Research from the Financial Services unit of Siemens (SFS) has revealed the growing importance of asset finance in enabling machine tools investments.

According to the study, conducted amongst the global top 80 machine tools OEMs, 84% of the respondents reported that their customers are experiencing increased difficulty in accessing traditional bank loans to fund equipment acquisition. More than 60% of the surveyed OEMs had witnessed rising demand for financing options from their customers over the last two years.

Non-bank finance is becoming increasingly relevant in facilitating equipment sales and technology upgrades. 64% of those surveyed confirmed that asset finance has been “highly important” in enabling their customers to acquire equipment in the two previous years. Demand for asset financing techniques is expected to grow through to the end of the decade, with 68% of the respondents suggesting that asset finance will continue to be “highly important” in the next five years. Leasing, specifically, has been highlighted by 55% of the OEM respondents as the principal funding source utilised by machine tools users.

In the UK, machine tools consumption saw a drop in 2012 compared to 2007, an aftermath effect of the global economic slowdown between 2008 and 2011. Access to affordable and appropriate finance therefore now plays a crucial role in reviving up-to-date machine tools equipment investment, in order to respond to the green shoots of economic revival and increased demand. This is especially important since many machine tools users are small and medium-sized enterprises (SMEs) who often experience difficulty accessing traditional bank loans for equipment acquisition.

“The recession has seen many machine tool users ‘sweating’ their outdated equipment assets because of a lack of funding for new investments,” commented Brian Foster, head of industry at SFS. “However, they need to upgrade to more productive, more energy-efficient alternatives if they are to remain competitive in the long run. OEMs who are able to help customers overcome their financial bottleneck by providing an integrated asset financing or leasing facility will secure themselves a distinct competitive advantage.”