but can involve both. However, all investments have a cost, so it is critical that the right investments are made.
Recycling firms are no different to other companies when making an investment decision, and this applies to recyclers when they decide to invest in new equipment, which may often involve a substantial amount of funds that turns out to be the most important capital outlay a firm makes for a long period of time. Thus, when deciding to invest in equipment, recyclers must weigh:
- Cost, space constraints, capacity, i.e. scale, and efficiency
- What is trying to be accomplished by investing in new equipment
- What is the best equipment to buy and how long will the equipment avoid obsolescence
- Is it worth buying new or used equipment or is it more cost effective to rent the equipment
- What options are available regarding maintenance, spare parts, and after sales service
- What equipment will maximise productivity, output, revenue and ultimately profitability
Different equipment is also needed depending on what materials are being recycled. For example, when deciding to purchase a plastic baler, determining the return on investment provides a clear picture of the baler’s financial viability. Investment in a baler or any other equipment should therefore be weighed against a rise in revenue and any cost savings generated.
Cost savings for the recycler entail lower waste hauling fees and labour costs (via automation), and the more efficient use of space. Research on the economics of plastic waste in a circular economy notes that efficient processing at the source is a primary driver of profitability. Another example is what type of material handling equipment will help a recycler boost productivity.
These factors must be thought about by recyclers so that they can invest with the confidence and assurance that they are making the right decision. This is because sometimes there is “no right time to invest”: the operating environment is always changing and uncertain with trends coming and going, making it difficult to identify what is a one hit wonder and what is truly game-changing. A recycler must therefore be flexible and adaptable – an investment must not box a recycler in. A recycler must also be aware that the most expensive investment option is not always the most appropriate solution. The best solution is often the one that satisfies a recycler’s unique needs and is arrived at after considering all of the factors listed above.
At a time of rising uncertainty and volatility in the environment that recyclers operate in the purchase of equipment can make or break a recycling business. While there is no right time to invest, if the world is truly entering a more inflationary period combined with increased demand for certain materials and resources that will not be able to be met by conventional sources of supply, then the demand for recyclable materials and resources will grow and only those recyclers with the best and most efficient equipment that boosts recovery rates and hence profitability will be ready to benefit from day one. This is an advantage that comes with solving an enterprise’s problems through wise decisions when investing in equipment. While the owners of recycling businesses know their business best, SUD Recycling Equipment Solutions is here to advise and assist recyclers on making the right investment decisions surrounding equipment.
With years of experience behind it, SUD Recycling Equipment Solutions understands the importance of you making the right investment and equipment decisions for your business. As a supplier of recycling equipment to meet your business’ needs, SUD Recycling Equipment Solutions works closely with recyclers to help them achieve their business’s goals so that opportunities are taken advantage of even at times of heightened uncertainty. Please contact us on +27 11 784 8955 or email info@sudrecycling.com.
Written and Compiled by Jason Mattes (Economist and Freelance Economics Writer).
Sources:
‘4 factors to consider when choosing a recycling system,’ Panizzolo Recycling Systems:
‘Equipment Needed for a Recycling Business: IPG’s Guide,’ IPG Tech:
‘Shear vs. pre-press: What’s the best technology for your plastic baler machine?,’ ANIS Trend d.o.o.: https://www.anis-trend.com/plastic-baler-machine-guide/