Trade-In Value of Optical Labs Takes a Wallop
As Digitals Sweep In
As if the minilab operator didn't have enough to worry
Sometime within the past five years the lab owner finally succumbed to the pressure of the APS 'revolution.' New equipment for the lab was installed with the devices to handle this 'format of the future.' (Not to be confused with the previous 'format of the future,' disk.) With this new lab came new debt, of course.
Now, there is another knock on the door. Another revolution. This time it's digital. What to do?
On one hand, this rebellion seems to have some legs to it. Digital camera sales are at serious levels. All the trade talk and writing is digital, digital, digital. On the other, it seems that the customers who are supposed to be looking for the digital services haven't quite come to the party yet. "But they will," promises everyone.
Okay, let's buy a digital minilab. The experience of having the various suppliers pursuing you when they smell the scent of a sale is a high. Sort of like buying a new car. And, like buying a new car, there comes that point when you sit down with the salesman to fill in the blanks on the order form with the numbers (read: dollars).
There's a line on the form for 'trade in.' Often the car salesman puts in 'the number' and keeps writing, knowing that the excitement of driving that silver Acura can fog the area of the brain that deals with logic. So be it. Who wants to go through the hassle of having to sell the old heap yourself?
The lab owner goes through the same process with his equipment purchases whenever he trades in his old system for new. Old stuff. But, this time, having recovered from the sticker shock of the price of a new digital minilab, up to $150,000 or more, he faces a new demon: trade-in shock.
It seems that in the past 12-18 months the trade-in value of optical labs has fallen off the edge of the cliff. Craig Wetherbee, Agfa's minilab executive, said that trade-in values have eroded by as much as 25-30% in that period. He said once-popular models like the MSC 2.3 and 3.2 that sold originally in the $100,000 range five years ago command a trade-in today of between $7,500 and $10,000.
What dictates these values, of course, is the undeniable law of supply and demand. The shift from optical to digital is dumping more optical minilabs into the used market than that market is able to profitably absorb.
BEF Corp, Allentown, PA, is probably the largest buyer, refurbisher and seller of used equipment in the country. Patrick Leonard, director of corporate development, said that a year ago his inventory of used equipment was about 300-350 labs. Today it approaches 1,000, a large proportion of them being Fuji models as they are absorbing all of the Fuji opticals that Wal-Mart is turning back in favor of digital Fuji Frontiers.
As a result, BEF will soon be offering Fuji SFA 250s and 278s, with APS and film processor for about $17,000 each, including a 30-day warranty. Not long ago BEF was selling them for about $45,000.
John Zeger, president of Universal Photo & Imaging, Henderson, NV, said, "The trade-in market is alive and well." John is the recognized reseller of used Noritsu equipment and, unlike BEF, has a fairly modest inventory of about 250 pieces. (Of course, Noritsu isn't supplying Wal-Mart.) He's selling 4-5 year old Noritsu's, 2300 and 2600 series, APS with film processor and 60-days parts warranty in the $45,000-55,000 range. As for older Noritsu's, such as 802, 1401, 701, 1001, John said their value is about zero. (I wonder if John would like to buy an old Noritsu System II?)
John said, "Systems depreciate more now because of the shorter product cycle." He is hoping that once digitals take hold the product cycle will lengthen.
Bill Diminno, Fuji's senior vice president and general manager, said, "The trade-in market has crashed." He added, "In the past we made a few bucks on a trade-in. Today, I'm happy if I can break even." Harvey Phillips, Noritsu vp of marketing, said his inventory of used equipment is "too strong."