Buying equipment based on total cost of ownership

A massive wave of equipment purchasing came and went.

There was so much demand for equipment in 2018 that a number of manufacturers were pressed to keep up.

Lead times were impacted, and aggregate producers yearning for equipment sometimes had to turn to brands they might not otherwise select. Simply having equipment available and ready to ship triggered significant sales across the industry.

Although the pace of equipment purchasing this year is not on par with 2018, producers continue to seek out equipment to enhance their operations. But the logic behind purchasing decisions is somewhat different today than it was 12 months ago.

When producers purchased equipment in 2018, it was often to fill a dire need. With critical production holes now filled, producers are looking to manufacturers and dealers to prove long-term value before they make their next major capital expenditures.

“Customers are looking to invest in plants that increase production or cost savings,” says Kristen Randall, marketing manager at Haver & Boecker Niagara. “Before, it might have been about ‘getting it in there and getting it to work.’ Now, it’s more about the long run.”

Greg Helfrich, the national operations manager at Elrus Aggregate Systems, agrees. According to Helfrich, the savviest producers today ask a series of key questions when exploring a plant or a system. Questions such as:

• What’s the life-cycle cost of the machine?
• What the 10-year cost of ownership?
• What’s the projected downtime of the machine?
• How much time will be spent fixing?

“In this age, 25 cents a ton really means something,” Helfrich says. “Even 10 cents a ton or a penny a ton means something, as margins are tighter.”

In the past, producers might have argued that a crusher is a crusher is a crusher. More producers recognize this simply isn’t the case, though.

“People often think that equipment in our industry is apples to apples, and that if one person makes one widget that all widgets are the same,” says Josh Swank, vice president of sales and marketing at Philippi-Hagenbuch.

Ultimately, several variables – engineering, design and material quality, for example – distinguish one widget from another. Those variables factor into total cost of ownership.

Price continues to factor into equipment decisions, as well. But the total cost of ownership concept is resonating more now than it once did.

“Reliability of equipment has always been valued in large producers,” says Patrick Moyer, general manager of process systems at Weir Minerals. “Today, we do have a lot of changing faces throughout the industry. So people are kind of revisiting that to make sure it’s not lost.”