| June 12, 2007 |
While most construction contractors know to the dime what every click of their dozers’ tracks is costing them, when it comes to trucks too many contractors just review the specs, write the check and go.
“Most of our customers don’t realize they’re in the trucking business as well,” says Joe Devlin, director of corporate communications at Mitsubishi-Fuso. As a result, contractors who aren’t truck savvy often buy too much truck or not enough – either way, they hurt their bottom line.
For this article we asked a handful of industry experts how contractors can best finesse the complicated criteria needed to maximize the return on their medium-duty truck investment dollars. The term medium duty includes everything from beefy pickup-style models with GVWRs of 12,000 pounds to big rigs just shy of 33,000 pounds. We’re concentrating on the lighter end of that scale here, but for more on bigger trucks (Class 7 and 8) see our Best Practices article in the August issue.
Length of ownership varies
The engines on today’s diesel-powered medium-duty trucks can log up to 300,000 miles or more before needing an overhaul. That gives even high-mileage construction trucks a five- to seven-year first life. Other types of truck owners, particularly municipalities, put on fewer miles and may keep their trucks for a decade or more.
Maintenance costs tend to be the main reason why truck owners trade up. “When you look at the maintenance costs on a graph they tend to go vertical after the five-year mark,” says Todd Kaufman, Ford’s brand analyst for F-650 and F-750 trucks.
Another reason for turnover is to enhance the company image. “Some companies pride themselves in nice aluminum wheels and a well-polished truck and they’ll turn theirs over a lot sooner than others,” Kaufman says.
Technology changing lifecycle costs
From the engine to the transmission and down to small components like water pumps, truck maintenance is getting easier, less frequent and less time consuming.
“Generally speaking we’ve gone to a longer time span on service intervals,” says Mike Bohacik, GM’s brand quality manager for medium-duty commercial trucks. The life on components like water pumps, fuel pumps and ignition systems has in many cases doubled or tripled over the past few decades. And service intervals are frequently grouped around the 7,500-mile mark so they can all get taken care of at once.
“Today’s oils and fluids are better and you can go longer between changes,” says Larry Savage, Ford’s commercial F-series brand manager. “Filter technology has improved for air, fuel and water, and coolant technology has improve immensely.” To the contractor this means a bit more in upfront costs but a substantial reduction in service costs and downtime.
And downtime, according to Rob Swim, director of medium-duty truck marketing at International Truck and Engine, is one of the most significant and unrecognized lifecycle costs, particularly among smaller fleets and contractors. “If your truck is down, there is a cost associated with that, either lost revenue or the additional expense of renting a truck,” Swim says. “What will a day’s downtime cost you? It may cost you your best customer.”
Evaluating dealer services
Given that construction contractors are usually better at managing big iron than trucks, finding a truck dealer with whom you can establish a good working relationship can have a positive effect on your bottom line. “The reason the dealer is so important is that, for the most part, the medium-duty truck customers are not professional truckers,” says Bill Mohr, director of service operations for Mitsubishi-Fuso.
The dealer can walk you through what may be a bewildering array of options and packages. They may also play an important role in after-sale support and service. “You want to know if the dealer is open nights or weekends when you need parts or service,” Swim says. “Ask if they deliver parts to your place of business. Ask if they will provide a replacement truck or a rental truck if yours needs work.”
Another area a dealer might help you with is financing. Banks have gotten away from financing transportation equipment, Swim says. “They don’t have the expertise where we as OEMs do this for a living. We offer things like skip payments. If we know a contractor in Minnesota won’t be making any money in the winter, we structure his financing so he doesn’t pay during those months.”
Dealer leasing agreements can also help contractors who want to maximize cash flow. “We are seeing people turning down zero-percent financing for 36 months and taking 2.9 percent for 48 or 60 months,” says Devlin.
The heart of any medium-duty truck is its frame and suspension. For off-road applications you need lots of beef here.
Spec for today, but think about tomorrow
Choosing the right truck is more than just detailing the specs. Swim compares it to a chess game. “Don’t just think about the truck you need today,” he says. “Think about what you might do with it later and the resale value – what’s important to the second owner.
“A lot of guys who buy used trucks from contractors up north put snow plows on them. And if that truck isn’t equipped to handle a snow plow, you diminish the number of customers you can sell the truck to.”
Another practice that’s popular among construction contractors is to buy a new truck, run it in a high mileage application until they’ve used up about three-quarters of the engine’s life, then put a new body on and use the truck for several more years in a low-mileage application.
The right way and the wrong way to choose a truck
“I don’t think there are as many mistakes in specing a vehicle as there were in the past,” says Mike Eaves, GM’s product manager for medium-duty trucks. “If there are mistakes they are typically from the smaller user who is less familiar with the vehicles. The larger customers know what they want and they base it on experience.”
It’s a mistake to buy too much truck as well as too little, but most of the problems come from trucks that are too light. Too many inexperienced customers buy trucks on price, Savage says. “They underbuy the truck and then they get a shortened life out of it,” he says. “Or they buy right at the limits of what they need and get in an overloaded situation.”
In addition to being dangerous, overloaded trucks are hard on tires, brakes, steering components and suspensions. Frame damage is also a possibility. “All those hit you in the pocketbook,” Kaufman says.
Good drivers and maintenance add to your bottom line
“The purchase price is the least expensive part of the lifecycle cost,” Swim says. You also have to factor in the cost of the driver and the maintenance. Driver wages may be a fixed cost, but how that person treats your truck and how well you manage your maintenance can have a big impact on your bottom line.
Trucks over 25,999 pounds require drivers with a commercial drivers license. And while CDL-carrying drivers may command better wages, an inexperienced or untrained driver can cost you a lot of money if they’re constantly over-revving the engine, grinding the gears and bottoming out the suspension.
In the maintenance department, even though component life and service intervals have been extended, you want to be exacting about the details. “Adherence to the maintenance schedule is going to pretty much guarantee a long life for the vehicle,” says Don Goch, GM’s service program manager for its medium-duty fleet. “Short cuts are going to cost you over time.”
Keep in mind also that the service intervals change depending on whether you are running your truck off road or on road. Severe-duty, off-road applications put extra strain on many components and often mandate shorter fluid-change intervals.
“The thing I always tell people in construction is the single most important thing you should pay attention to is air filtration,” Swim says. “You’re working in a dusty, dirty environment and if the manufacturer offers supplemental air filtration or prefilters they’re worth their weight in gold.”