Part 1-Fleet Management: How to Add (and Keep) Muscle in Your Machines
When it comes to earthmoving, machines aren't cheap. It's easy to invest seven figures in even a modest operation. These machines are tough and capable of moving a lot of yards in a short time, but it takes a savvy operator and a skillful technician to keep production at its peak and downtime at a minimum. Fortunately, today's earthmoving equipment is more versatile than ever before, and well-run operations attract and keep good people.
Kent Schewe, president of Primrose Landscaping in West Chicago, IL, has no problem keeping a good operator, but that's because he's an owner-operator. In fact, his business volume, now at six figures, has been increasing at a 25% clip per year for the last 12 years. His principal machine is a 2001 Case 95XT skid-steer. "It has twice the lifting capacity and bucket volume of an older Case I'd been using," he explains. "A lot of my work focuses on water-garden building, and I need a machine that can work in tight places. My biggest client, Aquascape Designs, typically does all its work by hand, including an 11-by-16 pond complete with water, fish, plants, and a working waterfall, installed in just a single day. On larger projects, I'll do the excavation and placement of the boulders weighing up to 18,000 pounds." Rental also helps Primrose meet excavation challenges. "I rent by the day and have rented excavators from 3,000 pounds to 70,000 pounds. Efficiency and accessibility are critical considerations. Smaller excavators with articulated booms sometimes make the difference in being able to accomplish the work in tight areas, such as alongside houses or around trees where there's limited swing area." Schewe concludes, "I do all my own maintenance and closely follow the factory maintenance schedule with all my machines. I've never had any downtime with my older skid-steer, and it has more than 2,000 hours. I'm an army of one, thanks to the equipment I have."
While this owner is satisfied with the size of his business, others seek growth. But how is an operator to expand his fleet without endangering his financial status? "As you grow and add equipment to fleets, cash becomes an issue," observes Case Credit Construction Equipment Market Manager Tom Milligan. Speaking from his Racine, WI, office, Milligan notes, "In general, renting and leasing have become an important piece of the puzzle for growing a fleet; [they help you] conserve cash. With renting, you're looking at cost of use rather than cost of ownership. A three-year lease can offer substantial savings over short-term rental, while rental gives a contractor a chance to try out a machine before he buys it." Milligan reports that Case Credit, in cooperation with the parent company and the dealer organization, works to offer subsidized leases, lower payments, and higher residuals than most independent financial companies can. This means lower payments and more cash saved.
"The trend in the industry is to be a total-solutions provider," observes Milligan. "Equipment companies such as Case are working to take on fleet management concerns so the contractor can concentrate on bidding and completing jobs. Customers are getting more sophisticated; they're looking at utilization and when to rent or lease to their advantage. They're leveraging growth by minimizing the cash impact so they don't grow themselves into financial difficulties."
"Whether large or small, the key element for improved resale value is to retain good records and follow the manufacturers' recommended maintenance schedule," says John Marshall, director of product support and after-sales for Case Construction Equipment. "Customers save money by choosing equipment that utilizes common engines and components throughout their equipment line. For example, our 4-390 engine is used in Case forklifts, backhoes, skid-steers, and crawlers. It can be serviced by a single technician trained on that unit, and the customer minimizes stocking various oils, lubricants, belts, and filters. Commonality of components not only leverages the expertise of the dealership but also minimizes maintenance costs and encourages the operator to complete daily maintenance points."
Marshall also counsels contractors to factor in the ease of maintenance when choosing equipment. "At Case, we believe designing ground-level lube and service points into the machine provides a win-win situation for our customers. It encourages the operator to complete daily maintenance for optimal equipment performance, but it also benefits the owner at the time of resale."
Rick Hall, Case Construction's vice president of engineering, adds, "Lubricant quality is critical to longevity. You want machines with filters designed to capture all contaminants, machines able to operate in wide-ranging temperatures from subzero to high heat. Also look to additive packages for lubricants to remove air from oil, to keep aeration at optimum levels. You want this in hydraulic systems and in transmissions, axles, and other elements of the power train.
"Products coming to the market today are much more ergonomically friendly, environmentally friendly, and efficient," contends Hall. "As a result, newer products deliver more productivity per unit of cost than older machines, and that includes increased ease of service and ease of maintenance, and lower workers' compensation costs. Trained operators can put in a longer day with less fatigue. Today's machines are reducing the cost of ownership at significant levels in all areas, whether you're talking operating costs, service costs, replacement costs, et cetera."
Wes Lee, director of heavy-equipment marketing, agrees, adding, "Whether it's wheel or track, contractors want to be able to take an attachment, such as a broom, from a skid-steer and use it on a wheel loader. Today's machines make it easier to quote a job by the dollar because the contractor can more easily predict the number of hours, kinds of tools needed, fuel costs, cycle time, and so on."
So what are some signs that it really is time to replace an older machine instead of rebuilding it? "Look at the cost of new capital versus rebuild," advises Lee. "Those who are cash-rich tend to trade out before rebuild, while others save the money and rebuild. It's an individual decision. If it's a high-production machine, you want it to be reliable. If your loader, for example, is used only part of the time, then rebuilding can make more sense.
"But remember, whatever the machine, if it's maintained to factory specs, it can command a higher resale value. There's no substitute for having a well-maintained machine, no matter how old it is. The better records you keep, the better chance you have of that equipment selling at the best possible price."
Steve Dietch, Case's strategic accounts manager in the upper Midwest, concurs. "People want to do more with less. A lot more excavators are being purchased with auxiliary hydraulics to run breakers, grapple buckets, universal processors, hoe packs, et cetera. They want to keep that machine busy. Yes, leasing and renting are becoming more popular, but the majority still buy outright with cash or through an RPO [rental purchase option]."
Managing a Bigger Fleet
|A lockable swing-out door on this skid-steer provides easy access to the cross-flow radiator, swing-out air cooler, battery disconnect switch, and rear jump-start terminals.|
Loren Steed, president of Steed Construction in Salt Lake City, UT, reports that during its 30 years in business, the company's fleet of heavy equipment has grown to 160-180 pieces. "That includes trucks but not pickups," he points out. "Essentially we specialize in site work and utility installation for custom homes. This year, billings will total about $11 million."
When it comes to adding a new piece, Steed prefers RPO. "You will find you can RPO a good share of the large iron out there. We prefer to do that from eight months to a year. This gives us time to build a comfort zone before we purchase. By that time, we've established a down payment of about a third the total cost, and we know how to use the machine and that we can keep it busy."
Over the years, Steed says the company has taken on a couple of lemons. "We had one excavator that had catastrophic hydraulic failures repeatedly. A piece of contaminant broke loose from somewhere and destroyed the main hydraulic valve. When repairs get so high it's more cost-efficient to turn back the piece rather than acquire it, that's when you're grateful that you used RPO. Dealers want to make it right, and they'll do everything they can to do so. They definitely want your future business, and they don't like a bad apple either. A 5% turnback isn't much, but it lets you focus on other challenges.
"But company maintenance practices are a huge part of the RPO. Essentially, if a dealer is comfortable with your maintenance program, your RPO rates will be lower. To get an RPO that's worth something, you need to have a reputation for a sound maintenance program and operator care."
Steed keeps this simple. If the problem can be traced to operator abuse, the operator is held accountable. "We don't threaten, we teach. If the operator understands what's happening and why, he'll be much more inclined to work with you, not against you. He'll be careful, even when you're nowhere near the work site. We try to hire people who will listen and learn. You have to put the new operator out in the field and try him, but usually the less a person talks about his qualifications, the more qualified he is."
Steed learned this last lesson the hard way. One morning, he explains, the excavator operator at his company had a dental appointment. The pressure was on, however, and the company needed to get the machine moving, so it took on a new man. Unfortunately, the newcomer proved to be cowboy. "In just a couple hours he ran over a telephone box and a power box and got rocks stuck between the track and the main house of the excavator. Frankly, if an applicant [boasts incessantly], you can pretty well write it down that once the rubber hits the road, he's really soft."
Steed stresses the importance of making life easier for the operator. "Cab comfort plays a huge part, but so does company working relations. We have to monitor and keep an open talking relationship with both salaried and hourly people." The working environment for equipment also is an important consideration. "Cat calls Salt Lake City one of the worst overheating nightmares because of altitude and temperature changes. We get higher spikes, especially up on the ski slopes. We maximize high-altitude performance with clean air filters, and we oversize our filters by about a third. We'll clean those filters every week under a dusty environment.
"We've also tailored the maintenance for each machine. We tend to do maintenance at one-half to one-third of the factory-recommended intervals. As a result, whether its Cat, John Deere, Kobelco, Hitachi, Case, Bomag, Volvo, Kenworth, Peterbilt, International, Ford, or GMC, we have long-lasting engines. Whenever repairs or the forecast for repairs is exceedingly high and the job demand is even higher, we'll remove the older piece from the fleet."
Little Things Make for Big Savings
"Managing fuel consumption is critical to the overall success of an operation," counsels Steve Herrera, business analysis manager for John Deere. "Focus on things that can improve fuel economy and increase operating efficiency. Many operations can be performed at a lower rpm with little or no reduction in production capability. Also, fuel efficiency—mode selections are becoming more common on new equipment. While operating in an economy mode, up to a 15% reduction in fuel cost is achievable."
Herrera offers other cautions. "Excessive idle time wastes fuel and puts unnecessary hours on the engine. Plugged air filters do not allow the proper air-to-fuel ratio, degrading fuel efficiency. Low tire pressure increases rolling resistance, while too loose or too tight an undercarriage lowers fuel economy and increases the wear rate. Running wear items past their limits may actually damage your equipment, which can lead to more unexpected downtime."
Herrera adds, "A proper preventive maintenance and fluid analysis program helps detect minor issues before they intensify, allowing you to plan downtime, reduce maintenance costs, and make your operation more productive. An understanding of predicted life-span data of major components will allow the development of an effective fix-before-fail maintenance strategy. This can preempt catastrophic downtime, avoid immediate loss of productivity, and prevent collateral damage to other system components."
Reece Norwood, excavator product manager for Kobelco in Stafford, TX, points out, "Make sure the machine is properly equipped for a variety of applications. Auxiliary attachments make excavators more productive and versatile. Also, an operator is more inclined to care for equipment if it is comfortable and gets the job done easily. You want the machine to be productive–with high breakout force and lifting capacity–yet be easy to maintain. Look at realistic maintenance intervals."
Seek the Best for the Task
|These wheel loaders have all daily service points at ground level. Things like fitters can be easily accessed without tools.|
|All daily service points on this trencher are conveniently located on the left side of the machine for quick service.|
As with other contractors, McGuire & Hester, headquartered in Oakland, CA, is performance-conscious. "Our fleet includes 12 excavators from 17,000 to 210,000 pounds, a couple of dozers, 10 backhoes, eight frontloaders, three pavers, and a fleet of rollers. We buy whatever produces the best result," emphasizes Rod Michaelson, equipment manager. "For example, I'm buying a Sakai SP-800 roller because it outproduces all the other brands. Vibrations and amplitudes are higher, giving heavier densities at a higher speed. It ensures we pass compaction–the first test around. Kobelco, though, has been the racehorse excavator, which is why seven of the 12 come from that manufacturer. Its machines hold together well and are easy to operate and long-lived."
This contractor also maximizes machine life by conducting inspections and performing preventive maintenance. "We get input from the operator. We had a used excavator that had an engine miss. After the dealer and engine company both looked at it, one of my guys found it had a bad cam load. After we made the repair, we had more power than when we first bought it." Standard engine maintenance happens every 250 hours, with major service scheduled at 1,000 hours or 12 months, whichever comes first. "Our lube man checks all the in-shop equipment once a day, with another mechanic on-site doing the same thing, and operators tell them if there's a problem with their machine."
Finding the Right Operator
So what do they look for in an operator? "A drug-free environment is mandatory," insists Michaelson. "We don't hire operators who like to party and be cowboys. We want operators who are conscientious about being operators, not abusers."
"The operator is the one who has the greatest effect on a machine's life," agrees Tom Brady, training coordinator for Caterpillar Equipment Training in Peoria, IL. "Only an operator who knows the machine, is skilled in its use, and is aware of its limitations and capabilities has the foundation for being a safe operator. A good operator helps minimize downtime, builds confidence and trust in people he works with, and is an important addition to the team. You need to find people with the right attitude and the right basic skills. Then the company needs to help the operator develop those skills. Contractors make an incredible investment in a machine and should also invest in hiring and training qualified people."
So how does one keep a qualified operator? "Offer competitive wages and listen to the operator," stresses Brady. He recalls an operator quitting simply because the owner would not replace a $900 seat on a $500,000 machine. "That cost him a terrific employee, yet he still had to replace the seat. One contractor on the East Coast began purchasing machines with cabs and air conditioning and started attracting the better operators in the area. It showed that he cared about his employees. If operators feel like they matter, that they belong, they're going to be there."
Pennsylvania Success Story
In late 2000, Schlouch Inc. of Blandon, PA, was voted the best large-size company to work for in Pennsylvania. "We're a full site-development contractor," explains Don Bernosky, equipment and mechanic coordinator. "We employ 330 and will run 15 to 20 projects at any given time. We'll do about $50 million this year." This from a company that started in 1983 with a staff consisting of Barry Schlouch, his wife, and 12 employees working out of an in-home office. Today its fleet has 359 pieces.
"We lease about 10% of that equipment, with the rest either owned or in the payment process. We do RPO because our investment in machines averages $3 million to $4 million a year. If we know we're going to need a machine for a couple of months or less, we'll rent it."
Operator training is an essential element to maximizing machine performance. Bernosky adds, "During January and February, vendors come in and we'll do operator specific training. We'll have all of our off-road employees, all our dozer operators, et cetera in at one time for one-day sessions." The sessions include maintenance, lubricating, operating techniques–anything an operator might do in the course of a day. "We hold survey classes so our operators can learn how to read cut-and-fill marks on the stakes, and soil experts teach compaction techniques on different types of soil."
When Schlouch buys a machine, it does an owning-and-operating cost analysis. "That gives us our benchmark for the machine and helps us set time frames for all component overhauls. We also have a time frame for when to get rid of a machine. This allows us to detect unusual wear, but operator abuse usually is not a problem. We like to keep our people on the same piece of equipment. It gives them a feeling of ownership." They're also part of the equipment-buying decisions.
Monthly "Team Encounters" help resolve on-the-job issues. "We'll bring in customers and people working on the job and sit down and hash out what's going on. We have a psychologist to help us resolve conflict."
This company also is big on seeking help from vendors. "About 50% of our fleet is Caterpillar, and most of that is because of product and dealer support," notes Slouch.
|Machine life can be maximized by conducting inspections and performing preventive maintenance regularly.|
Another key component to a heavy-equipment fleet is the machine that gets overburden off the site. "You need vehicles sturdy enough to operate in an off-road environment, survive the dirt and contamination, yet also move easily and efficiently from the site to the shop and back," comments Jim Sancher, marketing manager for construction vehicles for Volvo Trucks NA Inc. "Spring injury, for example, is practically zero as long as the springs don't touch one another in their arc. They should be designed so that they can always act as individual springs." This provides a softer ride when they're unloaded and needed rigidity when the box is full. "Another advantage to independent suspension is that when you articulate the axle, you minimize weight transfer from wheel end to wheel end," Sancher claims. "You have more uniform weight on all four ends, which means better traction in off-road conditions."
Sancher notes that in Volvo's case, drivers control a locking mechanism from the cab that will lock the front axle to the back axle and wheel end to wheel end, so all four wheel ends are driving. This boosts off-road moveability. Furthermore, a single frame in lieu of old double frames, such as those found in older dump trucks, saves 300-500 lb. in tare weight but still provides strong resistance to bending movement in the frame, which is essential when operating in a severe construction environment. Add in a cab that provides operators with 270° visibility, and safety is enhanced.
Bill Sixsmith, vocational marketing manager for International Truck and Engine Corporation in Warrenville, IL, points out, "We've just released the International 7000 Series–the industry's first high-performance trucks. The cab has plenty of interior room and storage for documents, lunch, tools, et cetera and is easy to enter. Mirrors provide high visibility and durability against vibration so the driver knows the environment he's working in."
Those mirrors also are designed to give rather than rip when inadvertently encountering a tree limb. And as with other heavy equipment, daily checks are easily handled. "The operator will do them consistently if they're easy," Sixsmith declares.
As with the rest of the heavy-equipment fleet, today's trucks have longer maintenance intervals and tend to last longer when operated by conscientious drivers. So getting–and keeping–the muscle in your fleet depends not only on acquiring the right mix of machines for the task at hand, but on finding and keeping great operators. When the two are at their best, the company is at its fittest for survival.
Author's Bio: Journalist Joseph Lynn Tilton specializes in land and building issues.