Defence & Obsolescence
Testing times require flexibility and a fast response
CIE talks with Microlease, the test equipment rental, leasing and asset management organisation, and explores how adopting a streamlined approach to acquisition and asset management in the aerospace and defence sector can help derive maximum value from high-value test equipment assets
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ased in Harrow, north London, Microlease is a rental specialist in test equipment. Its business is built on looking to help its customers by lowering their test equipment costs and improving their efficiency by providing test equipment services though using an outsourcing rental model.
As the company says “We simply match the best solution with a company’s test equipment needs – whether that’s a one week short-term rental of a lifetime of use.” Tighter capital budgets in the light of the continued tough economic climate mean that the rental model is becoming more popular. Companies, big and small, are able to rent or lease test equipment, can buy or sell used test equipment and companies like Microlease can also offer a range of test equipment services from equipment calibration to full test equipment asset management. The rental market has changed significantly in the past ten years. Traditional markets, such as the US and UK, have always been considered leaders in the use of the rental model, with particular market segments such as telecoms and aerospace leading the way but, according to Microlease, there has been significant growth in other markets such as France, Italy and Spain and of particular interest is the fact that it is also growing rapidly in the more traditional and conservative German market. Germany is interesting because it has
16 March 2012
long been seen as a very traditional market where companies have tended not to adopt the rental approach when looking at capital investment, they prefer to build up cash reserves and buy their equipment outright. The key to that market is understanding the importance associated with ownership and that is beginning to change. Tighter budgets and realising the opportunity cost of tying up funds in test equipment that might only be used infrequently means that German companies are taking a greater interest in the rental approach. That is a trend being seen globally. From
Turkey to the US companies are looking at their capital budgets and need to find more effective ways of spending constrained funds, but adopting the rental model can be difficult. Essentially it does require a change in culture. While the financial logic associated with such a move is clear and for many companies the investment required to update capital equipment doesn’t make sense when a rental or leasing model is available for many, however, the problem of adopting a rental approach is the perceived lack of control and the tradition, especially in the engineering sector, of owning equipment outright.
Many companies haven’t considered the
rental model, according to Microlease, but as the lack and cost of funds for investment have become bigger issues interest is certainly growing. Microlease has offices across Europe and in the US and is able to supply test
Components in Electronics
equipment globally. The company also works closely with test equipment manufacturers to offer programmes for new test equipment. For example it has a very close relationship with Agilent and actually sells its equipment to a large number of end-users in the UK and Italy. Rental and sales live together, according to the company. For example customers can buy, rent or lease the latest equipment. Rental tends to be for the short term, while the model of buying equipment is different.
So what are the benefits? Looking at the aerospace and defence
industry, for example, the effect of fiscal cuts and policy restructuring in
government, national and European agencies has left it facing tough operating conditions over the coming years. Unlike other sectors, the long-term nature of the industry and the need to support major military operations has meant that the effects of the economic crisis are only now starting to be experienced. During what is a period of deep uncertainty for the industry, streamlining resources inevitably becomes more essential. In this way, physical assets such as test equipment can be assessed in terms of how they are obtained, managed and utilised. Rather than buying equipment outright, the greater flexibility that leasing assets brings can be of huge
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