Aging Iron

This year is aging construction equipment. Asset managers are extending fleet average age. Although the presumption is that increases in age reflect time during which machine hours are low or nil, our recently completed Annual Report & Forecast points to a more ominous situation.

Less than one-third of contractor fleet managers report the overall condition of their fleets to be excellent or very good this year. This is down from 42 percent in 2008 and 36 percent in 2009.

Many forecasters are already painting pictures of caution about construction spending that look forward not to 2011 but to 2012. Spending next year should increase around 5 percent, mostly from an highly anticipated but as-yet uncertain boost in homebuilding. Long-overdue Federal transportation funding would not hit until late 2011 at the earliest.

Fleet managers can expect continued aging of their fleets next year, which makes the position of asset manager key to each organization that relies on iron to make its profit. Fleet accounts for as much as 80 percent of an organization’s assets, so managing it well best serves the future of the organization.

The challenges remain: equipment-cost containment to enable competitive bids, maximized machine life without jeopardizing residual value or safety, continual evaluation and re-evaluation of machine-acquisition strategies in an environment of tight capital.

Tried-and-true strategies still work, but the next 12 months will require all the skill and judgment equipment managers can muster to ensure their fleets will be prepared when the rebound comes.