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Circular business model: recognising the value of reconditioned assets makes for a better financing solution

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Ellen MacArthur Foundation
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JLG Manufacturing Europe

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JLG, a manufacturer of access products, has been reconditioning its equipment for over 20 years, primarily through large rental companies that occasionally return equipment to be reconditioned.

In 2013, JLG strategically developed its reconditioning capabilities as a mean of engaging in the full life cycle of its equipment and responding to the customer demand to make the most of their investment. The company takes machines back to the reconditioning facility after their first use cycle and repairs and restores them to original specification. The facility delivers factory-approved equipment that is backed by a three-year warranty.

Their financial solutions partner DLL developed a complete finance offering for JLG’s new and reconditioned assets, including rental solutions. Thus customers can return the equipment to JLG at the end of the lease contract.

By building a business model that integrates the recovery of assets, JLG formalises the reverse cycle, gains a close understanding of the flow of its products, and supports the business case for further investment in reconditioning activities.

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DLL and JLG have built this process on the recognition of the value of the reconditioned assets at the end of their second use, and the benefits are felt by the major stakeholders.

Higher residual values result in a lower cost to the end customer, who saves around 35% over buying new.

On top of this advantage, JLG can build a closer relationship with its customers, supporting them throughout the entire use cycle. Finally, working with JLG enables DLL to finance more equipment and differentiates it from competitors unwilling to take the risk.