The Cost of Compliance

Sept. 28, 2010

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Stimulus money is not reaching the majority of equipment fleets, according to just-concluded research we did for the Construction Equipment/Case Construction Equipment 2010 Annual Report & Forecast. Eighty-four percent of respondents have not seen any money from the stimulus package.

Although 1.5 percent of managers said stimulus money allowed them to upgrade machines for emissions compliance, that number falls woefully short of the need. Even with last month's announcement of a joint call upon Congress to fund emissions compliance on federally funded transportation projects, equipment managers continue to struggle with the most onerous burden in fleet management many of them have ever faced.

From a budget standpoint, any organization that owns and operates a fleet of heavy equipment is heading into 2010 wondering how much capital to invest in new iron and how much to invest in emissions compliance. Based on other research we've conducted, more budgets are leaning toward maintenance than are leaning toward new-machine purchases.

For them, emissions compliance becomes even more of a challenge. Instead of replacing machines with those powered by higher-Tiered diesels, these fleets must consider alternative methods of ensuring emissions compliance. And as we've reported, those costs add up quickly.

Emissions compliance continues to default to the equipment manager. In March 2008, we determined that more than half of fleets did not have anyone officially responsible for compliance. That has dropped to about one-third, but the offsetting growth in responsibility has fallen on the equipment manager: 29 percent in 2008 to about 40 percent today.

Fleet budgets must expand to cover these compliance-related costs. The responsibility for making that case, however, now rests squarely with the equipment manager. They must continue to make the case to their CFOs and budget committees for the cost of compliance.