September 2008 – Equipment Procurement
While their structures might differ, the ability for larger producers to leverage costs using national or regional accounts is a trend that truly began to take hold with the upswing in the industry’s consolidation. And Druyor says it is a nice tool to have in a purchasing arsenal. “We will use national accounts for leverage when we can,” he says. “When you have a multiple-year contract with a manufacturer, it gets some of the decision out of the way, so you don’t have to worry about that aspect of purchasing for a couple years.”
According to Brannigan, “The Certified Equipment Manager (CEM) program of AEMP is an excellent foundation for fleet managers and continuing education for advancement as a fleet management professional.” This type of training can be invaluable when making equipment purchasing decisions. “Continuing educational sessions at our semi-annual management meetings have included discussions on net present value analysis, lifecycle costing, and fleet replacement planning, as well as general topics such as emissions management, technology and telematics, and fuel management,” he says.
Replace or rent?
Rental has always been an option for fulfilling equipment needs. Campbell says that in recent years, when producers’ and contractors’ businesses were expanding quickly, these customers were more likely to buy new equipment outright as a means to add capacity. “Today, there is more caution,” he says. “We see increasing numbers of customers that will rent to supplement their fleets without long-term commitment. They like having the option to walk away.”
Campbell suggests a simple formula that can be followed when deciding whether to rent or buy. “If you use a machine less than 600 hours per year, then the most cost-effective option is to rent. If you use it 600 to 1,000 hours per year, then you should buy a used machine. If you use a machine more than 1,000 hours in a year, buy new. And if you use it more than 1,200 hours per year, buy new with a service contract or sure way to maintain the machine,” he says.
A different animal
Aggregate processing equipment can offer some different challenges in the purchase process, according to Druyor. “A wheel loader can pretty well shovel rock anywhere,” he notes, “but with aggregate processing equipment, you have to look at the products and applications more closely. There’s a lot more art going into it, in addition to everything else.” Druyor says for these purchases, he will get the plant engineers involved in the decisions, providing input on product mixes, type of rock, and production needs.
And one challenge that aggregate equipment manufacturers are working to solve is that of rising fuel costs. According to Stolowski, in the production flow, as the face of a quarry changes with blasting for new material, “producers often struggle with the fact that the face can be a good mile-and-a-half away from the surge pile or primary.” In answer to that problem – for producers looking to reduce processing fuel costs and/or enhance production – portable equipment can help reduce or eliminate the high fuel costs associated with haulage.
“By adding portable equipment to crush at the face, the producer gets 75 percent of the process done,” Stolowski says. “Alternatively, producers who modify a stationary plant to enhance production find that it’s a difficult process - and a huge capital investment. A new jaw unit might be a lower cost than a track-mounted jaw. But when you consider the other cost factors, including engineering, new foundations, chute work, fabrication, and conveying, there is a lot of added cost. And once it’s in place, it’s fixed. There’s no flexibility like track-mounted equipment can offer. And track equipment is self-contained with the feeder, the processing unit, and conveyors.”
It’s a trend that is definitely growing, Stolowski says. “Two years ago, the trend was fixed installations. Producers would remove smaller crushers and screens and replace them with larger capacity equipment. I think we would still see that today if the economy was the same. And while some people will always be staunch on stationary, others are exploring other ways to enhance production and reduce operating costs.”
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