SMART BUSINESS: Lock Up Equipment Theft

Losing $54,000 worth of equipment in one day would be a blow to any small business owner. But Lee Helmberger, owner of Lee’s Lawn Service in Omaha, Neb., was hit especially hard when his 2001 Ford F250 with a fully loaded 16-foot trailer was stolen on June 6, 2006. The stolen truck and trailer was the company’s only maintenance vehicle. “We’re a pretty small operation,” Helmberger says of his company, which operates one maintenance and one tree crew. “It was pretty devastating.”
 
The funny thing is security couldn’t have been tighter in Omaha where Helmberger and his crew stopped for lunch that day. President George W. Bush was in town and the Secret Service had conducted security sweeps in the bustling boardwalk area where Helmberger parked. That wasn’t enough to deter the thieves, however. In fact, striking on such a day may actually have been a getaway strategy. It took police two hours to respond.
 
“It seemed perfect timing for the thieves,” Helmberger says. “Whoever targeted us was very good at their job,” he says. “Like the police said, they probably got in the truck in a matter of seconds.”
 
Thankfully, Helmberger had an inland marine insurance policy and received the replacement value of the stolen equipment. While his insurer processed the claim, fellow members of the Omaha Grounds Maintenance Association stepped forward to lend him equipment. “We were back out mowing the next day with borrowed equipment,” he says. “But I lost a lot of production talking with the insurance company and the police, and I put in a lot of extra hours purchasing replaced equipment.” 

Lee’s Lawn Service protected its equipment like most other landscape crews protect theirs –­ he locked his truck and secured handheld equipment on locked racks. If a busy area and federal agents didn’t deter a crime like this, what’s a business owner to do?
 
“The best way to avoid having things stolen is to have loss control procedures and the proper training in place so these things don’t happen in the first place,” advises Michael Weisburger, president of Weisburger Insurance Brokerage, White Plains, N.Y. “Some companies actually budget for lost or stolen equipment, which I would recommend.” Although it varies widely from firm to firm, Weisburger says budgeting for 10 to 20 percent in lost or stolen equipment annually is appropriate.
  
Unfortunately, many contractors don’t instate loss-prevention plans until a serious theft happens to them. But with a combination of insurance, technology, common-sense tactics and practical tips, companies can reduce losses and prevent their equipment from being picked off.

ON THE RISE. More than 62 percent of contractors have experienced equipment theft, according to a recent poll conducted by Lawn & Landscape. In 2006, landscape contractors lost an average of $3,425 to theft. And maintenance vehicles like Helmberger’s are just one vulnerability. Construction sites and storage facilities are other common hot spots for prowlers.
 
Why? Landscape equipment, like that of other contracting trades, is an easy target, according to the National Equipment Registry, a database service that records heavy equipment ownership and theft information to increase recovery rates and reduce theft costs.
 
Heavy equipment in particular is often stolen because the reward for the thief far outweighs the risk, NER says. For example, heavy equipment often has limited machine and site security, is valuable and easy to re-sell. The same can be said for other frequently pilfered landscape supplies, including handheld equipment, irrigation components and plant material. Low recovery rates (88 percent of contractors reported recovery rates of less than 5 percent in our survey), few arrests and light penalties demonstrate why equipment theft is attractive to outlaws.

JOBSITE: SITTING DUCKS. Equipment left on worksites is some of the most vulnerable. These machines are generally valuable and versatile pieces – so not only are the returns greater, there’s a larger pool of potential buyers.
 
Across the construction trades, skid-steers account for the greatest number of stolen heavy equipment (32 percent), according to NER’s 2005 Equipment Theft Report. Nine percent of all heavy equipment stolen is classified as a landscape loader.
 
On average, green industry insurance provider Hortica receives 28 mobile equipment claims a year with an average claim of $5,400 (including skid-steers, tractors, loaders, etc.). Since 2000, Hortica has received 190 mobile equipment claims with a loss of $1.03 million dollars. “And that’s just what’s claimed,” adds Andrew Mauschbaugh, assistant vice president of loss control.
 
Due to security concerns, many power equipment manufacturers have introduced anti-theft devices that can be installed by the manufacturer or retrofitted by equipment dealers.
 
“There’s quite a few anti-theft devices in the marketplace,” says Gerry Steenbergen, an internal consultant for Caterpillar, Peoria, Ill. “They include everything from devices that isolate the battery/electricity or fuel supply to some that shut off air supply to the machines. Others have electronic control modules that let certain keys be recognized or not recognized on that particular machine. So you can control who has access and at what time of day.” The cost of these devices varies among manufacturers, dealers and the type of technology employed. It can range from several hundred to several thousand dollars per machine.
 
Aftermarket tracking technology, which is more commonly installed on cars and trucks, is also suitable for construction equipment. The chance for recovery skyrockets when contractors install global positioning systems or radio frequency transceivers on heavy equipment. Compared to NER estimates that say 10 to 15 percent of stolen heavy equipment is recovered, 70 percent of construction equipment outfitted with LoJack Systems, one brand of radio-frequency tracking technology, was recovered in less than 24 hours after being reported to the police. Depending on the technology employed, the cost ranges from a few hundred to a few thousand dollars. The price for the LoJack system on construction equipment is $795.
 
Several years ago, Columbus, Ohio-based Peabody Landscape Group lost $50,000 worth of equipment to theft in one year. In addition to having trucks stolen and trailers burglarized overnight at its facility, Peabody had a skid-steer stolen from a jobsite adjacent to a state highway patrol facility. Realizing no site was safe enough, Peabody installed anti-theft mechanisms on its heavy equipment. The devices cost several hundred dollars, President David Peabody says. “It was well worth it since our insurance deductible is $1,000,” he says. “You just have to look at what your savings are relative to deductibles.”
 
The threat of being dropped by its insurer also prompted Peabody to institute other theft-prevention measures.
 
In addition to installing a perimeter security system and anti-theft devices on construction equipment, Peabody invested in GPS for its fleet of 28 vehicles and trailers to improve recovery. The installation cost was about $40,000 and the system costs about $2,100 per month. Although Peabody acknowledges implementing GPS wasn’t “inexpensive by any means,” he says it was the right move to keep its insurance carrier. “Equipment is our lifeblood,” Peabody says. “It helps us expedite projects, so obviously we wanted to be proactive in protecting it.” GPS also has helped Peabody reduce labor costs and protect against client disputes and false claims.

FACILITY:
NIGHTTIME PROTECTION.
Some contractors’ worst theft problems occur on their home turf. Often, this type of theft is an “inside job,” as employees or their acquaintances know how tight (or loose) security is – and may even have the necessary keys or codes to help themselves to property with little effort.
  
Take, for example, Foegley Landscape of South Bend, Ind. Like many other landscape companies, Foegley has experienced equipment theft problems since it was founded in 1959. “We’ve lost string trimmers, backpack blowers and who knows how much plant material has walked out of here in years past,” President John Foegley says. His company’s facility, which includes a difficult-to-monitor 20-acre nursery, had been outfitted with a motion-detector alarm system for years, but it was often more trouble that it was worth. For example, the motion detectors were repeatedly tripped by deer or raccoons, requiring both Foegley and the police to get out of bed in the middle of the night to go check it out.
 
In 2005, the company logged its usual $10,000-a-year loss as a result of theft. “I’d had it,” Foegley says. “I was just tired of this going on and I was bound and determined to put a stop to it.”
 
That winter, Foegley hired a local company to install a video surveillance system and a silent alarm, which he can activate remotely via telephone. Now, when the system is tripped, the security company only calls if there’s suspicious activity – not animals – and it automatically e-mails a clip of the footage to Foegley, which he can review from any computer.
 
Not only will Foegley recoup the cost of the $10,000 system this year as a result of no stolen equipment, he sleeps much better these days. “All I can tell you is it’s been a miracle,” he says. “Once we installed the surveillance cameras, it virtually eliminated all nefarious activity we had.
 
“You hate to think it’s an inside job and that someone from your crew is coming in and swiping stuff, but I find it coincidental that once we installed cameras everything stopped,” Foegley adds. “But who knows, maybe thieves are coming in now and casing the joint to see we have cameras.”   
 
La Verne, Calif.-based SCLM Co. also ramped up security with video surveillance when it moved to a new shop in March 2006.
 
“I’ve had quite a bit stolen over the years, some right off the trucks, some from employees – trusted ones, too,” President Dan Hanson says. “It’s tough when you have to protect against people not only stealing equipment off of your trucks, but people who work for you who you trust with keys to your facility.”
 
In addition to adding alarms and video surveillance, Hanson eliminated all keys to the facility by installing an electronic card access system. The system logs every time a person enters the building and identifies his name, time, date and point of entry. For added protection, some storage areas require card access, too. For example, SCLM has one irrigation technician who works on Saturdays. He is authorized to enter the facility and the irrigation storage area, but not the rest of the building. “I can assign a card to anyone and control what doors they can get in and out of and when,” Hanson says. The system also logs when an unauthorized user attempts to access a restricted area. Another perk: If an employee who has a set of keys is let go, Hanson doesn’t spend $400 getting new locks on all the doors.
 
“This has 100 percent eliminated the problems that we previously had with employees removing property after hours and on the weekends,” Hanson says. “You can’t watch every single employee. There are a couple of bad apples in every bunch and sometimes they just can’t resist temptation.”
 
SCLM spent about $50,000 for its entire security system, including alarms, surveillance and the card access system, which accounted for about $12,000 of that total.

MAINTENANCE:
MOVING TARGETS.
Before 2005, Nature Scapes of Lilburn, Ga., lost “a few pieces of equipment” per year to theft. In the spring of that year, rampant theft plagued landscape contractors in metro Atlanta and Nature Scapes lost more than $22,000 worth of equipment, including one truck that was stolen from a residence at an upscale gated community. Other Atlanta-area contractors experienced more severe situations, including armed robbery. Police suspected the offender was a theft ring that shipped stolen landscape equipment out of the state or even out of the country. “There were people going around stealing from full landscaping crews at gunpoint,” says Rick Upchurch, president of Nature Scapes. “They pistol-whipped people to give up their equipment.”
 
Officials at the Metro Atlanta Landscape & Turf Association (MALTA) called an emergency meeting.
 
As a result, Nature Scapes reevaluated its loss-prevention policy, altering some procedures, educating employees and boosting security at its facility. “There’s a different mind-set here now,” Upchurch says. “After going through that, I think about theft daily.”
 
For example, the company incorporated theft-prevention reminders into its weekly safety meetings. “A lot of it is educating your guys to let them know they’re being watched every minute,” Upchurch says. “The thieves are professionals. It’s a crime of opportunity. They’re watching and waiting on you to walk out of sight.”
 
A negligence policy also is now in effect. An employee who’s responsible for a piece of equipment being stolen (i.e., not locking it up), is required to pay for the loss. “If employees have to buy one blower, they’ll learn.”
 
To further boost equipment security, Nature Scapes improved the locks it uses to secure equipment. The cost of a lock jumped from about $15 to $50. “But it’s worth it,” Upchurch says. “We haven’t had anything stolen off of the trucks since.”
 
Also, in 2005 the company began replacing open, ramp-bed trucks with box trucks, which start at more than $25,000. “We switched out about six trucks to enclosed ones,” Upchurch says. “We have 25 or 30 more to go. As we buy new trucks, we’ll buy enclosed ones.”
 
SCLM Co. used to average a piece or two of stolen equipment per quarter, but nothing has been stolen off of a maintenance truck since the company began using trimmer and blower racks. The three-trap trimmer racks cost between $250 and $300; blower racks cost about $100 each. The racks also provide damage control. SCLM spends 25 percent less on repairs since it installed the racks. In addition, SCLM uses ½-inch chain and padlocks to secure mowers, which cost less than $50 per truck.
 
Upchurch, the current president of MALTA, says the organization promotes one particular piece of advice to all contractors for the purpose of thwarting this growing problem: “Don’t buy equipment from guys you don’t know,” Upchurch says. “If you can’t verify the serial numbers – that’s hot stuff. If you’re buying it, all you’re doing is creating the atmosphere that causes the problem.”