The recent lackluster winter combined with rising labor and fuel costs has forced many snow fighters to trim costs in their operations. One way to cut costs is to invest in used snow removal equipment, which brings the contractor the same snow fighting quality and reliability but at a reduced price.
Sure, that brand-new skid steer or pickup – all shiny and fresh off the showroom floor – is a tempting proposition. But for a snow contractor, is this a sound investment? In many cases it’s 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 will keep equipment in pristine condition.
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,” says 25-year snow vet George Stoll. “I felt sorry for them last winter.”
Stoll, who operates New York-based George Stoll Construction, only buys 550s and X350s new. Everything else – whether it’s rear-loaders or tri-axels – he purchases 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, which 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, sandblast it, paint it and get it to where I need it instead of spending $75,000 on a good single-axel… I’m basically getting two trucks for the price of one.”
5 tips for sourcing good used equipment
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And there’s no need to equip his fleet with brand-new trucks, either. “For my employees, it’s just a piece of equipment… a disposable asset,” Stoll 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 sources 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!”
New vs. Used
Nearly 40 percent of contractors prefer to purchase new plow trucks, according to Snow Magazine research, while only 21 percent purchase their trucks “used.” Another third of contractors responded that they use a mix of new and used trucks for plow work. The low percentage of “lease” respondents most likely reflects contractors who maintain a truck as a personal or site-inspection vehicle, and as a result those leased vehicles aren’t exposed to excessive wear and tear.
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.”
You always have to remember that when you are buying from an auction, that you are buying an item and may not have the luxury of knowing its full history. Everything is as-is, so buyer beware.
“In the back of your mind, you have to always think of the worst-case scenario,” says Stoll. “If I’m bidding on this, I think, ‘I’ve got to throw a new transmission into it or an engine,’ You have to figure the worst-case scenario. Always have that in the back of your mind. The best piece of advice is to get a set of eyes on it. Make the phone call. Call the guys that are at the shop to dig around a little bit.”
From reputable vendors to online sites such as Craigslist, a free, no-frills online “classifieds” style website, the options are plentiful. Regardless of where you find equipment, contractors need to do their research first and be patient. Failure to do so could leave them with a lemon.
Paying for it Whether you’re getting a great deal on a used skid-steer, or your investing in new plow trucks to accommodate a recent expansion, you’re going to have to pay for this equipment. Snow contractors may not have the cash on hand to pay out-of-pocket, so financing equipment acquisition, with the intent of paying the loan off once the cash starts flowing in, remains the only other viable option. Here are some key tips to keep in mind:
Shop around. You may be familiar with a particular bank, but it doesn’t make sense not to shop around for the best rate. Several years of payments plus interest rates in your future means doing your homework now. Don’t take the first offer that comes your way. Assets. It’s very helpful to have other assets to collateralize. However, on a positive note, the good thing about equipment financing is that if the bank ever had to take the snowplow or skid steer back, it is something that they would be able to resell. |
Scott Zorno, co-owner of CE Snow-Care Services, a family-run snow removal business based in Bailey/Conifer, 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 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 snow equipment options posted at the popular website, it’s not his preferred way to shop.
Key points on purchasing used equipment
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“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. 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. 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 you once you’ve purchased it.
“Normally you are talking more than 1,000 miles unless you are at a local auction,” Stoll says. “I have one guy who 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 source 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 Blue Book, both of which have online versions.
“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. We also do a lot of equipment rotation. Recently, we traded one of our farm tractors off 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.
“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.”
David McPherson is a Toronto-based freelance writer and a frequent Snow Magazine contributor.
Be up for a bid Here’s a hot tip that many snow pros don’t always immediately consider when it comes time to replace aging equipment or add critical pieces to meet an expanding client base. Every week equipment auctions are held around the country. Now, you don’t have to travel 2,000 miles to get to one. Most likely there is one staged within 500 miles of every contractor in the snow belt. The key is finding them. If they’re not posted publicly in your local newspaper or regional trade-related publication, you can most likely track this information down online. Email the organizer and ask to be placed on their mailing list. Here’s a bonus tip: Keep in mind that your local departments of transportation (DOT’s) and most municipalities keep excellent care of their equipment. A DOT auction is a golden opportunity to find hidden gems for addition to your fleet. Every state has them and they can be easily be located on-line. John Allin is a veteran snow fighter and snow industry consultant, educator and author. |
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