Successful contractors always make more opportunities than they find. Resourceful construction pros stay busy by creating and capitalizing on good work that they pinpoint and secure with enterprising business acumen. A new year always means a new round of job opportunities, but to secure those jobs in 2014, contractors will need to adapt their tactics to create new successes. The construction market continues to be filled with challenges — dwindling job prospects, high unemployment, a stubborn Congress, expensive materials and a slowly recovering housing market. But with challenges also comes opportunities, and to help give our readership the edge in upcoming opportunities, we asked some of the equipment industry’s finest minds to share their best advice and predictions for 2014. What did we glean from their wise words? Let’s find out…
Keith Gribbins is managing editor of Compact Equipment, based in Brecksville, Ohio.
Matthew Flannery, COO of United Rentals
With project activity tracking higher, equipment availability has become a high-profile driver of productivity. A recent study by the Construction Industry Institute found that “wrench time” accounted for only 29 percent of a construction laborer’s day, while 52 percent was allocated to materials handling, prep and that productivity-killer called wait time. Equipment availability is not as simple as it sounds. It requires both provision and consumption management.
A decade ago, rental providers had rules of thumb: utilize a certain machine X percent of the time or don’t buy it outright. Today, we know that equipment management is more complex, involving use of capital, safety, maintenance, insurance, transport and the availability of “inside the fence” services. The bottom line is that 29 percent wrench time is unacceptable. There are many options today that bring agility to equipment usage without compromising availability. It requires consumption and provision analyses to find the right balance between base capital investment and a flexible rental strategy, but it will be worth it.
Employee Safety Recognition
Mike Williamsen, PhD, Senior Safety Consultant for Caterpillar Safety Services
Improving employee recognition skills is one of the best ways to effectively communicate important safety messages. When developing safety perception, assess the safety recognition culture in your workplace. Benchmark questions include: Is promotion to higher level jobs dependent on good safety performance? Is safe work behavior recognized by supervisors? Are safe workers picked to train new employees? Can first-line supervisors reward employees for good safety performance? Is safe work behavior recognized by your company?
With direct feedback collected from this assessment, a continuous improvement team can develop a recognition system based on safety accountabilities practiced across the organization. A standard solution includes training personnel how to effectively provide one-on-one recognition. This training involves many aspects: a one-on-one event focused on what is correct; a commitment from the student to do the task correctly; a continual one-on-one follow up on the skill in question; an adult approach to improving performance; a simple model that is used throughout the industry to teach new skills: define what needs to be done correctly; train what to do correctly; measure how well the skill is performed; and give feedback on trainee performance.
Leasing and Financing
William G. Sutton, CAE, President and CEO of the Equipment Leasing and Finance Association
Most businesses require equipment in order to operate and grow and, for a majority of businesses, equipment financing is a key acquisition strategy. To assist businesses in planning their acquisition strategies this year, we are tracking the top equipment acquisition trends for 2014. These trends are distilled from recent research data and input from members of the Equipment Leasing and Finance Association and our research affiliate, the Equipment Leasing and Finance Foundation. Investment in equipment and software will reach an all-time high in 2014.
Equipment replacement demand will continue to drive investment. Demand for equipment financing will increase due to greater stability in the federal budgeting process. The global economy will impact businesses’ equipment acquisition decisions. Rebounding of some industry sectors will spur varied equipment types. A majority of U.S. businesses will use some form of financing for equipment acquisition. Credit market conditions will remain favorable for long-term equipment financing. A low short-term interest rate environment will continue, while long-term rates will rise but remain below the historical average. Technology innovations will continue to improve the customer experience, and long-awaited changes to the lease accounting standard will continue to be debated.
Jim Hasler, Vice President of CASE Construction Equipment-North America
There is an overwhelming need to revitalize nearly all sectors of American infrastructure. The American Society of Civil Engineers (ASCE) estimates that a $3.6 trillion investment will be needed by 2020 to bring our infrastructure to an acceptable condition. What is the risk if we do nothing? In a 2013 Wall Street Journal op-ed piece, ASCE president Greg DiLoreto states: “We will see a drop of $3.1 trillion in GDP by 2020 due to the ripple effect deficient infrastructure has on our nation’s economy.” That’s not something we can let happen.
Federal funding isn’t the only answer. Local business and civic leaders are making an impact on their communities every day and can take matters into their own hands by supporting groups and individuals who push for new methods of development at the local level. This can be done through public-private partnerships, user fees, tax reform, grants and any number of other tools that local governments have at their disposal. This is the issue of our time — and not just for the construction industry. Infrastructure development has historically proven to have a positive impact on employment and economic growth.
Connecting the Field and Office
Dennis Stejskal, Vice President of Product Management at Sage Construction and Real Estate
Making mission-critical business applications available remotely is an important topic in the construction industry, where money is made and lost in the field. Construction companies are increasingly relying on cloud-based collaborative solutions to help keep construction projects moving by connecting the field to the office. Connecting your people, documents and data securely together in one, easy-to-use online project hub, ensures your entire project team can share and access common, accurate and timely project information anytime, anywhere from smartphones, tablets or PCs.
Secure mobile access to project reports not only ensures the most current project information is available to each member of your team, it also encourages collaboration and increases efficiency by allowing teams to share and access project documents, drawings, photos and more. Having this information at their fingertips allows your project teams to make well-informed decisions. And if you run multiple jobsites you will no longer have to run paper trails to a central office which may delay a project report. You can even use mobile devices to collect, review and approve employee time worked on projects helping you ditch paper timesheets and speed up your job costing and payroll processes. Integration with on premise solutions can further strengthen communication and project reporting between the office and the field.
Mini Ex Maintenance
Keith Rohrbacker, Kubota Product Manager
The most important maintenance activities for compact excavators are the initial oil and filter changes — this is critical to maintain proper function of the engine, hydraulic system and track motors. After these initial changes, it is important to keep up with some basic tips for routine maintenance. Check engine and hydraulic fluid levels. These fluids are the life blood of the machine and should be checked daily. Visual indicators make it easy to monitor engine oil, coolant and hydraulic fluid levels. Should levels drop suddenly, be sure to check for leaks and repair immediately.
Check the water and fuel separator. Checking for the presence of water in the fuel is an easy and crucial daily check. Some excavators’ fuel/water separators come with a red ring in a clear bowl; this red ring will float on water — making it nearly foolproof to monitor this potentially damaging fuel/water combination. With today’s Tier 4 engines, clean fuel is essential and could save thousands of dollars in repair costs. Lubricate pivot points. Pivot points on the boom, dipper, bucket and the house swing bearing area should be lubricated daily as indicated in the operator’s manual to reduce wear. Track tension should be checked periodically or daily if the excavator is frequently used. Too loose of a track can result in poor maneuvering and lead to de-tracking, causing track damage and a reduction in the track’s longevity. Too tight of a track can cause premature wear and breakage.
Position Your Business for Success
Jim Schug, Principal and Engagement Manager with FMI Corp.
The markets are no longer forgiving and are not likely to be anytime soon. Positioning your firm in the wrong market, poorly executing on your plan or otherwise making a bad selection is likely to be an expensive proposition. Moving forward, senior management will need to take an objective, fact-based approach and use it to develop real strategies that will help the business penetrate new markets and build profit.
Making these kinds of moves without the right research and background is a dangerous game. In a slow growth and volatile economy, today’s management will be called upon to do a more deliberate job of thinking through these items and the implications of the strategies that they advocate. Management must also do the right job of aligning how their organizations actually work with the strategies that they proclaim. What we are seeing is that the winners in the marketplace are those firms that do the best job of making sure that what is said in the boardroom is what actually happens on the ground.
Attention to Tires and Tracks
Bob Bulger, Value Knowledge Over Product Managerat Camoplast Solideal
The biggest mistake we see customers make is to underestimate the impact of their compact fleet on operating costs. In heavy equipment applications like mining, tire purchasing decisions are made using a complete tire management program based on cost-per-hour, not on initial price. Skid steers, telehandlers and small loaders deserve the same consideration. Equipment owners and fleet managers have a lot to gain by working more closely with their tire dealer. The dealer has the product knowledge to guide you to the right tires for your applications.
Our industry offers a huge selection of tire profiles, tread patterns and advanced rubber formulations, and it’s for a reason — to achieve the lowest operating cost solution for customers. Whether you use tires, tracks, wheels, solid or pneumatics or even a rubber over-the-tire tracks, the dealer is best equipped to match the right model to the needs of your equipment in terms of wear, traction, floatation, load carrying, ride comfort and, ultimately, cost. You need to know that other options are available that might save you more in the long run. Then you can discuss a complete tire management program and services like a wheel and rim exchange that will further reduce your total tire cost and increase your equipment utilization.
Dean Barley, Vice President of Terex Construction Americas
When considering brand, consider the reliability of the machine and how well you know and understand its parts. Are you comfortable with the technology under the hood? If you can handle the small maintenance issues yourself, you can help reduce overall cost and downtime. Also, how responsive and expansive is a brand’s distributor network? You should look for a distributor who is conveniently located and who can deliver parts and you need quickly. For renters, matching the equipment to the task is the most vital decision — renting a larger unit than needed can result in additional rental and fuel consumption costs, and the larger unit could be less productive. Productivity features are also important in building a case for investment to meet productivity requirements and project time constraints. ROI will be considered in the context of the hours the machine is working and revenue generated so whether a customer bites the bullet during tough times ultimately depends on the financial situation of the company and the anticipated level of current and future work.
Dan Brodbeck, 2014 Associated Builders and Contractors National Chairman
A phrase that has always resonated with me is: “Get into politics, or get out of business.” Without staying active politically, you lose the opportunity to advocate for your business and your employees. The November midterm elections are not far off and it is our civic duty as leaders in our communities to not only participate in the political process but engage others as well. Now more than ever it is a time for action, not apathy. It is time to be involved, be informed and be inspired. Like the aforementioned quote suggests, someone else isn’t going to do it for you. We are at a critical crossroads at this point of time in this country, but as long as we, as business owners, stay engaged, we can make very positive things happen together.
Dave Stanzel, Vice President of Construction Products at Miller Electric Mfg. Co.
All welding sectors, especially the fabrication and construction industries, will continue to face a skilled welder shortage, a problem that is only escalating as more welding operators retire and incoming numbers aren’t keeping up. According to the American Welding Society, the average age of welders today is 55. Those demographics contribute to the shortage — the AWS estimates the need for welding professionals will be 291,000 by 2020. We hear loud and clear from fabricators and construction companies that this is a concern. That’s why it’s important for the industry, trade associations and technical schools to rally around the trade and get more people to consider welding as a viable and satisfying career choice.
From the product development standpoint, there are several strategies that can help. One is developing operator interfaces that are simpler and easier to use, the premise being that a simpler interface makes it easier to train a welder to make a good weld almost immediately. Secondly, it’s important to make welding products that are more intuitive, so operators can simply adjust one or two knobs to put themselves in a position to make a good weld. Think simple, quick and automatic. Machines that deliver simplicity-driven performance are one key to addressing the shortage. Boil it down to what welding operators really need, and engineer and design the products around that.
Jeff Wage, Vice President of McLaughlin Boring Systems
Although downtime is bound to happen at some point, there are steps to avoid most of the occurrences and minimize the financial impact it has. Follow equipment maintenance schedules set by the manufacturer. Visually inspect the equipment both before and after each work shift. Look for excessive wear on components. Most preventative maintenance can be taken care of by the contractor; however, it is important to have a certified technician at the dealership handle major service or repairs, such as engine and hydraulic maintenance. Wear parts should also be supplied by the dealership to ensure correct OEM parts are installed. It is also highly recommended that a contractor consider asset protection programs for its fleet. The cost of the protection plans can pay for itself with just one incident.
Respect Great Teams
Kevin Lentz, President of Performance Marketing
We’re all born with certain skills, but great teams are built, not born. People can’t be thrown into a company or onto a project at random with expectations that all will work out perfectly. It takes time, patience and effort to build a team. Above all, the two key factors are shared values and respect. Shared values are essential because everyone on the team must be working toward a common goal. We all want to get paid, of course, so simply showing up to do a job isn’t enough. Instead, there must an underlying value system that bonds the team together. People simply work together better when they share a common viewpoint. So for us, our values bring us together, and our culture keeps us together. Respect is more than the title of a great Aretha Franklin song. It may seem like a no-brainer, yet it’s so obvious that it’s often overlooked. Respect is often as simple as believing that other people can have good ideas, too, and then getting everyone on board to support those ideas. That’s how good teams work.