Faced with a lack of capital, many companies that might never have considered purchasing equipment from the secondary market are now finding themselves lured by used-equipment dealers awash in surplus acquired from facility closings and liquidations.Gone is the business culture of the 1990s that discarded valuable machines and technology like old shoes. At the same time, surplus providers have become much more efficient at remarketing used technology.Bruce Leister, manager of commercial auctioneer BL Enterprises in Belmont, Calif., said he once went to the city dump in Sunnyvale, Calif., and came back with a scanning electron microscope. "It was a different time then," he said.In the current downturn, the used-equipment business has become a safety valve: When there is a lack of equity, auctions are a means of moving equipment and raising cash.Activity in secondary markets tends to accelerate toward the bottom of a market cycle because companies start to sell off their capital equipment, said Gary Alexander, who is president of the Surplus Equipment Consortium Network.When the economy picks up and cash is again available, buyers engage in a feeding frenzy because used equipment often goes for 20 to 30 cents on the dollar. As the cycle peaks, the secondary market benefits again because companies need equipment quickly and manufacturers sometimes cannot fill new orders for weeks or months.Leister's auctioning services tend to benefit when the cycle is headed downward. His clients fall into one of two categories: those who are going through bankruptcy and have no plan to re-emerge and those who are shutting down facilities and liquidating equipment. Over the course of a day, a single auction can move between 1000 and 3000 line items."Lately, people that never buy used equipment are buying," said Tom van Duyne of Laser Resale in Sudbury, Mass., whose late-summer business has been lively. Some of the biggest demand, he said, is for small sealed CO2 lasers from Coherent Inc. of Santa Clara, Calif., and Synrad Inc. of Mukilteo, Wash. Nd:YAG engravers are also a hot item -- particularly for medical applications -- as are power meters, but suppliers are uncertain what to charge for the newest diode pumps, he said.Alexander noted activity across the board for test and measurement equipment. In fact, he said, quite a bit of available equipment was purchased brand new and never installed. However, because it was resold, it falls under the category of "used equipment," even though it's still in the crate.Who is buying?Paul Edstrom of GE Capital Global Electronics Solutions in San Diego estimated that as much as 40 percent of his company's sales are made outside the US, mostly in Southeast Asia and China, which is the primary and most profitable target area for metrology equipment.Van Duyne cited a busy market for used lasers in the Czech Republic, Slovakia and Germany, estimating that a third of the big-ticket items he sells are going overseas. He recently sold a Ti:sapphire laser for $10,000 to the Czech Republic. The same laser brand new from Coherent would typically sell for $25,000.These kinds of stories are not uncommon and may help explain why original manufacturers might be concerned that used equipment is cannibalizing the market for their new products.But Bob Brams of BMI Surplus Equipment Brokers in Hanover, Mass., argues that more equipment on the market benefits more people, including the original manufacturers. His logic is that a lot of businesses and schools cannot afford new equipment. If they have a familiarity with a product and are satisfied with its function, there is a good chance that they will show brand loyalty when it comes time to buy new equipment.Edstrom said that there are companies that do everything they can to quash the secondary equipment trade, and that many OEMs prefer to sell a product to a single customer who will use the device for its expected lifetime and then discard it at the junkyard. However, the reality for most customers is different.Some OEMs, he said, recognize this -- particularly stepper manufacturers who sell devices that need quite a bit of calibrating and fine-tuning once purchased. These companies realize that their names are still on the product, and they want to make sure that it works.Whatever the technology, the abrupt shift from a seller's to a buyer's market probably hasn't helped OEMs' competitive edge. Brams speculated that some new equipment was overpriced before the downturn because customers had capital in such volume that suppliers could charge exorbitant prices. Items that sold for $30,000 last year are going now for $2000 at public sale, he said.Running counter to this perception is speculation by Edstrom and others that currently available used equipment is undervalued and that buyers are stockpiling it. There is a tremendous supply imbalance right now, he said, so buyers are selectively purchasing equipment from integrated-device manufacturers.In this slow economy, Brams said, niche markets can be very lucrative for suppliers of hold-out inventories. What happens in certain cases is that a small base of people have invested very heavily in a particular system and will stubbornly refuse to change as long as their existing device is still operating.Used-equipment dealers will purchase a large number of machines solely for the purpose of parts in this practice."You buy what you can, and you buy very carefully," he said. "What is valuable today may not be valuable tomorrow."