Down Market Doesn’t Damper Large Loader Options

By Frank Raczon, Senior Editor | January 21, 2017

Though 2016 wasn’t a banner year for wheel loaders 200 horsepower and over, and at least some manufacturers are unsure of 2017 growth, managers still have plenty of choices in this higher-production category.

Gary Bell, KCM Corp. VP/general manager, says all classes of wheel loaders are down in 2016 and the overall market is down by over 13 percent through October.

“But the long-term trend is that the mid-range of loaders—the highest share of the loader market—is shrinking and the compact loaders are the fastest growing segment while the large-loader segment is growing slightly but basically flat,” Bell says.

Cost of Ownership

Horsepower Avg. price Hourly rate*
200-224 $299,409 $70.36
225-249 $274,782 $69.48
250-274 $382,595 $97.15
275-349 $410,049 $102.38
350-499 $728,250 $157.37

*Hourly rate represents the monthly ownership costs divided by 176, plus operating cost. Unit prices used in this calculation: diesel fuel at $2.30 per gallon; mechanic’s wage at $56.67 per hour; and money costs at 1.875 percent.

Large loaders, typically found in more permanent or fixed applications like quarries, transfer stations, and mills, are generally kept longer, which is a key to understanding market conditions.

“The more permanent applications entail a lot of fixed plant investment that doesn’t vary over time as much,” Bell says. “So larger loaders, which are normally required to work for at least 5 years or 10,000 hours, often work for double or even triple that in their lifetimes. During the 2009 downturn, many large loader applications continued to operate, but the owners opted to continue to run the older machines longer and reduce fleet size.

“This caused the large-loader segment to drop significantly in the aftermath of the downturn,” Bell says. “But now these markets are recovering from having the smallest and oldest fleet demographics in a long time, so most of the large-loader mega-buyers are back to more normal replenishment strategies.”

John Deere cites a 5-10 percent decline in the market during the same time period. “This decrease could be attributed to the major shift in the energy industry, where drops in demand led to overall market changes,” says John Chesterman, product marketing manager, production-class four-wheel-drive loaders, John Deere Construction & Forestry. “We’re confident we will see improvement in the quarry and aggregate segment
in 2017.”

Deere recently introduced a new model, the 844K-III Aggregate Handler, specifically for the segment. It has beefed-up horsepower (401 versus 380 in the conventional 844K-III), and is purpose-built for two-pass loading, using larger tilt cylinders, higher hydraulic pressure, and the increased counterweighting necessary to handle larger material-handling buckets up to 9.8 cubic yards.

Volvo Construction Equipment pegs the market for wheel loaders 200 horsepower and above as being down 11 percent. “Analysts see a slight downturn in the market in 2017, though not as large of a downturn as the 11 percent experienced this year,” says Eric Yeomans, product manager.

“We’ve continued to see a desire for customers to rent or lease for certain projects versus making capital investments; however, many are waiting to see what happens with the new administration in 2017,” Yeomans says.

“With the election behind us, we expect demand to increase in 2017, especially in infrastructure projects and commercial building developments where this wheel loader size class does a lot of heavy lifting, carrying, and loading tasks on job sites,” says Mike Stark, wheel loader product specialist for Doosan.

Taken together, it’s a bit of a mixed forecast from the OEMs that chose to respond, but if the purse strings do loosen for 2017, there is no shortage of choice for managers, with 10 manufacturers actively selling models in North America.

Lucas Sardenberg, product marketing consultant for wheel loaders at Caterpillar, advises managers to ask a series of questions before buying.

“Start with the current tool being used to perform the job: What size is it? What is the configuration? Do any modifications, such as different tires, guarding, or an additional counterweight need to be made?” Sardenberg says. “What are the limitations or why are you looking to replace it? Too much downtime? Not enough production?

“Next, go to the task at hand. For the smaller models, what use will the loader have? Is it loading or unloading material from trucks with pallet forks? If so, what weights and dimensions are involved? For underground utility jobs, what model and size excavator will assist the loader?” he says.

“Something else to consider before buying a wheel loader in this size class is the attachment, likely a bucket, and the best size for the machine,” says Doosan’s Stark.  “It is important for a fleet manager to select a bucket that is best suited for the types of material the wheel loader is regularly lifting, carrying, and dumping. Another consideration is choosing between a standard configuration and an optional high-lift configuration.”

Doosan offers a high-lift configuration on all of its wheel loaders. The option provides between 12 and 18 inches of additional dump height.

Such configurations are available from most manufacturers. “In some cases,” says Case brand marketing manager Andrew Dargatz, “depending on material density and bucket capacity needs, and if height is the primary issue, specifying an XR [extended reach] linkage may give contractors the hinge-pin height they need without having to upgrade to a larger machine.”

Sardenberg continues, “For yard loaders, what are the material densities and what are the truck and/or hopper dimensions to load? Then, look at the job site and check how far is the loader expected to travel. What kind of terrain is present: Is it flat, level or rough, wet or muddy? Is there a brand of tire preferred?”

Sardenberg also advocates taking video and photos of the site where the loader will operate—and securing some help.

“If all of this information seems overwhelming, Caterpillar dealers have the tools to help collect and analyze the data in order to size the machine for the job,” he says. “Managers might be surprised if the dealer suggests a smaller size loader than the size they currently own or were expecting, but with advancements in machine productivity and capability, customers can downsize without sacrificing any productivity yet save on costs.”

Advanced technology should also make the list. It’s one gateway to keeping operating costs down.

“Technology and telematics are also very important considerations,” Volvo’s Yeomans says. “What technology is available that allows for easier operation, and what telematics offerings are available? How does the OEM or dealer work with machine utilization reports to help you increase profitability and lower the total cost of ownership?”

Dargatz emphasizes the practical side of technology.

“Electronics have evolved to a point where the machine—from the cab to the engine, hydraulics and everything in between—is connected and working in unison,” Dargatz says. “One practical development of this integrated technology is automatic bucket control features such as height control, return-to-dig, and return-to-travel. These functions help automate common boom and bucket functions, such as loading trucks or hoppers of a common height, and then returning the bucket back to a desired travel position, simplifying repetitive movements for the operator, and improving productivity, all while reducing fuel consumption and lowering operating costs.”

And managers shouldn’t forget disposal when choosing a loader, advises JCB North America’s wheel loader product manager Will Turner. “Another consideration is the machine’s resale/end value. Choosing a specialized specification, with a unique set of options, for example, may make resale in the aftermarket easier or more difficult,” he says. “A niche specification may decrease the ease of resale. This should be balanced carefully.”

OEMs return to telematics as a key to lowering operating costs.

“Operator training is a major factor in reducing operating costs, and telematics data clearly shows the impact of different operators on fuel usage and productivity,” KCM’s Bell says. “Fuel consumption can vary significantly in the same application with a different operator. A simple thing like operating the machine in normal power mode rather than the high power mode can make a big difference in fuel consumption. Use of telematics to find problems quickly and correct them before they become major issues is important to reducing operating costs, as is preventing maintenance issues through telematics programming.”

Yeomans focuses on the machine-monitoring aspect of telematics. “One of the best ways managers can keep operating costs down is to lean on machine monitoring and insights they’re gaining from their telematics programs,” Yeomans says. “Managers can really lean on machine monitoring to help identify cost savings on their machines and across the job site. We’re seeing some customers gain up to 10 percent uptime just by tackling some particular things like idle time, and taking advantage of preventive maintenance.

“I think in the early days of telematics people used to get ‘over-alerted,’” Yeomans says. “Now, the industry as a whole is learning, and the newer technologies that are coming out, and the way that teams—from OEMs to dealers to owners and fleet managers—are working with that data is creating incredible results for lower cost of ownership.”

“We encourage our customers to track tire pressure as part of their maintenance programs,” says Deere’s Chesterman. “Fleet managers can use the John Deere tire pressure monitoring system via the JDLink dashboard to check and track tire pressure on a daily basis.”

Case’s Dargatz stresses using the up-to-the-minute nature of telematics data for cost control. “Managers can also utilize telematics systems to get up-to-the-minute reports on a machine’s operating parameters—engine rpm, idle time, fuel consumption, and a variety of other parameters can be monitored in real-time, and this information can be used by fleet managers and other personnel to help manage operating costs,” he says. “Telematics systems can also help fleet managers more easily manage maintenance intervals.”

Telematics will become even more prevalent as this size class of wheel loaders evolves.

“The next trend we expect to see is integrated machine guidance and operation tracking,” says Juston Thompson, product training manager for Hyundai. “Hyundai provides an integrated load-weighing system that comes standard on all HL900 series loaders. Weight management is key to many operations and is one of the reasons for including it as a standard feature on our loaders. Our Hi-Mate remote-management system is further evidence of this trend, providing machine owners a real-time method of tracking performance and maintenance-related variables.”

The way machines are being used, or not being used, is another set of measurements that will continue to key productivity and cost management.

“The thing that will continue to drive change in machines and job sites are technologies like telematics, operator systems, even site simulation and job site planning,” Yeomans says. “Managers are really focused, as they should be, on how they can increase productivity at lower costs.

“The best way to do that is through gaining a better understanding of the way things are moving right now on the site, how they’re being used, and how they’re not being used, to help inform better decisions about exactly what machines are needed, and to explore higher utilization rates with things like preventive maintenance, reduced idle time, and operator training. Managers want to know how they can save money and increase productivity, and telematics is a really strong way to do that,” Yeomans says.

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