MOBILE MACHINERY: SHOULD YOU RENT OR BUY?

PLANT & EQUIPMENT HIRE

The beauty of hired tracked plant is it can be taken off a job (eg a highway project) for another assignment and returned to the road within 48 hours.

MOBILE MACHINERY:

SHOULD YOU RENT OR BUY?

The hiring of tracked crushing and screening plant can be beneficial for a number of reasons. As Paul Smith explains, it is quick and easy to install, operate and dismantle, and it encourages users to experiment with jobs they wouldn’t normally entertain.

I

once spoke to David, an old contact of mine who owned a tracked impact crusher. He had acquired the system to process broken concrete on-site on a public highway project. David explained how an important customer of his, an asphalt producer, had called him in immediate need of some recycled asphalt pavement (RAP) material, as his inventory had been depleted. He did have a pile of unprocessed RAP, but no way to crush it to meet his deadline, and asked if he could hire David and his crew to lend a hand. “No problem” was David’s response. That Friday afternoon David loaded his tracked horizontal shaft impactor plant onto a low-deck semi-trailer and hauled it over to the customer’s yard. It began to crush RAP material that evening. His two-man team crushed RAP all weekend, putting down about 5000 tonnes of finished product. Then, on Sunday evening, David loaded the tracked plant back on the trailer and headed back to the highway project, where he commenced crushing concrete the next morning. David was very grateful that the mobility of “these new tracked plants” had allowed him to react and respond to such an unplanned but valuable business opportunity. He explained how it would have taken a couple of days and several haul loads just to set up his old wheeled plant. He wouldn’t have had adequate time to react, and even if he did, the costs to move and set up the old plant for a small volume of RAP would have been prohibitive.

The biggest advantage of tracked machines is they enable less experienced operators and crews to run crushers and screens.

David summarised it like this: “There is no way we could have done something like that with our old wheeled plants. Tracked plants have brought a paradigm shift to our industry.” This story really helps show the merits of hiring a tracked system. The capabilities and benefits of tracked plants explained in David’s story are obvious:

• They can be quickly loaded onto a trailer and easily hauled to the material.

• They do not require multiple transfer conveyors, which must be also moved and positioned.

• Once on-site, they can be up and running in a matter of minutes.

• They do not require a large crew to operate.

ECONOMICS These capabilities equate to low “indirect” (or non-productive) costs compared with traditional systems requiring multiple loads and more labour to erect the equipment. Additional haul loads means additional fuel, driver wages, truck maintenance, etc, and obviously adding more time to erect the plant doesn’t just incur higher labour costs, it also increases downtime where the plant is not running. If we accept that processed material is the economic sponge that absorbs the indirect costs to move and set up the plant, then it becomes obvious that tracked plants provide an opportunity to process smaller quantities of material. Since a tracked plant does not

4 Quarry 2020 Guide to Mobile Plant

incur as high indirect costs, it has less costs that need to be absorbed before profits are generated.

APPLICATIONS Many contractors today do not have the long business horizon necessary to invest in specialised processing machinery. Many contractors have to be nimble, in that they might crush hard rock on one job, process recycled materials on the next and then only need to screen topsoil on the next. This leads to possibly the biggest advantage tracked machines provide – they are designed to enable operators and crews that are less experienced with crushing and screening equipment to be successful in just about any application. With proper transition points, conveyor angles and so forth engineered into the equipment, this puts less pressure on the end user to operate the equipment properly. This is where hiring the machinery gives many producers opportunities. They can operate leaner on competitive, perhaps more complex, jobs that many would have declined to bid on previously. As a result:

• Smaller volume, shorter duration projects might suddenly become worth pursuing.

• Companies that specialise in landscaping

might see an opportunity to save cost and increase profit by crushing their own material, instead of buying it.

• A quarry producer needing to screen overburden can rent a tracked screen that can process material independent of the main plant, without having to interrupt the main operation.

• Most tracked machinery is equipped with diesel engines, meaning they can be operated anywhere, regardless of available electricity.

The opportunities are potentially endless.

FINANCES Another opportunity to hire equipment lies on the balance sheet. During economic downturns and recessions, many companies are unable to fulfil their equipment needs when capital spending is cut. In such cases it is common for companies to engage in long-term rental contracts (more than 12 months), which enables them to meet their production demand while not investing in capital.

Let’s also consider the entry level contractor that doesn’t have the capital to invest in its own fleet of crushing and screening equipment.

Dealers are motivated to turn over their inventory, and as such will include a rental/ purchase clause to the rental agreements. A common clause states that after the rental period expires, the end user has the opportunity to apply the rent (or a large portion of it) to the purchase of the equipment. Think about it: if the renter has already invested between 25 and 50 per cent of the total value of the machine, there is a clear incentive to convert the machine, and it is much easier for the end user to finance the balance. Clearly, there are many times when hiring crushing and screening equipment is advantageous in terms of overcoming economic, application and financial challenges. Truly, the ability to hire process machinery has brought forth a new paradigm, creating new opportunities to generate profits in ways that were previously unthinkable. •