Knowing When To Say When: Equipment Maintenance

There must be a rational way to determine when it’s time to invest in a new model with all the bells and whistles. Each area of the United States is faced with various acceptable equipment tolerances and the parameters for trade or purchase change accordingly. Of course, all contractors must face up to the law of diminishing return. Basic economics and the experience of seasoned contractors provide some insight into equipment management practices that work.

THE BASICS. Depending on how deep your pockets are or how obliging your banker is, you will eventually reach a point when the unit is costing you more than it is worth.

Conventional wisdom has always dictated that contractors keep a piece of equipment until it’s no longer profitable. For example, you purchase a new diesel rider with a 52-inch cut. That unit, if paid for in cash, set you back $14,000. The salesperson may have told you it would last forever, but you calculate with your drivers that it has a real-time life expectancy of about seven years.

At the end of the seven years, you figure it will be worth about 5 percent of its new cost (approximately $700). To determine the monthly cost of the mower, take the purchase price ($14,000) less the residual or scrap price ($700) to get $13,300 for the life of the machine. Divide that cost by the number of months in seven years (84). Your usage cost is $158.33 per month plus your maintenance (parts and labor) costs.

If, at the end of seven years, your monthly cost to keep your now ancient mower running is less than $158.33 (in parts and labor), keep using it. If, however, it’s costing you more, then it’s probably time to retire it, trade it in or give the equipment a merciful burial.

Of course, this is a straightforward scenario. It doesn’t take into account extended downtime during busy times, obsolescence or the relative unattractiveness of antiquated equipment in the field. Then you are where the buck stops, as Harry Truman said. The final decision to upgrade is between you and your banker.

POINTS OF VIEW. Kurt Kluznik, president of Yardmaster Inc., Painesville, Ohio, prefers to roll new equipment in before major maintenance even becomes an issue. Yardmaster will try to sell its two-cycle equipment and smaller mowers to homeowners and smaller commercial maintenance companies after one season, and its larger riding equipment after two seasons.

To Kluznik, it’s a simple system to track, and it makes economical sense. "If a string trimmer goes down on a site, you have a $400 piece of equipment stopping a crew that’s billing at $100 an hour," he explained, "It doesn’t take long to see the benefits."

On the other side of the coin is Arnold Sieg, vice president with the Bruce Company in Racine, Wis., who indicated that the company tends "to repair equipment for a long time. Our record system is semi-computerized with each piece of equipment given a number, cost and date of purchase. We set depreciation, and major repairs are capitalized and added to the original cost."

Because of the long winters, Sieg said his mechanics can spend a lot of time reconditioning and rebuilding. "We have 12 full-time mechanics and we supplement them with our landscape crews. The landscape crews can do repainting and low-level mechanical operations. Basically," he laughed, "we do run our mowers to death."

David Fuller of Fullbach Services, Inc., Louisville, Ky., said that he and his partner Ted Ennenbach give each piece of equipment a life cycle time. They allow three years for walk behinds and four years for riding mowers.

"We expect to get 1,000 to 1,100 hours of mowing out of a machine each season, and we figure a maximum life expectancy of 3,000 hours," Fuller said. "If a piece of equipment needs repairs totaling one-third to one-half the cost of a new piece, then we figure on replacing it rather than spending the money on repairs.

"We figure a working life of 12 to 18 months on small items like trimmers and blowers," Fuller explained, "since downtime on them is just too expensive.

"We are currently experimenting with a couple of computer programs to help us track our equipment repairs," Fuller said. "The two we’ve experimented with are Fleetmax and Fleetwise. Both can be run with Windows and are fairly inexpensive."

But in the end, equipment management is a team task. "The decision to replace a piece of equipment is based on the mechanic’s recommendation and our cost/life expectancy," Fuller said.

John Gachina, president of Gachina Landscape Management of Menlo Park, Calif., feels that preventive service is the key. "It’s on top of our agenda for equipment," said Gachina.

"We give each piece of equipment a number when we purchase it and we track maintenance cost by that number. We have two very good mechanics and they decide, along with our maintenance supervisor and general manager, when to replace a particular item," he added.

"We believe equipment must earn its keep, so we try to stay with new equipment," said Gachina. "Furthermore, we believe new, clean equipment portrays the image we want our customers to remember us by. We also feel that our people appreciate the equipment then. It improves morale among our employees.

"We do 98 percent of our maintenance in-house," he estimated, "and only send out our specialized repairs. Also, since land is so valuable here, we can’t afford the luxury of a bone pile of used scrap equipment. We prefer to trade it in or sell it outright."

The California contractor said, "We evaluate our equipment based on replacement costs as well as downtime and repair costs."

Small operators without in-house mechanics said they try to use dealers and warranty service to keep their equipment in good repair. Fred Ray of Rayco, Tookerville, Tenn., maintains the engines himself, but realizes the differences with commercial equipment. He said he bought a Sears Craftsman riding mower three years ago and believes it is ready to wear out. For his commercial walk-behinds, however, he hopes to get 10 years use.

"I’ll get rid of a piece of equipment if I have to keep putting money in every week because something breaks," Ray concluded.

In Lowville, N.Y., equipment has to do double duty for Doug Hanno, Doug Hanno Yard Care. With three mowers, he uses one with a snow plow attachment in winter as often as he uses it to mow. In fact, he acknowledges that plowing is harder use.

"I like to keep things new and under warranty," Hanno said. "If I have a problem, I take it back and they fix it. I find it’s cheaper. It’s just better for me to swap. I couldn’t ask for a better dealer. He’ll open at 4 a.m. in a snow storm if I need him."

Millard Equipment in Lowville sells and services Hanno’s equipment. At the risk of not selling equipment, Al Millard said he prefers not to sell homeowner units for professional service because "it would be an injustice."

Millard said he works with the contractor to "determine weekly and annual usage" and help select a piece of equipment. Next, he schedules regular maintenance to prevent serious breakdowns.

According to Millard, the age and cost of repair determine whether a piece of equipment is replaced. In many cases, he suggests, a professional mower with high hours would be best traded in to the dealer and reconditioned to be sold for lighter homeowner use.

Some companies, however, seldom trade in any equipment. They prefer to reuse parts to recondition other equipment.

Rex Gore, president of Clean Cut, Inc., Austin, Tex., said, "We seldom retire a whole unit. We rebuild and figure on savings of 20 to 40 percent vs. buying a new unit. In our experience, we can spend $1,200 to $1,600 refurbishing a machine that would cost us $3,000 new.

The company is experimenting with a computer system for maintenance and repairs called "Quest." Gore said financing, along with repair records, also plays a major role in equipment replacement.

"How often do we recondition? We’re still working on that," said Gore. "The point at which we trade or replace is still based on an educated guess."