Equipment Executive: The Times…They Are A-Changin’

By Andy Agoos, Contributing Editor | December 15, 2011

The singer Bob Dylan had it right. The times, they are a-changin’. I recently was preparing a presentation for a group of equipment managers and listed the major changes we are encountering. It’s scary how many significant changes are happening simultaneously. Sure, most of the changes are good and add productivity, but how do we keep up? Consider the effect of the following changes, in no specific order, that have accelerated in the past 10 years.

Impact of new compliance and regulatory issues

This is the tail that is wagging the dog. Everyone knows about CARB and emissions, but equipment end users must contend with many more regulations from the DOT, EPA, OSHA, and MSHA--excuse the acronyms. We must absorb and abide with ever-changing, more-restrictive permit and safety issues such as backup alarms; MSDS’s on file for every product on our service trucks, asphalt paver fume extractors, and the list seems endless. Operator certification and training requirements have increased: crane operators through NCCCO; forklift operators, aerial work platforms, transports and CDLs. Combine that with the documented annual equipment inspections (cranes, manlifts) and this compliance group has become daunting.

Emerging technology in new equipment

New models are now coming out on a three-year cycle to be ready for Conexpo and Bauma. We all know of the constant engine changes to meet our latest emission targets that include things such as exhaust gas recirculation, particulate filters with regeneration features, 35,000-psi fuel injection systems, urea solution injection systems, etc. In 10 years, the drivetrains have gone from powershift transmissions to hydrostatic transmissions to hybrids to electric drives. Electronic controllers are doubling every five years. On top of this, major productivity improvements arrive every year: ride control systems; grade control systems. Who has time to keep up with all the new technology?

Worldwide industry changes

Today’s equipment managers are awash in data. Data literally pours in from all sides—from thousands of telematics alerts every year to the powerful internet with more specifications, more suppliers, more emails, more manuals, and more of everything. Enterprise-wide company software systems allow equipment managers to have more data and more ratios than ever before. We all know that data is not information. Some of it is just noise. It’s like trying to drink from a fire hose.

Consolidation of end users, OEMs, and dealers

As if the rapidly evolving industry isn’t enough, the trend to larger companies adds another of complication. Contractors are busy consolidating as more and more international companies invest in North America. Recall the saying, “Either have a plan or become part of someone else’s plan.” Meanwhile, the traditional OEM pool is shrinking as companies like Terex, Caterpillar, Doosan, Volvo, Astec, and others absorb many of the older brands…and soon we can expect a surge of Chinese and Indian manufacturers to add to the mix. Dealers are growing by consolidation as well.

Growth of the equipment rental industry

As our North American infrastructure matures, the bid contracts tend to be smaller and the jobs are correspondingly shorter. The long-term backlogs go down, and it becomes harder to project utilization out beyond two years. Since utilization drives the purchase decisions, it is harder to know our needs beyond two years. At the same time, credit has tightened over the past three years so many companies have defleeted and not replaced the capacity they have lost. That brings the end user to more rentals and more leasing—yet another change from the way we have done business. As we do more short-term rentals and more rental purchase options, we lose the standardization we had when our fleets were principally owned.

Huge price increases in fuel and tires

It’s no secret to any equipment person that fuel and tire prices have skyrocketed over the past years. Off-road No. 2 diesel fuel was less than $1 a gallon until 2003, so it has more than tripled in the last 10 years. Tire prices, due to the escalating cost of natural rubber, have gone up more than 50 percent since 2007. With the BRIC countries coming on line, these prices are likely to continue up. Equipment managers must pursue alternatives (retreading; fuel hedging) and recalculate equipment rates every year.

The problem facing the equipment manager is an overwhelming flood of simultaneous changes. Is there an easy answer? Probably not, but the professional equipment manager must focus on those factors that most greatly affect him and his specific company. Delegate like crazy and verify to follow up with your people. The winner isn’t the one who works hardest, it’s the one who figures out what is important and manages the right information. Think about it.