Automation Is Changing What Businesses Expect From Equipment
Automation is moving beyond factories and warehouses. It is increasingly becoming part of the equipment businesses use in the field.
Companies are testing heavy machinery that can be operated remotely or perform certain tasks autonomously. At an Arizona landfill, for example, a 40-ton bulldozer can now be operated remotely, allowing the operator to control the machine without sitting inside it. Autonomous equipment is also being tested for additional work at the site.
Developments like these highlight a broader change in equipment investment: newer machinery isn’t always just a replacement for what came before. It can bring entirely new capabilities to the business.
Equipment Is Becoming More Capable
Automation can change how businesses evaluate an equipment upgrade.
Traditionally, replacing equipment might have been driven by age, maintenance costs or declining reliability. Those factors still matter, but advances in technology add another consideration.
Newer equipment may improve productivity, reduce operator exposure to hazardous conditions or help businesses operate more effectively when skilled workers are difficult to find.
Caterpillar, for example, now offers varying levels of automation across equipment including dozers, excavators, loaders, compactors and trucks.
That means businesses may increasingly find themselves comparing more than an old machine with a newer version of the same machine. They may be comparing two very different levels of capability.
The Investment Case Goes Beyond Replacement
When equipment can perform more efficiently or automate portions of an operation, the financial analysis changes.
The purchase price is still important, but so is the potential operational impact.
An older machine may still work. The better question may be whether it continues to be the most productive asset for the job.
Financing New Capabilities
More advanced equipment can also require a significant capital investment.
Equipment financing can give businesses a way to acquire newer machinery while spreading the cost over time rather than funding the entire purchase upfront.
The financing structure should reflect the equipment itself. Expected useful life, utilization, productivity gains and how quickly technology may change can all influence the appropriate approach.
This becomes particularly important as machinery incorporates more sophisticated automation and technology.
Looking Beyond the Purchase Price
The next generation of equipment is likely to give businesses more factors to consider when deciding when to upgrade.
Purchase price will remain important, but productivity, safety, operating costs and technological advances can all affect the value an asset delivers.
That makes equipment investment less about simply replacing an old machine with a new one.
As automation expands into more industries, businesses may increasingly need to ask whether their existing equipment is simply still working or whether newer equipment could help the entire operation work better.
Ready to Explore Your Financing Options?
If your business is planning an equipment purchase or evaluating financing options, Fidelity Capital can help you explore a structure that fits your needs.
Get Prequalified: Complete our simple online prequalification form to see what financing options may be available to your business.
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Disclaimer: This article is provided for general informational and educational purposes only. It may reference or incorporate information reported by third-party news organizations, financial publications, industry sources, and other publicly available sources. Fidelity Capital Partners, LLC does not independently verify all third-party information referenced, and such information may be incomplete, subject to revision, or change over time. Any analysis or commentary provided by Fidelity Capital Partners, LLC reflects our interpretation of the information available at the time of publication, including its potential relevance to equipment financing, leasing, capital planning, and related business decisions. Nothing in this article constitutes financial, legal, tax, investment, or other professional advice, nor does it constitute an offer or commitment to provide financing.
