Trade In or Trade Up?


January 1, 2008

Learn how to gather information and make the best equipment procurement decisions possible.

by Rodney E. Garrett

There is no better time to reassess specific equipment brands and alternative equipment options than at trade-in time. However, making the best decision requires gathering pertinent equipment information and evaluating performance records. To illustrate, consider the equipment employed at the beginning of the traditional rock-to-aggregates process and then fast forward to the equipment used at the end of the process. Typically, the equipment kind at the quarry face is a wheel loader, and the equipment used to load delivery trucks at the aggregates stacks is likewise a wheel loader, albeit smaller in capacity.

When considering an equipment trade, questions arise about what brands and models should be chosen. Further study may include alternative types of equipment. Often, the equipment to be traded is six to 10 years old, so newer technologies have been introduced with many focused on improving machine performance.

S.M. Lorusso & Sons, Inc., a Walpole, Mass.-based aggregates producer, has addressed these questions as well as many others before trading its equipment. By completing a thorough analysis of its equipment performance, operational costs, and production goals, it was able to upgrade to better performing, more cost-effective equipment.

Company history

S.M. Lorusso & Sons, Inc., was founded in 1940 by a father-son team as a sand and gravel supply company. Today, the son, Tony Lorusso is the company president and tends to corporate matters. His son, AJ, serves as vice president and handles the equipment management program and daily operations of four quarries.

The company remains a family affair with six family members owning S.M. Lorusso & Sons, as well as Cape Cod Aggregates and Lorusso-Bristol Stone Corp.

S.M. Lorusso & Sons owns and operates four quarries in Massachusetts with its headquarters in Walpole. One of S.M. Lorusso & Sons’ more notable projects included supplying aggregates to the Boston MTA Big Dig Tunnel Project.

Two of its quarries serve to illustrate Lorusso’s equipment-evaluation purchasing program for excavating/loading equipment; West Roxbury Crushed Stone and Wrentham Quarry. Both quarries are named after the respective towns in which they are located. Although these are two of the company’s more mature sites, they have the latest excavation and loading equipment that is owned by the company with some pieces that are only a year-old.

The West Roxbury quarry is comprised of eight benches/faces in depth, with each face about 40 feet high. The Wrentham quarry does not have as many benches, but it also is conventionally laid out. West Roxbury produces aggregates for asphalt paving and ready-mixed concrete production, as well as railroad ballast. The bulk of aggregates produced at the Wrentham quarry are supplied to the CertainTeed Corp., a major manufacturer of roofing materials, where the supplied crushed/screened aggregates are further reduced in size to produce roofing granules.

Most of the rock quarried at Wrentham is rhyolite. It is a fine-grained igneous decomposed (chemically weathered) volcanic rock that is massive with extensive jointing. It includes silica as well as some alkali feldspar and quartz. Los Angeles abrasion tests show results ranging from 11 to 15 percent. The rock quarried at West Roxbury is a relatively hard granite, which is an igneous plutonic rock and similar to rhyolite, but does not have rhyolite’s microcrystalline structure. It, too, is quite abrasive, which can influence the kind of excavating/loading equipment chosen for the work at the face.

Consider performance records

The flagship excavating and loading equipment in the Lorusso fleet is currently Liebherr, which is by choice. According to AJ Lorusso, there are many very good equipment brands to choose from. “We do not endorse any make equipment. We have used different brands of wheel loaders, excavators, and even a shovel,” he says. “We evaluate the different brands before purchasing, and then we select the best that is offered at the time. Our loyalty is to the company and what equipment best serves it and not to a particular brand of equipment.”

S.M. Lorusso & Sons maintains thorough performance records on each piece of equipment, but AJ says this information is not sufficient for making a well-informed decision when choosing replacement equipment. He says that just because one brand of wheel loader was an outstanding performer in the past, it may not be the current equipment category leader. This explains why the company’s wheel loader brands have varied through the years.

However, choice has not been based simply on one brand over all others. The kind of equipment also has been changed. For example, the company has switched from using wheel loaders at some of the quarry faces to using a shovel at a third quarry. In addition, two quarries now use hydraulic excavators. Changing the kind of equipment used at the quarry faces was to improve the cost effectiveness in digging blasted rock and to increase significantly the loading efficiency.

Factor in operational costs

Today, the equipment’s fuel efficiency is as an important consideration as is the machine’s reliability and productivity because of the continued increase in diesel fuel prices. The company records the fuel-efficiency performance of each wheel loader (even one on demo). Each wheel loader of the same make and model can vary significantly depending on what kind of work it does, so that is also noted. The fuel utilization data are then projected over the anticipated machine hours the wheel loader will be used by the company. Table 1 shows a comparative analysis of wheel loaders in Lorusso’s fleet or ones that have been demonstrated. Each wheel loader was used primarily for loading aggregates onto delivery trucks.

Table 1 shows that Liebherr wheel loaders provided the best fuel savings compared to other models of wheel loaders. Further, the reliability of the four model L580 wheel loaders has averaged 97 percent.

An interesting point made by AJ is that one of the wheel loaders listed in Table 1 features a 7-cubic-yard bucket compared to the Liebherr 6.5-cubic-yard bucket. “If we were to use the 7-cubic-yard wheel loader to load trucks where we could eliminate one pass per truck we would factor that in as a plus,” he says. “However, loading delivery trucks here makes no difference because either loader must make four or five passes each, depending on the capacity of the truck.”

Along the same thinking, another wheel loader listed in Table 1 has a 6.0-cubic-yard bucket, and this size does require an extra pass per delivery truck loaded. For example, the Liebherr wheel loader fills the larger capacity trucks with exactly five passes of the 6.5-cubic-yard bucket. The wheel loader with the 6-cubic-yard bucket would come up 2.5 cubic yards short to fill the truck, so a sixth pass is necessary. Despite this wheel loader’s smaller capacity, the fuel consumption per hour is greater, and the loading time is 20 percent greater.

Considering all direct and indirect costs for the model L580, its lifetime cost at the quarry will be $100,000 less than the next most cost-efficient wheel loader listed in Table 1. Since there are five L580 wheel loaders in place, the total savings comes to $500,000 over a six-year term. Fuel consumption efficiency is a major role in gaining those savings. Consider alternative options

AJ says the use of big excavators at the quarry face for loading blasted rock is proving to be the most productive and cost effective method yet. For years, the company carried out the more traditional method of loading blasted rock by using big wheel loaders. They did a reasonably good job, according to AJ, but they also were very costly to operate. One big wheel loader fitted with an 8-cubic-yard bucket and used at the face in the West Roxbury quarry had 22,000 machine hours tallied before a new Liebherr R 974 B Litronic hydraulic excavator replaced it. This model is an 185,000-pound machine featuring a 6-cubic-yard bucket.

At a third quarry owned by the company, a shovel is still used at the face. It is one size larger than the model R 974 B. AJ says the shovel is a good performer, and its use actually inspired him to consider evaluating the big excavators for gaining even greater performance. Some of the advantages he found in an excavator compared to a shovel is a lower purchase price and significantly longer tracks life where the pads are a very expensive item to replace. The shovel’s pads need be replaced every 2.5 years at a price of $25,000, plus labor installation costs. After two years use, the excavator’s original tracks are still in place and show little signs of wear.

There are some performance advantages to using a hydraulic excavator compared with using either a shovel or wheel loader. The excavator operator does not dig blindly into a pile of rock as he does using a shovel or wheel loader. This advantage enables him to readily spot oversize rock pieces and quickly segregate them from the pile. The operator can pick up the rock in the bucket, swing the boom, and dump it outside the of the rock heap. With short-reach booms on the other two machines, the rock is scooped into the bucket, and the machine must walk with it to the outside of the pile before it is dumped. This action must be repeated at least five times a day, at the expense of production time.

The greater reach of the excavator’s boom also enables the operator to center the rock while loading it onto the haulers, thus increasing the payload. Further, it is easier and safer to handle the hauler, and the centered load eliminates rock spillage onto the haul road.

A major maintenance cost associated with the wheel loaders is tire replacement. Tire replacement costs for wheel loaders at the two sites are pro-rated and total $70,000 a year. The short tire life is attributed to blasted rock with its multi-sharp edges that cut and gouge the tires.

A comparison of operational and ownership costs for both the wheel loader and excavator shows that the excavator costs $5 per hour less. Throughout the projected 16,000 hours of use, it will save the company $80,000 in excavation and loading costs per quarry.

Fuel savings, based on the quantity of rock handled, are improved by 20 percent. While the fuel consumption per hour is similar for either machine, the excavator loads the haulers at a rate of 1,000 tons per hour compared to the wheel loader’s rate of 800 tons per hour.

There are, of course, pros and cons for choosing any brand and kind of equipment. AJ says that he is fully aware of that fact, and it a reason why he will not endorse any brand. However, the brand of equipment in the Lorusso fleet presently works best for the company, and AJ does recommend that equipment buyers put it on their short list when choosing new equipment.

Rodney Garrett, a freelance writer and photographer, specializes in the construction and mining industries.

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