Loeb Equipment & Appraisal Makes Life's Work a 2nd Life for Machinery
For Nearly 130 Years, Loeb has been Buying and Selling Used Machinery
By Julie Wernau, Tribune Reporter
As published in the Chicago Tribune Business Section - December 6, 2009
In one corner, a huge hunk of metal with two Plexiglas doors and enough knobs to stir the imagination looks like a time machine. In another an "agitated kettle" with a large, caldronlike bowl sits on thick pallets.
Loeb Equipment & Appraisal Co. has seen its inventory of used machinery balloon 20 percent
from last year. The airplane model, the "Spirit of Orville," came from Orville Redenbacher's original
popcorn plant in Valparaiso, Ind., which closed in 2000.
These machines, along with $27 million worth of bottle cappers, hair-spray fillers, potato-chip sorters and other huge gizmos, once the humming machines of American manufacturing, now sit ghostlike in Loeb Equipment & Appraisal Co.'s warehouses. The Chicago-based company's inventory of machines ballooned 20 percent from last year and may grow as more plants continue to close.
"It's an unfortunate sign of what is happening with manufacturing in the United States," said Howard Newman, president of Loeb, headquartered at what used to be a dairy at 4131 S. State St.
Loeb President, Howard Newman, is the fifth generation in his family
in the business, founded by his great-great-grandfather in 1880.
But the way Newman sees it, every piece of equipment his company acquires, usually through liquidations, bankruptcies and plant closings, gets an extended life through recycling. For instance, when Loeb liquidated machinery from Jay's Foods' plant, pieces were resold to 120 businesses, from major candy and snack-food companies to mom-and-pop shops.
A conference room just inside the entrance hosts a wall of products that have been created from such machinery: Cinnamon Life cereal, Rice-A-Roni and Scope, to name a few.
At Roth International in Chicago, which creates dental products, owner Richard Bryan this year purchased a dust-collecting machine, originally owned by Kraft, for $1,750. He considered it a steal, since the manufacturer was selling the same machines for $10,000.
"I'm only a three-man company here," said Bryan, who still operates a 1945 milling machine he purchased from Loeb in 1979. The stainless-steel machine was custom-made for Bell Laboratories in New Jersey, he said. Most of the machines now are made from carbon steel, which Bryan said he can't use for dental products due to the threat of oxidation.
"To buy that machine new would have probably cost me about $15,000 in 1979, and it cost me only about a third of that," Bryan said.
For small businesses, the chance to buy machinery at low prices makes it possible for them to grow.
Such is the case for Cipriani's Pasta & Sauce in Chicago Heights, with yearly sales of about $1 million, said owner Annette Johnson. The company, founded in 1929, hangs its reputation on products that are just like homemade, which includes slow-cooking pasta sauce that sells for about $3 a bottle.
About a year ago Johnson purchased bottling equipment and three high-volume kettles from Loeb, which she said would have cost triple the price if new.
"They've got these big sweeps in them," Johnson said of the kettles, which cook the sauce for an hour at temperatures above 200 degrees. "It's like you're at home; you've got to stir the pot. You can leave the sauce alone and let it cook. ... We make a very homemade sauce, just in a very big format."
Back at 28-employee Loeb, Newman is ever the salesman.
Loeb purchases a wide range of pre-owned equipment in liquidations and plant
closings, then resells the used pieces to buyers looking to pick up a bargain.
He pointed to an old machine from Polaroid: a series of conveyor belts, knobs and embossing equipment that once created cardboard boxes to be filled with instant cameras.
"Technology changes," Newman said. "In 1982, if you would have said Polaroid would go out of business, a Fortune 500 company, nobody would have believed you."
Today, that machine, he said, could be used for any number of products that require vertical cardboard boxes.
The decline of U.S. manufacturing has changed Loeb's reach. Its machines have been sold as far abroad as Papua New Guinea, where an oven used to dry papaya waited sixth months for delivery because of a clay road and the rainy season.
The company's auctions totaled about $21 million this year, and Newman noted that a recent auction in Georgia yielded buyers in 17 countries.
Scaled-back corporate budgets have also helped business.
"With a lot of the capital budgets being placed on hold this year, the viability of using preowned machinery is much better," he said.
Moreover, machinery rentals jumped 130 percent this year, said Newman, who declined to reveal the company's total revenue but noted it was about up about 10 percent this year.
Newman, who collects signs from moribund plants, is the fifth generation in his family involved in the business. In 1880, his great-great-grandfather, Harry Newman, left Armour Soap Works and went into the new- and used-machinery business under the name Newman Tallow & Soap Machinery.
In the front room of Loeb, Newman displays his great-great-grandfather's original roll-top desk. He also shows off his great-grandfather's hammer, initials etched in the handle, which he found recently when he moved a giant cabinet in a parts room.
Today, when Newman walks through Loeb's South Side warehouse, he can point to the most obscure machine and explain what it is used for and how it works.
"I was always sort of mechanically inclined, and I actually wanted to be an architect for many years," said Newman, standing beside a photograph of a 1972 Triumph he restored when he was 13 years old. "My dad would bring me here with a paint brush in my hand, and I'm not sure if I got more paint on the machines, the floor or myself."
He sees a kind of art in machines that is reflected in his office. A photograph of an abandoned metal tank that his wife refused to allow into their home dominates the room, and a twisted metal pipe, the length of a person, is set into a corner like sculpture.
Loeb's machinery has also made it to Hollywood, a cameo of sorts in the 2008 Batman film "The Dark Knight."
"When the butler first goes down to the bat cave, and he goes by all those crazy-looking machines, that was our stuff," said Newman.
A woman in charge of props for the movie rented eight truckloads of equipment, Newman said. A labeler became some kind of "analyzer" in the movie. Mechanical devices were suddenly computerized.
While Newman got the sale, he didn't get a movie credit.
"I said, 'How about this? I want my name after the acknowledgments section where it says, 'Thank you, Richard M. Daley, mayor; Howard Newman, president of Loeb," Newman recalled, laughing. "She was like, 'I don't even know who to talk to about that. Do you want to rent me the equipment or not?' "