What should be done with used manufacturing equipment? - Not necessarily worn-out scrap, but equipment which has quite simply become redundant as a result of mergers and business restructuring? One creates a market place for buying and selling. Companies with surplus machinery get cash in return and other businesses can obtain "new" equipment at a very competitive price.

Once upon a time…
"It all started in Norsk Hydro, which because of its many subsidiaries always has surplus equipment at its various manufacturing facilities. In order to get a picture of the assets involved, we built up a database with the aim of registering all redundant equipment. The idea was that one manufacturing facility could obtain access to the used equipment which had become redundant at a different facility," says Øystein Langerud, who was employed in Norsk Hydro until 1999, before becoming Managing Director of the "re-use company", Inverse. MiljøStrategi's reporter met Øystein Langerud and newly employed Ola Mjelde in the company's offices at Høvik, near Oslo.

"We quickly saw that we could achieve even more if we looked further afield than Hydro's neighbourhood, and it was natural to look into co-operating with other companies. At the time I was Hydro's representative in "Birkebeinerlauget Bedriftsutvikling" (BBU, a scheme involving several companies in the field of business development), and in co-operation with BBU's general manager, Dag Sanne, we sold the idea to other companies in BBU. Veidekke, Telenor and DnB became interested in the idea and are now the company's owners. The present-day company is actually the "old" Telenor Miljø, which changed its name to Inverse in 1999," says Øystein Langerud.

"Win-win"
The business concept is remarkably simple and is based on the fact that much of the machinery and manufacturing equipment in use today has a relatively high second-hand value. However, companies with surplus equipment have neither the capacity, the contacts nor the skills necessary to sell such equipment. The value of the equipment must be made clear and an overview of the potential customers is needed. This is where Inverse comes into the picture:

"Our strong point is that we represent neither the seller nor the buyer. Our job is to reveal the assets available and establish contact between buyers and sellers, whilst it is the previous owner of the equipment who is the seller. Inverse profits from a commission on the sale. In addition to obtaining a good price, the company retains control over where the manufacturing equipment ends up. Not everybody wants their competitors to take over their equipment," says Mjelde.

The company often does more than simply arrange buying and selling. Inverse is also involved in preparing package solutions which can lead to an improvement in the value of an individual machine compared with what one would have achieved had it been sold separately. Businesses which for example wish to buy used production-line equipment can get help to find components in several companies. This is possible thanks to Inverse's knowledge of the various industry segments and overview of the manufacturers of machinery and equipment. On their part, these have a good overview of their customers and know where machinery and equipment are located.

Becoming a global operator
In the beginning, the concept was meant to serve the needs of Hydro's manufacturing facilities internally. However, the horizon was widened, first to companies outside of Hydro, and now the whole world is becoming Inverse's market place.

"In the future, we envisage a flow of equipment and machinery going from northern and western Europe to eastern Europe, South America and Asia. Companies are now being established in the Scandinavian countries as well as the Netherlands, Germany, Britain and Hong Kong. There will be no traditional subsidiary companies. We will enter into partnership agreements with national companies, who then become the owners of the new Inverse companies. After three years, all the companies will be merged and we also hope to launch their shares on the stock market," says Øystein Langerud. The biggest project so far has been the supply of two large diesel generators to Store Norske Spitsbergen Kullkompani on Svalbard, to be used in electricity production at the Svea mines. Inverse is responsible for the project, which involves dismantling, transportation, installation and maintenance. The price of new equipment would be NOK 65 million, but instead the mining company will pay NOK 13 million for the used generators.

Moreover, in Øystein Langerud's opinion, the concept should be of considerable interest in connection with emergency relief and aid work, and he envisages that aid organisations will be able to acquire proper equipment at appreciably lower cost than by purchasing new. He is therefore hoping for a future co-operation with the Norwegian Department for Overseas Aid and aid organisations.

This article was written by Jan Bjerk and previously published in "MiljøStrategi" 2/2001

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