Plastics and rubber equipment finance

How do plastics manufacturers finance moulding and extrusion equipment?

Injection moulders, extrusion businesses and rubber manufacturers typically finance moulding and extrusion machinery on hire purchase, since these machines have a long working life and established manufacturers' equipment holds a genuine secondary market among other processors. Purchases are usually made against a specific tooling contract or customer programme, so the repayment schedule can be matched to that programme's revenue, but the tooling itself is a separate cost that is not usually financed as if it were a general business asset.

Buyers are injection moulders, extrusion businesses, and rubber or composite manufacturers supplying other industries such as automotive and packaging. Moulding and extrusion machinery is expensive and is usually bought against a specific tooling contract or a new customer programme, which means the equipment purchase and the revenue it is expected to generate are closely linked from the outset, making it easier to structure a repayment schedule that matches the business's actual cash flow from that programme.

Hire purchase suits injection moulding and extrusion lines well, since these machines are built to run for many years and a processor generally intends to keep using the same equipment across multiple customer programmes rather than replace it when any single contract ends. Ancillary equipment tied to a shorter product programme can be worth financing separately on a shorter term, since it may not be needed once that specific programme concludes.

Moulding machines from established manufacturers have a genuine secondary market among other processors, which gives lenders real confidence in the security when financing this equipment. The tooling itself, cut specifically for one customer's part, has almost no resale value to anyone else, and is usually owned by the customer commissioning the part rather than the processor, so it should not be financed as if it were a general, resaleable business asset.

The mistake we see most often is failing to distinguish clearly between the machine, which is a genuine, resaleable business asset, and the tooling, which is generally customer-owned and specific to one part. Financing arrangements that blur this distinction can leave a processor carrying finance obligations on tooling it does not actually own outright once the customer relationship ends. Checking who holds title to the tooling before it is included on any finance quote avoids this becoming a dispute later.

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