Importing Machinery
A woodshop owner takes a chance on importing his own machinery straight from Asia, takes a chance, and reports back on the results. August 19, 2008
Question
Has anyone out there ever imported their own equipment from China or Taiwan? We are expanding and looking into machinery. Upon investigation it is fairly easy to find the actual manufacturers of the imports like Extrema, Activa, LOBO, Sunhill, Cantek, and others. After getting quotes from both the manufacturers and the importers it has become clear that the importers have a 200-300% markup on all items, even accounting for freight and custom duties.
What are the pitfalls and protocols for transactions directly with Asian manufacturers? Aairfare to Taipei is about $935. I can go inspect the machines and follow to freight dock and still save at least $150,000 on the 5 major machines I want to purchase!
Forum Responses
(Business and Management Forum)
From contributor M:
I remember looking into this 20 years ago. I had a sliding saw all lined up. I chickened out at the time of purchase. Worried that it would be used as a boat anchor on the way over and it would be covered in rust. If you fly over and take care of crating it yourself, might be okay. I still say North American machinery is tenfold better than some of the crap out of China. I would worry about replacement parts and if it meets North American electrical standards.
From contributor B:
Well, let's see - reasons to think about this... The product is paid for before it leaves the dock. You are responsible for the product even before it is yours. That means you are not likely to get the best of the pups available. Your only support network is in the country of origin, unless the official importer is feeling really charitable that day. They (the local importer) may not even sell you parts; it's their call.
Their day usually starts a bit later than ours. Oh, the only people that speak English well are in sales, and they have done their job when your funds clear the bank. If customs holds something for 60 days, it's okay, it's part of national security.
All the liability is yours, in the event of an injury or worse. In many cases, the importer is responsible for making sure the machinery is up to code, both from a safety and electrical standpoint. Sometimes sound enclosures are added by the importer as well. Since much of the industry is state supported, suing the Chinese government, or the companies that are part of their collective, for example, won't get you very far - you pretty much need their consent to sue them as an individual small company.
And last but not least, if importers are walking away with 2-3 times their investment, everyone would be importers - why do anything else? I am being a bit tongue in cheek, but it is a risky venture, and it might be better to gamble in Vegas.
From the original questioner:
According to one manufacturer I have been talking with, the majority of their "technical components," such as bearings and electronics, are all made in Europe by companies such as NSK, Allen Bradley, etc. The castings used for housings and bodies as well as the casting machining is done by the same foundries and these parts are then sent to either Taiwan or Shanghai for assembly by the selling manufacturer. All funds are escrowed by a private third party until I inspect the equipment and load into a container. The freight company provides insurance on my shipment for a cost equal to about 1% of the shipment's total value. Custom fees are 1-2% unless I use a domestic imports agent who can speed the paperwork and insure timely delivery for another 1-2% of the total cost of the shipment. With all of the components being off the shelf other than castings it seems like my local industrial supply house will actually have most of the wear parts available off the shelf. I think the fear of the unknown is what keeps everyone from being an importer. My banker and I have discussed the possibilities and we may even offer machinery for resale in the US here some time in the future once we have proven the quality and capabilities of the machinery in my production facility. Our current approach is to acquire 2 machines and place them in our production line to see how they stand up to hard use. If we are pleased, then we will go for a larger expansion. We will see!
From contributor S:
I have never personally been involved in importing machinery, but would think that it could be filled with dozens of unknown problems. In my opinion, you should show some loyalty to the US manufacturers. Business is about relationships. If we start to piece meal our monies to those concerned only with their own pocketbooks then the US guys may not be there in the future. Then you will be doing business with the disloyal, remote and greedy. I believe if this question was on the importing of cabinets and millwork, you would not get one response supporting you. The only things that I'm fond of exporting are things they don't have or can't build there. If the USA is like a family, let's take care of it. If your brother is in the pizza business, you shouldn't be buying from his competition. The US is giving itself away little by little, and it needs to stop. I'm not anti-global, just know that charity starts at home.
From the original questioner:
Unfortunately there are practically no machines made in the USA. All of the corporations have taken to importing their products from overseas where they can have them made cheaply and reap increased profits. The few companies that still produce a machine domestically are astronomically more expensive. There is no way an American made gang rip needs to cost $70-80K when I can buy a much more complex machine like a Chevy truck for $16K. The failure of The American Business Family is that the manufacturers have all become greedy. There is little reason to import cabinets because we all work hard and cheap to produce our products, unlike the machinery manufacturers that I am aware of. Custom service from American companies is poor. It is difficult to get them to follow up on quotes and sales, let alone after the sale. The Taiwanese and Chinese are prompt to reply, courteous, and professional. If they deal with you after the sale the way they do prior, I am sure that I will be better off than if I bought an American woodworking machine.
From contributor S:
Sounds like that is good personal experience. I will give my opinions some more thought. Thanks for the response.
From contributor D:
I have done some importing. Not so important as what you're buying is how you handle the transaction. The machines in question have a few considerations, from my experience. Make sure the power network is set up for North American standards, or at least be prepared to have them changed over when they arrive. Make sure there are no import tax credits due upon arrival (this is almost like a duty tax). Make sure the manufacturer is not factoring his receivables with your machine's serial number. Your customs broker should be able to run lien and title searches for you. Hire a stevedore company to handle the machinery and all aspects of transport. They pick it up, drop it off, under their insurance, and all you do is inspect and sign upon receipt. As well most manufacturers have reps in the states where you can probably give them a small deposit and have delivered under the guise of a demo machine. The last and most important thing to remember is once that machine is in your shop and running, there is no real support network for you. That's why dealers exist, hand in hand with importers and exporters.
From contributor C:
There have been countless debates over imports or American made and I am sure there will be many more. When discussing import machinery it is important to remember some of the best woodworking machinery is imported, not necessarily from China on Taiwan. The importing of machinery and goods is not a new practice by any means. I am not going to defend or criticize American or imported machinery - I believe both have their place in our economy.
On a recent visit to a specialty millwork factory, I was chatting with the owner about a machinery purchase he was considering. His local outsource molding supplier recently purchased a new Weinig molder to meet increased demands. The shop owner was so impressed with the product and service his supplier was able to offer he thought he should purchase the same machine to meet an expected growth in business. The conversation turned to the cost difference between the Weinig and a different import brand. The shop owner compared two machines with similar capabilities and concluded that the higher priced machine was priced higher for the name alone. This is where I really entered the talk. I agreed that name was a factor but it was more what the name stands for, who the company is. I asked him what his track record was with service on the "discount imports," and he replied not perfect, but okay. I then asked how much downtime he could afford on each of his machines on the plant floor. Of course the answers varied from zero downtime to days or weeks.
Without considering the fit and finish of a piece of machinery, it all comes down to value and return on investment. If you need an odd piece of machinery to do a medium critical operation, then risk a low cost solution. On the other hand if you need a mission critical machine that would shut down your operation without it, spend what it takes to get the right equipment from a company that can provide a full service solution.
I have no affiliation with any machinery company, foreign or domestic. My best bet is to develop a relationship with a good supplier and stick with it.
From contributor S:
Right. In the above, I was speaking more to the Chinese imports rather than the proven European manufacturers. You've got to have friends that can help in this business. Ones, primarily, that are not 10K miles away, along with their parts.
From contributor L:
I bought a hot press from Italy some years ago. The importing was actually not that big of a deal. However, it took forever to have it made (too many Church holidays in Italy!). Finally it was done and I asked for a drawing of the product. Yep, they made the wrong machine! They had a good size deposit so that was it for sleeping through the night. The happy ending is that they agreed to having made a mistake and remade the press. This worked out and it still is working for us today.
If you buy from a good company, it should be okay, but make sure you get every detail documented. Now, would I do this with an Asian company? Disclaimer: I have 2 Anderson routers, made in Taiwan (not China, though they subcontract some with China), but they were bought via North Carolina.
From contributor V:
I think the questioner's impetus to buy direct and import is akin to the customer in my shop trying to find any reason to pay more for a superior product. How can I convince the customer to pay more? If I have to explain it, they won't get it.
The drive to save a few (admittedly hard-earned) bucks can often blind us to the larger picture. Business is about relationships. We all will pay more for things we feel are superior (Starbucks et al). Obviously enough, we are not all driving Kias or Yugos. Nevertheless, every car we buy is disposable and will end up discarded.
Despite claims above to the counter, there are many companies that have a stake in their service and life of product, and that is reflected in the (greedy?) pricing. There are also many tales of the import nightmare where responsibility is shifted to an indeterminate place, and you are left holding the bag. Parts? We all know these stories.
The best that can be said is that with importing from Asia directly, one should be prepared to have open access to not only a machine shop, but electronics technicians and perhaps even programmers in order to build a business on such a shaky foundation. Why one would pursue risk in this venue is either short-sighted or the Wal-Mart method gone mad.
From contributor E:
I am reminded of a job I worked on a few years back. All of the windows for the house were going to be made in Italy at a cost of about $400K. The homeowner was convinced this was an outrageous price, and since he *was* the "best negotiator on the planet," he decided he could do better than the GC's price if he went to Italy himself and arranged for the windows. He did go. He found another manufacturer, he paid about $150K for the same windows, and returned smiling to himself about his prowess. The windows were critical to the job's progress, but they got delayed, and delayed again, and eventually never did show up. And the homeowner lost all the money he paid for them. The job came to a screeching halt. Subs disappeared while the original manufacturer was put back in the loop and the GC waited for delivery which was now about 6 months from the original quote. Because the windows now cost the $400K plus what he lost on his "deal," some of the remaining parts of the total job were scaled back or cut out altogether.
Call it karmic justice or plain old insult to injury, while the job was closed down waiting for the windows, someone broke into the site and stole all the copper wiring. Seeming miles of it were roughed into the mechanical room and left coiled and dangling from the walls waiting for the electricians to finish. The wire was given a close haircut right at the wall, making a nightmare for everyone involved.
From contributor G:
The selling price of machinery is not based on what it cost to build. The price is based on the value to the buyer. If a machine will increase your bottom line by $100,000 per year then its value to you is at least $100,000. So even if the machine could be sold for a profit at $50,000, the manufacturer will try to sell it for $100,000. That's its value.
First I do look at my cost, but then I look long and hard at what the value is to my buyer. This last year that value was $100 per hour for my labor. $25 would have cover my cost and I would have still made a little money, but why leave $75 per hour on the table?
From the original questioner:
I do not dispute that there are products from American companies that have great value. I also have a few Taiwanese machines that I am very happy with. We are a 3 man shop. Flying to Taipei or Shanghai is $1000, and once there I can inspect my machines, load them in a container, and ship to US. I get the opportunity to have capabilities I currently can't afford from a domestic importer or a European or American manufacturer. I would love to buy a Diehl, Weinig, SCMI, and Butfering but it would be years from now that I add a straight line rip, moulder, sliding table shaper, and 52" 2 head widebelt. The cost of the Weinig alone buys two of every machine listed if I import myself. For a small custom shop to add so much potential with so little money may be the edge I need to take off in my industry. The overhead incurred to add the Cadillac, Ferrari, BMW's of the woodworking equipment industry may just put us under? This is the gamble I guess!
From contributor Y:
For a 3 man shop that's not a gamble - that's a must! It would be like me buying a dozen Devillbiss paint pots and a dozen 700.00 guns, when I could buy the air agitated Astro paint pots and guns same quantity all for the price of one Devillbiss 5 gallon paint pot dual regulated with air agitation and one 700.00 gun. Will they last as long? No. Do I care? No, because even if they only last 5 or 6 years, I will have produced more than enough to be able to purchase the Devillbiss then, which I would not.
From contributor J:
I recently got some info from a Weinig sales rep. The new moulders are now casted and assembled in China; only the bearings and gear boxes come from Germany. I agree that they have by far the best support, but the reputation they carry in the moulder business is top quality machines. It makes me worry about a new purchase from them.
From contributor R:
I would do it. Unless you're rich and swimming in money, why pay an extra $150k to have somebody t hold your hand and tell you everything is okay? If you're paying 33 cents on the dollar, you can always sell them on eBay or IRS Auctions and probably break even or make money if you don't like them. Many of the import companies don't even stock the machines anymore - they are shipped on demand from China. Also, at every IWF there is a booth of the TWMIA - Taiwanese Woodworking Machinery Import Association.
From the original questioner:
We are going ahead and ordering a straight line rip, a wood waste briquetting machine, and a clamp carrier. If we like how the transaction goes, we will then invest a bit more in a 5 head moulder, a 52" dual head widebelt, a larger DH kiln, and a multiple spindle shaper. It will be 60-75 days before delivery. We made payment by letter of credit so no money is transferred until we receive and okay the goods. The 12 in SLR delivered to Houston is a ridiculously cheap $3900. Its specs are similar to all of the other imports and it looks just like the SLR12 from Powermatic. We will see.
From contributor L:
You're a brave soul. I just saw an ad for the Powermatic SLR. They don't say what the max thickness is. You might want to look at that. The real test is how well it runs in 3 years (and on). I suppose if the price is right, you could buy another, yet would that stop your production? We have a Diehl 75, circa 1960 something. From time to time I think about getting a smaller unit as we do not use it a lot, but I am always in fear of having an import break down. The Diehl just keeps running with just a regular drink of oil and a few kilowatts. And it cuts jule joint straight.
From the original questioner:
If I was ripping for panel glue ups a Diehl would be the way to go. I just need to straighten up 4/4 for moulder blanks for flooring. I think the entry level saw will do. A friend of mine has an import and it is nothing compared to a Diehl but I think it will suit my purpose for the price. I can't replace the chain on an old Diehl or Mattison for the price of the import. I hope I don't regret this, but the risk is a small amount of money, so I will give it a shot. I'll keep you all updated.
From the original questioner:
I have had my ripsaw for a while now. After paying the freight and import duties, we have about $6k in the purchase of a brand new ripsaw. It came with a variable frequency drive on the feedbelt, which was an addition that we were not aware of but extremely happy to get. We have ripped about 15,000 bd/ft at this point and the edge finish is as smooth as glass. We glue line ripped 12ft boards that were straight as an arrow. I could not be happier with the machine, especially since it was only half of what a similar machine already in the USA would have cost. I think I will go ahead and get a widebelt from the agent I used to make the purchase in China. They had an awesome deal on a two head 1300mm wide machine. Seems silly to me to pay all the extra for a machine someone else imported.
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The comments below were added after this Forum discussion was archived as a Knowledge Base article (add your comment).
Comment from contributor I:
The machine you have is the same as some of the most popular import machines that sell through a dealer (they are quite good but not in the class of a North American machine) for between 7K and 8K depending on your negotiating skills. If you are into your machine for 6K I don't see any advantage in taking the risk for such a small difference.
I have been distributing machines for 37 years and if we were making 200-300% on the equipment I doubt I would still be doing it other than the fact I still like it. I could give you a long list of pitfalls but I think your mind is made up no matter what is said.
