Keep Loader Costs Lean

Therese Dunphy

August 1, 2009

In many cases, a new 7- to 8-cubic-yard loader will cost less to run — per hour or per ton — than an older model.

by Tom Jackson


mgmt-am-0709-photo-2_989902Big machines bring big profits, but they also cost a lot to operate — all the more reason to calculate, out to the penny, what you’ll spend working these high-volume producers. Another reason to closely analyze the cost considerations of your big equipment is that new production-level machines often come with the latest technology in the equipment industry.

Today’s newer machines, with Tier 3 engines and high-tech electronics and hydraulics, can run circles around earlier generations of machines — and do so while burning less fuel and maximizing their up-time. In this economic climate, some operators may shy away from new equipment purchases, but you’re shortchanging yourself if you look only at the sticker price. Experienced operators know that what matters is not the purchase price, but what it costs you per yard or per ton to move material.

In this article, we’re looking at wheel loaders with bucket capacities in the 7-to 8-cubic yard range — a typical quarry machine or high-volume earthmover. To help us analyze the costs on these, we turned to two of Komatsu’s product managers, Rob Warden and Chuck Murawski. They recommended we study the new WA500-6 wheel loader as it is a new, clean-sheet-of-paper design. The only things that were carried forward from the previous Dash-3 model were the size of the tires and the size of the engine. Everything else — the transmission, torque converter, axle, frames, and hydraulics — was redesigned to work together harmoniously, making it a good candidate to show off the cost-saving potential of a new machine.

“What often happens as a machine model grows older is that the weight and horsepower increase, but the components stay the same,” Warden says. “You have to work your components harder to get the performance you require and you end up using more fuel.”

When you start from scratch, engineers can design everything to hit a certain sweet spot, so you’re not constantly pushing the engine or hydraulics up against their limits. Manufacturers will also integrate the latest technology, which, in this case, includes more shifting modes; a lockup torque converter; a closed-center, load-sensing system with variable displacement piston hydraulic pumps; and a variable-speed, on-demand hydraulically-driven cooling fan. To reduce downtime, the new WA500-6 also offers DT electrical connectors, O-ring face seals on hydraulic hoses, and Equipment Management Monitoring System (EMMS) onboard diagnostics.


Residual value

wheelloaderchart1As part of the owning and operating (O&O) cost calculations, we include the residual value of the machine at the end of its first lifecycle. But with a new generation of machine, estimating the resale value is tricky because the field population is relatively young, there aren’t any on the used equipment market, and a survey of price guides only turned up two roughly comparable machines. Further complicating matters is that there are many different ways to sell a machine. You can trade it in to the dealer, sell it yourself, or sell it at auction. And don’t forget that there are some O&O cost models that have you zero out the value of the machine at the end of its lifecycle and claim no residual value. We build the residual value into our calculations, which lowers your O&O cost, but all these considerations are best settled with the advice of your accountant, equipment dealer, and, in some cases, a tax advisor.

To help with the math on this assignment, we used a spreadsheet calculator that’s available at Komatsu dealers. Most of the top equipment OEMs today make similar calculators available, as they’re an invaluable tool for totaling up costs. Remember also the numbers we cite here are theoretical and for discussion purposes only. To get your costs to the level of accuracy you need to operate your equipment profitably, you need to sit down with the dealer, plug in the exact specs of the machine you want, and use your own labor, fuel, and consumables costs. Don’t be tempted to guesstimate based on our figures, as even small variations in the numbers can quickly add up over time.


Fuel efficiency

agrm0809pg26In our fuel calculations, we estimated the fuel use of the WA500-6. Fuel consumption of this model ranges from 4.6 to 12.0 gallons per hour as it will vary based on the load factor of your application. Because of its significant impact on your lifecycle operating costs, this is one figure you should research from your previous operations and plug into your own O&O models.

No other operating cost gets as much attention today as fuel costs. Even though diesel is a lot less expensive than it was a year ago, it’s still one of the few costs you can have some control over. And it’s the one cost most manufacturers can successfully help you control.

The first way to reduce the fuel burned per unit of work performed is, as mentioned earlier, to design a machine where all the components are engineered to work together harmoniously, and by adding features like additional shifting modes that better match the tire speed and torque-to-traction needs. Lock up torque converters are a good way to gain a few extra gallons per hour when roading a wheel loader or doing load-and-carry work. A closed-center, load-sensing system with variable displacement piston pumps will reduce wasted energy by only pumping as much oil as is needed for the immediate demand. In side-by-side comparisons to the previous generation Dash-3 models, the WA500-6 is 15 to 17 percent more fuel efficient in terms of gallons per hour and 25 to 30 percent more efficient in yards moved per gallon, say Warden and Murawski.

Plug those kinds of figures into an O&O calculator and you start to see some significant savings. In this case, the most conservative figure, 15 percent savings in gallons per hour (at $2.25 per gallon), still delivers $26,325 in savings over the life of the machine.


Tracking your assets

Another big boost to fuel savings comes from the use of asset tracking programs to monitor and manage concerns such as excess idle times. Komatsu calls its asset management program Komtrax, and most of the major OEMs, as well as GPS providers, now offer similar capabilities. What these offer is the ability to remotely track the location and operating condition of your equipment and/or vehicles. You can customize reports to alert you to things like excessive idle time, then you can coach operators to shut the machine down when not working.

Asset tracking also helps you save money in service calls. Although this isn’t something we would plug into an O&O calculator, you can do your own rough estimate on how much you would save if your technicians never had to chase down a hard-to-find machine, or if all your maintenance or diagnostic issues and needs were e-mailed to the shop every morning before the service truck headed out. Asset management programs combined with onboard diagnostic systems will also tell you about small problems before they grow into big problems and allow you to more efficiently schedule preventive maintenance.


Maintenance and repairs

The figures we used for preventive maintenance and repairs are based on Komatsu averages. If you’re in a high-labor cost area or have a lot of variables that depart from the average, be sure to detail these with your dealer.

One thing we did not put into the formula was the cost of replacing bucket cutting edges and/or teeth. These vary widely depending on what the machine is used for and the soil or material conditions. Bring your own replacement schedule to the table when you do your own calculations.


Wheel loaders, 7- to 8-yard bucket capacity

Note: These numbers are based on a new Komatsu WA500-6 wheel loader for five years at 2,000 hours a year (10,000 hour total). The figures cited here are theoretical, however, and for discussion purposes only. For an accurate accounting of your future owning and operating costs, consult with a dealer. Also note: sums may not total exactly in these calculations due to fractions and rounding.


Long-term costs, lowering costs

Production machines such as an 8-cubic-yard wheel loader are often replaced every five years or 15,000 hours. Replacement could mean moving it from a main production to a back-up unit or moving it out of their fleet. Operators today are trying to minimize their operating costs, and a large part of the operating costs is the replacement of major components for the machine to have a second life. If you can effectively maximize the hours a machine runs until major component replacement, then the operating costs will be lower. The decision whether to replace major components or not depends on your requirements.

If operators choose to replace the major components on their wheel loader,  Komatsu and several other major OEMs offer remanufactured components that can replace major components — engines, hydraulic pumps, and transmissions — with a component price that’s approximately 60 percent of the cost of new. This can lower your O&O costs on a second-life machine, especially if you gain some fuel efficiency by using factory quality remanufactured components. You have to be willing to work around the downtime from replacing major components, but using these components will provide confidence in the machines quality during the second life.


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