Scrap Handling Equipment Focus--Shopping List

1) Should I buy or lease?

You should always contact your business tax advisor with regard to the pros and cons of leasing or buying a scrap handler. Obviously, controlling cash flow is critical to profitability.

The scrap handler scheduled to be your primary production machine should be kept new and under a maintenance contract. These machines generally will accrue very high operating hours (2,500 to 4,000 hours per year). In this heavy-duty application an FMV (fair market value) lease can be very beneficial depending on how it is structured. An FMV lease allows you the following flexibility:

Service contracts and extended machine warranties can be added to the lease as insurance against major repairs and to keep the machine in the best condition for return or purchase at the completion of the lease.

The time period of the lease should be determined by the number of operating hours you expect the machine to accrue per year, with the goal of not keeping the machine in a high production role after it has accumulated 10,000 or more operating hours.

2) Should I consider buying a piece of used equipment?

It is generally accepted in the scrap, demolition, recycling and construction industries that diesel engines, transmissions, gearboxes or hydraulic pumps can all be susceptible to major problems at or near 10,000 hours of operation.

A prospective buyer of a used machine should ask for a maintenance history document from the seller. You can expect a much shorter life with poor maintenance practices and a much longer operating life if quality maintenance practices (scheduled preventive maintenance) have been performed by the previous owner.

Ideally, a used machine will have been refurbished so that there are zero hours of operation on the powertrain.

Depending on the amount of operating hours and the condition of the machine, one can expect that a used piece of equipment for a non-critical or non-primary production application would have a useful place in your scrap handling operation.

3) Should I purchase a tracked or wheeled scrap handler?

Tracked scrap handlers have been the accepted standard in the scrap industry. They have excellent stability because of the increased weight of the undercarriage. They are generally less expensive than wheeled carriers but can be more expensive to maintain. They are slower traveling and can cause significant damage to concrete.

Some local legislation requires scrap yards to pave their facilities to prevent soil contamination from fuels and oils. Consequently, wheeled scrap handlers are becoming more and more the scrap handler of choice.

Wheeled scrap handlers can cost more initially, but with the speed of travel and hydraulic outriggers for increased lift and stability, combined with reduced maintenance costs, they can provide scrap yards with the most effective solution to increase utilization and production and are concrete friendly.

It is also imperative to select the best solid tires available with resistance to chunking, peeling or chipping for the most trouble-free and reduced operating costs possible. The best solid tires on the market could last for as many as 5,000 operating hours.

4) Will my new scrap handlers and other new machines need to meet clean emission standards?

The emission standards for all construction, off-road and industrial equipment have been established by federal government agencies, and mandates have been issued to manufacturers for compliance.

Currently all manufacturers in specific horsepower ranges will offer Tier 3 compliant machines and continue converting until all engines in all horsepower ranges meet this standard. Tier 3 emissions are cleaner than the air we breathe in most cities today. Tier 4 compliance will be the next level of emission purity and could be required as early as 2007 or 2008, depending on local air quality emission standards.

It is expected that regulators will be monitoring the compliance of manufacturers, not individual machine owners, so the onus will generally fall on the manufacturer to demonstrate that its machines are EPA compliant.

But in some states that contain regions where air quality is poor, local enforcement can be more aggressive, and on-site inspections are possible.

5) Is a service contract with the equipment dealer worthwhile?

A preventative maintenance contract from the dealer could be beneficial. Equipment has become higher in production and more technical, necessitating special skills and tools to accomplish servicing properly.

While utilizing a dealer service technician for regularly scheduled maintenance check intervals, such as at 250, 500, 750 and 1,000 hours, your mechanics can use this opportunity to learn about your equipment. The factory trained service technician will also provide a backup function for all daily services.

Many of the machines in today’s market are complicated and computerized, so these sessions become worthwhile ways for staff mechanics to learn and observe while dealer personnel check onboard computers and troubleshoot.

The recycler’s mechanic may learn from the dealer’s mechanic about such things as dry grease fittings that need special attention or the best way to change a hose.

Servicing can be scheduled outside the main operation hours with the intent to minimize downtime, enhance production and ensure maximum equipment life.

6) How do I know if I’m buying a large enough machine?