F I N A N C E
FINANCING
THE MACHINES:
THE CHANGING KIWI LANDSCAPE
Traditionally, financing
machinery in New Zealand
has been the remit of
the commercial asset
finance companies. Typically, these
companies were off-shoots of
the main trading banks or leasing
companies and/or property finance
lenders who wanted to ‘balance their
books’ by also offering a traditional
product.
Prior to the Global Financial Crisis
(GFC) there were a plethora of lenders
who would fund machinery and the
market had very defined first, second
and third tier lenders who offered
varied terms based on the market
segments they preferred to finance.
With the GFC, New Zealand had a bit
of a clearing out of many of these
lenders with reports of upwards of 40
lenders now no longer in existence.
The funding model of ‘mum & dad
investors’ lending these institutions
their life savings in exchange for
debenture stock has been replaced
by wholesale bank lines to the
institutions that remain with far more
governance and accountability to the
likes of both the Reserve Bank and
also the Financial Services Authority.
What has also happened is New
Zealand has followed the model that
has been in existence in Australia
for decades in that you now go to a
finance broker for your commercial
asset finance.
Finance company staff who have
remained in the industry have started
their own brokerages and this model
is working very well for all concerned.
Historically, if you needed finance
for a truck, digger, lathe or other
piece of machinery in Australia
you went to either a finance broker
you had a rapport with or typically
you were referred to an industry
finance specialist by the seller of the
machinery. This is very much the case
now here, and has been welcomed
by business owners who for years
were frustrated by transient bank and
finance company employees who
really didn’t know much about the
clients business or industry.
When, as a business owner, you are
relying on that finance person to
be your advocate to secure you the
terms you require, it is a much better
chance these days that your finance
broker will secure funding as required
and much quicker.
In regards to the types of facilities
on offer, this covers the full range
of revolving credit, lease-to-own
(finance lease), operating lease and
hire purchase. Most lenders are
happy to offer funding for 100% of
the purchase price and also cover
add-on costs like freight, tooling,
dust/fume extraction, software and
some other ‘soft costs’ associated
with installation.
A good lender/broker will also
understand supplier terms and
can offer payment structures like
letters of credit and in some cases
via escrow accounts. It does vary
depending on the various parties
requirements but these finance
products are all available to the buyer
should it be required to secure an
order on a machine.
While the $NZD has fallen a little
against a number of currencies in
the latter part of 2018, machinery
has never been at a better price to
purchase. Couple this with the low
interest rate environment we find
ourselves in and it is a good time to
buy new technology.
One Finance has over the last 18
months funded an ever-increasing
amount of automation add-ons to the
machinery being funded. Loading and
unloading tables, palletising, robots,
barfeeders/parts catchers (lights-out
packages), return tables, stacking
systems and conveyors have all been
added to machine orders.
The driver of this is two-fold; firstly,
we find ourselves in New Zealand
faced with a lack of skilled workforce
applying for jobs and secondly the
cost of having a labour unit involved
is going up and will continue to do
so with changes to minimum/living
wages laws. Employers are reacting
to this challenge by automating and in
some cases ’dumbing-down’ aspects
of their production and replacing it
with machines.
We see this only continuing and is a
growth trend.
By Shaun Nicholson
ONE FINANCE AND INSURANCE
HISTORICALLY, IF YOU NEEDED FINANCE FOR A TRUCK, DIGGER, LATHE OR OTHER PIECE OF MACHINERY IN
AUSTRALIA YOU WENT TO EITHER A FINANCE BROKER YOU HAD A RAPPORT WITH OR TYPICALLY YOU WERE
REFERRED TO AN INDUSTRY FINANCE SPECIALIST BY THE SELLER OF THE MACHINERY. THIS IS VERY MUCH
THE CASE NOW IN NEW ZEALAND.
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