FRIEDRICHSHAFEN, Germany—Plastics processing is a capital-intensive industry, but leasing injection molding machines can help processors ramp up quickly—or add new technology for a specific job—without tying up too much money, officials of KraussMaffei Group said.
The leasing packages cover KraussMaffei and Netstal injection molding machines with up to 300 metric tons of clamping force.
A broad leasing plan marks a change in the sales of injection molding machines and even the idea of a physical asset, according to Nadine Despineux, KraussMaffei's vice president of sales for injection molding machines.
"We believe that, in the future, the business model is much, much more belonging to total life cycle considerations and not just on buying and selling a product," she said.
"What's important is that, in times when high flexibility is necessary, because markets are changing fast, that's the way you can address that because you see a product more from a life cycle perspective, not anymore from just a single sales transaction," Despineux said. "And we believe the business is changing and that's our answer."
Munich-based KraussMaffei is starting machine rental in its home country first.
"Currently, it's Germany. But we will step-by-step roll this out to all our major business countries," Despineux said.
KraussMaffei is working with banks and leasing firms, she said. Each country has its own regulations for leasing agreements, so the broader introduction will take time.
Other machinery companies already can provide leasing as an option, but KraussMaffei appears to be the first major injection press maker to trumpet a comprehensive leasing program. KraussMaffei unveiled its leasing program at the company's Oct. 18 news conference at the Fakuma show in Friedrichshafen.
"Generally, in our industry, this is something which can be offered if a customer asks for it. But it's nothing currently, with any other competitor, something which you proactively use as a business model. And this has totally changed with KraussMaffei," Despineux said.
She said KraussMaffei leaders are looking at the big picture and toward the future. Molders often receive orders for a defined period, say from four to seven years, she said. If a molder buys an injection molding press—a major capital investment—and the work goes away, the processor still has the machine. That can cause a hit on the balance sheet, even more so if the press has highly specific technology for a given job.
Despineux said molders might be in a disruptive business model—for example, molding for an automotive industry that is transitioning to car sharing or driverless cars.
"Their current business is growing, so they have pretty high investments, high [capital expenditure]. It's a negative impact on their financial figures," she said.
Product life cycles keep getting shorter. Leasing gives flexibility to roll with the tide.
"The products are not anymore in a production for 15 years. Products are changing very fast and sometimes, you then have to run machines and get invested into that. And with such a concept [leasing], you can change it fast. And say now I need a bigger one, or I need a smaller one," Despineux said. "It's all about flexibility. It's all about addressing this world of changing from different angles. And not just staying with this transaction approach, saying that's it, and then I'm out."
At the Fakuma news conference, Hans Ulrich Golz, president of KM's injection molding machinery segment, said machines returned after a four-year lease period would find buyers on the secondary market. There is a big demand for late-model used injection molding machines, he said.
But machines coming off a lease won't necessarily physically come back to KraussMaffei in Munich, Despineux said. KM may arrange to ship the machines directly to the next owner.
"At the end of the day, it's about connecting offers on the markets to persons who need machines," she said. "I think we need to go beyond the normal thinking that you always have to have a hardware transaction from A to B. These things nowadays can be organized differently, and that's important."
Despineux spelled out some of the nitty-gritty details in an interview after KM's news conference. Lease customers pay a set fee each month. They can pay just for the machine or pay a higher fee that includes insurance for things such as breakage, operating errors and lack of lubricants.
At the end of the rental term, the customer can decide to buy the machine, extend a longer lease period or turn it back in.
"It's more like the car model, which everybody knows," she said.
KraussMaffei is offering two types of leasing arrangements, initially to its German customers. The Speed & Standard package, with covers orders for machinery valued at up to $295,000, is done on a fixed contract—Despineux said KM officials are discussing a range of three or four years. The credit check and transaction are quick, using standard forms.
For orders costing more than $295,000, the company offers customized options under the Flexible & Tailored plan. Despineux said this is aimed at key-account customers.
"This is where we can really discuss individual needs of the customers. And you can discuss different terms. You can discuss different models. And there, we're pretty flexible. It takes a little bit more time," she said. The length of this lease is negotiable, and it can be extended.
For this new distribution channel, KraussMaffei will keep an inventory of its line of modular CX ClassiX injection molding machines in stock so customers can get quick delivery, another part of the flexibility of leasing.