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Machinery and Equipment Supply Contracts

BY John L. Watkins
April 27, 2011

Machinery and equipment suppliers manufacture and sell the machinery that other manufacturers use to produce all manner of manufactured goods. The “Great Recession” has been, in general, a very bad time for machinery and equipment suppliers in North America. However, there is reason for optimism in 2011.

The tax package recently enacted into law includes a provision allowing customers to write off many machinery purchases immediately. Machinery and equipment orders in Germany (a major supplier of machinery and machine tools) surged in 2010. Many international companies are recognizing that it is economically viable (if not economically superior) to establish manufacturing operations in the United States rather than manufacturing goods overseas and then transporting and importing them to the United States and Canada.

Machinery sellers typically sell equipment with a long expected-useful-life that will allow the customers to manufacture and sell their own products ' and hence make a lot of money ' for many years. Machinery and equipment sellers are often smaller than their customers and operate at modest profit margins.

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