Just about every product in the world has two main markets: one for new product, and a second market for used sometimes referred to as surplus, reconditioned, rebuilt or remanufactured product.
Cars, computers, jewelry, and electronics are just a few examples of thriving industries that trade in used goods. The commercial and industrial electrical supply markets are no exception.
Electrical equipment, like automobiles and industrial machinery, are designed to last decades. However, like other durable goods, electrical equipment can be dangerous to the inexperienced whether it is new or used product. The confluence of these two facts means that product safety not just availability is critical to a healthy electrical marketplace.
In 1908, the National Association of Electrical Distributors was formed to “establish the electrical distributor as an essential force in the electrical industry and economy,” followed by the National Electrical Manufacturer’s Association (NEMA) in 1926. These venerable associations eventually expanded to include educational programs and standards to help improve the operations and safety of the electrical supply chain with a focus on new product from electrical Original Equipment Manufacturers (OEMs). During the next 50 years, two other associations emerged to help service the used and installed base of electrical equipment. The Electrical Apparatus Service Association (EASA) focused on rewinding standards for electric motors, while the InterNational Electrical Testing Association (NETA) offered guidance, education, and certification for field-testing electrical equipment. But it wasn’t until 1996 that a group of independent electrical distributors joined forces to promote the reconditioning of industrial electrical product. The Professional Electrical Apparatus Recyclers League (PEARL) is the only trade association that offers technical reconditioning standards for industrial electrical product, a code of ethics, ongoing education, site and technician certification, and best practices. Today, PEARL’s corporate membership has grown to more than 70 independent electrical resellers with revenues in excess of $500 million each year.
Why Do We Need Used Electrical Equipment?
Why does a secondary, or “out of channel” market for electrical equipment exist? It exists for the same reason that electrical OEMs and wholesale distributors exist – supply and demand.
Consider a manufacturing plant that has a failed component in a critical electrical service. A new replacement component is not available from the manufacturer and distributors for weeks, months, or worse, not at all. So what is the plant to do?
How about the power generating station that distributes electricity through a vintage – but perfectly serviceable – 15kv switchgear built in 1959. The station needs to upgrade their integral tie breaker from 2000A to 3000A to keep up with escalating demand.
The most cost effective (and practical) way to upgrade the service is to replace the tie breaker with one of similar vintage and design, but with the higher current rating. Unfortunately, primary supply channels stopped stocking this product 30 years ago.
What about the new office building that is falling further and further behind schedule waiting for a certain size and type of conduit or conduit fittings, only to discover weeks past the original delivery date that the material is on backorder with no estimated time of delivery?
Each of these cases represents need-it-now demand for electrical products – critical demand from the customers’ perspectives. Enter the secondary electrical supply house. They’ve acquired and warehoused hard-to-find electrical product for just these types of situation. However, even when the replacement component is located, the question remains: How safe is the replacement?
The only way to answer the “safety” question is to validate the component through acceptance testing, and when necessary, recondition the component to meet or exceed the product’s original performance specifications, or upgrade the component with newer technologies that exceed the original specification.
This is where a knowledgeable secondary channel for electrical product performs a valuable and necessary service, particularly as OEMs continue to adopt ‘lean’ manufacturing processes that extend lead times for many pieces of electrical equipment.
To answer this demand, independent resellers of new, surplus, and reconditioned electrical products have acquired massive inventories of electrical service equipment from closed industrial plants, scaled-back construction projects, and electrical distributors themselves when OEMs discontinue or change product lines. Unlike OEMs and franchise electrical distributors, these independent electrical distributors hold inventory much longer than the primary channel so that when customers need a component for expansion or replacement, the device is available and the customer can get back to business.