The price is right

The recent lackluster winter combined with rising labor and fuel costs forces many snow fighters to search for ways to trim costs in their operations.

One easy way to cut costs is to invest in used snow removal equipment, which can bring the contractor the same snow fighting quality and reliability, but at a reduced price.

Sure, that brand new skid-steer or pickup truck – all shiny and fresh off the showroom floor – is a tempting purchasing proposition. But for a snow contractor, is this a sound investment? In many cases it’s probably not, as most veteran snow fighters will tell you. Consider the inherent rigors of winter snow and ice management, and the irresponsible nature of some employees, and it’s not an environment that’ll keep equipment in pristine condition.

Snow fighter George Stoll agrees, adding purchasing new is often a decision a contractor can’t afford to make.

“There are a lot of guys running around in my market with brand-new everything,” Stoll says. “I felt sorry for them last winter.”

Stoll, the owner operates George Stoll Construction, which has provided all phases of snow removal service – from basic snowplowing to salting, sanding and liquid de-icing – for commercial properties in the Empire State’s Rockland, Orange, Putnam, Westchester and Dutchess counties for more than 25 years. The only machines Stoll still buys new are 550s and X350s. Everything else – whether it’s rear-loaders or tri-axles – he prefers to purchase at auction or from trusted vendors.

“It didn’t snow that much last year, so if you’re saddled with big payments you’re going to suffer,” he says, referring to winter 2011-12 that really wasn’t much of a winter for most of the North American snow market.

“I’d rather buy a good used truck for $35,000, run it through the shop, paint it, sandblast it and get it to where I need it instead of spending $75,000 on a good single axle… I’m basically getting two trucks for the price of one.”

There’s no need to equip his fleet with brand-new trucks, Stoll says.

“For my employees, it’s just a piece of equipment … a disposable asset,” he says. “Most guys don’t treat the equipment as I would. All it is to them is a work vehicle, so why give them new stuff.”

Stoll purchases all of his municipal-grade equipment used. He finds his machinery from a couple of select places. In fact, one of his most reliable auctions is based in Colorado. “I recently bought a 2002 forklift in Boulder that’s phenomenal,” he says. “There’s 30,000 miles on it and there’s not a drop of rust.”

Winning bid
Equipment deals don’t always come easy. Finding a phenomenal vehicle like the aforementioned forklift requires a fair amount research and due diligence, Stoll says. “I have a routine,” he says. “Every single night when I come home, I have dinner with my wife and kids, and then after everyone is in bed, I sit on the computer for a couple of hours and just search websites to see what is out there and what equipment is going for. I then keep that in the back of my mind … I’m always checking prices. A couple of my buddies think I’m crazy, but I always want to make a good deal.”

Stoll reaches out to colleagues and friends across the United States who can verify and inspect vehicles on his behalf.

When it comes to equipment auctions, you need to figure out what the top price is that you are willing to pay before you start bidding.

“You need to come up with a formula,” Stoll says. “With all of the online options, you don’t know who you are bidding against, so you have to pick a price and then don’t bid over this price point. If your limit is $40,000, that’s where you have to stop.”

Besides auctions where else can a snow fighter track down quality second-hand equipment at a better than average price?

From reputable vendors to online sites such as Craigslist, the options are plentiful. Regardless of where you find equipment, Stoll says contractors need to do their research first and be patient. Failure to do so could leave them with a lemon.

Scott Zorno, co-owner of CE Snow-Care Services, a family-run snow removal business based in Bailey Colo., says new equipment is just not feasible for most snow removal businesses. However, for those snow fighters who can afford to buy new, Zorno suggests finding package deals.

“If you buy a plow and a sander, for example, some vendors will give you a discount,” he says.

Zorno founded the company that became CE Snow-Care back in 1974 when he was a senior in college. Today, the small business owner sources many of his second-hand machines from Craigslist.

“It’s a great resource, but you have to be really careful,” he warns. “What looks good on Craigslist can turn out to be a worn-out piece of junk.”

It’s for that reason that Ian Newman does not use Craigslist. While the owner of Newman Property Services, a four-season operation based in New Hampshire, sees a lot of attractive equipment options posted at the popular website, it’s not his preferred way to shop.

“Most of our used equipment we search out and try to find the company or person who is unloading something with little hours and almost new quality at a fair price,” he says. “We use our vendors and equipment suppliers to guide us to the equipment we are in need of. For me, at least I have taken the low-overhead approach without sacrificing the quality of our work.”

Patience pays
Patience is another key. Zorno keeps a vigilant watch of Craigslist’s equipment listings and remains in touch with various vendors until he finds the right deal. Stoll takes a similar approach and stresses that waiting for the right deal is an important cost-cutting measure. He is constantly scouring various sites online just to make sure he knows the market value of various pieces of snow removal equipment.

Whether buying equipment through an auction or online, a snow fighter can’t forget to factor in the added transportation costs of getting that vehicle to his front door once he’s purchased it, Stoll says.

“Normally you are talking more than 1,000 miles unless you are at a local auction,” he says.

“I have one good guy that goes all over the country and I have a good per-mile rate from him, so I’ll wait until I have two or three pieces of equipment before I have him come across the country. If you don’t factor into these costs, they will add up.”

Nice price points
Zorno relies on a handful of select, reputable equipment dealers who help him find quality used equipment. Every once in a while, he’ll contact these vendors and give them the specs of a machine he’s interested in, such as a two to three-year-old Dodge Diesel. That way, the dealer, on Zorn’s behalf, can be on the lookout for an exact match and alert him when it’s available for purchase.

There are also two blue books he consults to get a feel for a truck’s worth: The Kelley Blue Book and the NADA Guides, both of which have online versions.

“You can generally figure out what a vehicle is worth,” Zorno says. “One book comes in a little higher than the other, so I basically take the average of the two and that’s the price I work with.”

At the end of the day, with no idea how much snow Mother Nature will deliver, and what will happen with the economy in the year ahead, the key is to be smart and think outside the box to stay afloat and keep the cash flowing in the competitive snow-removal business.

“Buying equipment nowadays has become an art,” Newman says. “With a tight credit market for some of us and competition with less overhead you have to be savvy.”

Recently, the company traded a farm tractor for a skid-steer with tracks to enter new markets.

“The tractor was a winter machine, but after losing the eight accounts it took care of for the past six years, it was time to rotate,” he says. “We find if the equipment has been sitting for a period of three months making little money, we need to change it up with something to keep the money coming in.

With no guarantee on contracts nowadays we don’t leverage ourselves as we used to… we used to take notes on equipment for periods of five years and now we only look at short-term leasing or three-year notes.” Newman adds that rotating equipment has helped the company reposition itself in the marketplace.

“If it’s big, we buy used, and if it is a truck, we buy new,” he says.

“It all depends on our season’s outlook and how much winter work we get.”

The author is a freelance writer based in Toronto.