Online Only Feature -- The Right Deal

Material handler customers typically have a prescribed amount of material to move in keeping up with a shredder or shear. If a smaller tracked or wheeled machine will do the job, the question becomes: Why spend the extra money on a larger unit? The decision is really all about economics.

At the end of ten or twelve thousand hours the pumps, cylinders, and engines are approaching the time for some major rebuilding. Also, as machines age, the need for repairs increases, dependability begins to fall off and repair bills begin to increase. If uptime is critical to the operation, the economics of keeping a higher-hour machine really comes into question.

If a smaller machine has performed well at less cost, the used machine can be replaced and potentially sold to (or transferred to) one of the smaller feeder yards where uptime and duty cycle requirements are not as high.

Caterpillar is seeing larger customers move in this direction. They are looking at three-to-five-year leases with total maintenance and repair agreements (TM&R) through Caterpillar dealers. This approach delivers excellent machine uptime and a fixed cost for operating the mobile equipment fleet.

The fixed costs then can be worked into annual and long-term business plans and can be used to calculate operating costs. Another benefit of using TM&R service agreements is that factory-trained technicians repair the equipment. The dealer keeps the maintenance records and is invested in delivering the uptime that the customer wants and has contracted for.

Proper maintenance helps reduce or eliminates catastrophic failures, which helps ensure that the dealer will make money on a TM&R contract. At the same time the customer benefits through excellent uptime, which results in improved operating efficiencies. A maintenance contract also means that the used equipment coming off lease is of known quality and has maintenance records to prove it.

Heavy equipment manufacturers have developed a broad range of scrap handlers, which enable scrap yard managers to optimize their operations.

The smaller machines may not be able to swing as large a tool, but they are able to cycle very quickly and are very productive. For example, one customer told me that his Cat 330 MH with a 1 1/4-yard grapple could handle as much tonnage as his older Cat 235 equipped with a two-yard grapple.

Taking emotions out of the machine purchasing decision and studying the economics associated with the application can pay off. I urge you to take a second look at any material handler purchasing decision and to make sure the economics truly support that decision.

--Bill Ulrich, Material Handler Market Manager - North America, Caterpillar Inc., Peoria, Ill.