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Equipment hire: Extracting long-term benefits from short-term solutions

As the extractive industry grapples with the dual challenges of meeting construction materials demand and maintaining modern fleets of plant and equipment, Damian Christie speaks with four industry suppliers about the merits of plant hire.

With Australia now engaged in a new construction phase that is expected to deliver up to $75 billion worth of public infrastructure projects over the next decade, two questions are foremost:

  1. Will there be enough access to construction materials reserves?

  2. Will there be the plant and equipment available for quarries to meet production quotas?

While the answer to the first question is much less certain (the industry will, as always, be at the “mercy” of state and territory governments), the likelihood now and into the future is that the second question can be resolved – and part of that solution lies in the rental of quarry-spec plant and equipment.

Many of the original equipment manufacturers (OEMs) and/or their distributors in Australia already offer options for quarrying and extractive operations to rent heavy plant and equipment – including earthmoving vehicles and mobile crushers and screens.

While their core business is selling these products to quarry operators and producers, the OEMs and dealers recognise that there is also a market that engages in short- and medium-term assignments.

As Finlay Screening & Crushing Systems’ hire and technical manager Ronnie Bustard simply puts it: “Customers hire because the length of the project is too short to justify purchase or the duration of the job is uncertain.”

Finlay is a specialist provider of crushing, screening and processing equipment solutions for the mining, quarrying and recycling industries in the eastern states, and in South Australia and Tasmania. Its brands include Terex Finlay, Terex Enviro, Terex Ecotec and Pilot Crushtec.

Bustard’s counterpart in Western Australia and the Northern Territory is Shane Czerkasow, the managing director of OPS Screening & Crushing Equipment. OPS’s portfolio also includes Terex Finlay, Terex Evoquip, Terex Ecotec and Telestack. He says,for many companies, “capital is the issue. Hire allows them the flexibility to react quickly to opportunities and obtain equipment under their operating expenditure budgets”.

Czerkasow adds that for contractors, their agreements with clients are frequently short-term. “The lack of certainty often prohibits capital investment decisions,” he says. “Equipment hire is flexible to coincide with the duration of their contract.”

He says some customers are happy from time to time “to take advantage of additional orders and projects, at short notice and with little to no financial risk that could be associated with purchase of equipment which cannot be justified by the project at hand”.

Stephen Watterson, the CEO of family-owned The Lincom Group, which distributes the Powerscreen mobile range nationally, says that supply issues with current plant on-site contributes to an operator’s decision to rent equipment.

“The customer brings in hire equipment that is easy to get to site and set up with minimal delay which then allows them to meet the market demand for supplying material,” Watterson explains. “A lot of these jobs are periodic and don’t justify spending the capital on equipment. It’s better to hire it on an as needed basis and also get the advantage of hire for tax purposes.”

“Rental normally does not require capital expenditure and can be an off-balance sheet solution, allowing the customer to invest capital elsewhere in fixed plant assets,” affirms Geoff Pisani, the general manager of Komatsu Rental, Komatsu Australia’s rental business. He adds that rental is suitable for meeting project-specific needs and requirements, and allows for increased operational flexibility.

A rental machine can also be an ideal replacement for an existing machine that undergoes significant maintenance or a rebuild. “It allows increased production efficiency,” Pisani says. “When a breakdown occurs on an owned machine, a rental can be an efficient and effective option to allow the customer’s operations and productivity to continue.”

Komatsu Rental’s popular vehicles include the WA470 wheel loader and the HM400 articulated dump truck.
Komatsu Rental’s popular vehicles include the WA470 wheel loader and the HM400 articulated dump truck.
A Powerscreen XH500SR at work on a large mining job.
A Powerscreen XH500SR at work on a large mining job.

 

Best for the application

The three mobile crushing and screening plant distributors offer a variety of tracked equipment for hire – jaw, cone, horizontal and vertical shaft impact crushers, screens, feeders, stackers, radial conveyors, and trommels. They agree that quarry operators are very specific about their needs.

“We will always check the application to ensure the machine that we supply will meet the customer’s expectations and that it is the right machine for the job,” Bustard says.

“We focus heavily on identifying what is the best machine for the customer’s operation,” Czerkasow adds.

“Lincom has a philosophy that we tell the customer what he needs – not what he wants,” Watterson affirms.

The three mobile plant suppliers report that quarries will rent single or multiple crushers and screens, depending on the job at hand.

“For many new operations, plant hire is a flexible means to commence production while they assess the production capacity they’re going to require on a long-term basis. With hired equipment, if the demand outweighs the equipment’s production capability, they can easily swap it for larger capacity units,” Czerkasow says.

Komatsu Rental’s most popular vehicles within the quarry sector are wheel loaders (the WA470-7, WA500-7 and WA600-8), rigid and articulated dump trucks (the HD605-8, HD405 and HM400-3), quarry-spec excavators (PC850-8, PC450-8 and PC600-8) and dozers.

“Some quarries may rent one or two machines,” Pisani said. “However, some sites are all Komatsu machines, with a mix between owned and rental. Komatsu can offer an optimal fleet recommendation application study, to advise the most efficient size and number of machines to meet expected production levels.”

‘Try before you buy’

A train of Lincom’s Powerscreen mobile plant on assignment.
A train of Lincom’s Powerscreen mobile plant on assignment.

Rental machines are brand new or have a low hour usage. Finlay and OPS, as Czerkasow says, “put new equipment directly out to hire. Our mantra is to provide reliable, low hour equipment to maximise uptime and production for the client”.

Bustard says Finlay aims to keep its hire fleet “under one year old”, while Czerkasow says it is OPS’s preference to run equipment in its hire fleet that has done less than 3000 hours.

“Each piece of equipment has a full condition inspection and report conducted after each and every hire job, with full repair and preventative maintenance,” he says.

Watterson says that Lincom similarly prides itself on having “a very modern low hour rental fleet. It’s essential that the equipment is modern, well maintained and presents well to the market. We cannot afford to have old gear with big hours on the equipment, as the reliability and utilisation goes down to a level that’s not acceptable to the client”.

Pisani says Komatsu Rental aims to turn over new machines for its fleet every 24 to 36 months, and generally at between 2000 and 3000 hours. These Komatsu Rental machines are then sold as premium used equipment and can be offered to the customer with warranty.

Similarly, any item in Lincom’s rental fleet is, according to Watterson, “for sale the day it goes into the fleet. On some occasions we have had long-term hires and we have also had a client looking for a good low hour machine. In that scenario we sell the low hour machine to the client and replenish the long-term rental client with a new machine from our stock, fulfilling the requirements of both parties”.

In other instances, quarry operators will hire plant and equipment with a view to eventually purchasing it.

“A new customer to crushing and screening often wants to make sure they can do the job before committing to purchase,” Bustard says, while Czerkasow says that renting plant first is a “unique way of ‘try before you buy’”.

“This nature of capital equipment is not always available for demo,” Czerkasow continued. “Hire/buy arrangements provide the customer with an opportunity to learn if the equipment is right for their application, what the operational costs are like and if they are comfortable with the supplier’s aftermarket support prior to committing to a large capital investment.”

In Watterson’s experience, the majority of Lincom’s rentals “are purely rentals” but he says he is noticing more hire arrangements translating into purchases. “Hire/buys are a way for a producer to get tonnes on the ground, see what the machines can do before they purchase and also give the financiers comfort about the results of the equipment and the revenue it will give to the producer.”

Pisani says renting a machine provides the opportunity for Komatsu customers to “try the latest model equipment in their operation and application before buying”.

“It provides an ideal opportunity for operators to experience a Komatsu machine with no long-term commitment,” Pisani adds.

“Renting a quarry-specific machine through Komatsu Rental assures customers that they are getting access to the latest technology, compliance, safety features and benefits that they would normally receive when they purchase a new Komatsu machine.”

All four suppliers provide full maintenance and servicing to their hire fleets, including covering breakdowns and warranties. This takes the form of dedicated teams of service engineers and technicians across Australia providing on-site or workshop service.

OPS’s Terex Finlay mobile plant has been hired out to contractors working on the construction material requirements of several WA mining projects.
OPS’s Terex Finlay mobile plant has been hired out to contractors working on the construction material requirements of several WA mining projects.

Future relationships

Feedback from customers about each company’s rental service has been upbeat.

“Our equipment is well received because of the age and the reliability of the equipment which allows our customers to fulfil their requirements to their clients on time, on budget and with minimal downtime,” Watterson says.

“The most prolific feedback we receive is about the high specifications of the equipment,” Czerkasow says. “We understand that mineral processing and materials handling equipment is critical to any operation and it needs to be reliable and efficient. That’s why we rigorously maintain our equipment and supply hire equipment with very low hours. Many features that may be optional with other companies are included on our hire fleet to ensure the customer achieves maximum operational time and cost per tonne efficiency.”

All four companies’ earthmoving, crushing and screening, and other affiliated rental equipment is today hard at work on quarrying, concrete, asphalt, recycling and mine infrastructure projects throughout Australia that subsequently provide materials to agriculture, roads, tunnels, rail and civil construction. This includes Lincom hire plant on the Pacific Highway upgrade and OPS equipment on the $1.9 billion Metronet Forestfield Airport link project in WA.

All four suppliers agree that plant hire is an important means of building solid, long-standing relationships with customers. Bustard says it’s “an opportunity to show what the machines can do and what we offer in technical support, after sales service and support”.

“Providing a solid, reliable solution to the full spectrum of customer requirements is extremely important to building a solid and long-term relationship,” Czerkasow says.

“Hire of equipment can also be the conduit for developing a new relationship. Customers don’t often start out by outright purchasing equipment. Hire can be a perfect medium for a new company to start out or for an existing company to expand. This is all part of the cycle of a long-term relationship.”

“Komatsu Rental aims to provide a solution to the customer with a highly specified new or near new machine, while providing parts and service back-up to support the customer’s operation,” Pisani explains. “We work very closely with our customers to integrate into their business and become an indispensable resource and trusted adviser.”

For Lincom Group, Watterson says sustainable, long-standing relationships with customers are core to its business, “regardless of the transaction type. We have some customers that only deal with us once or twice a year for hiring equipment and the solid relationship we have with these clients gives them comfort to return to us every time”.

All four suppliers are happy to dispense advice to quarry operators contemplating the rental of plant and equipment for their operations.

“Always ask how old and what hours are on the machines you’re hiring,” Bustard advises, “and request a service history to ensure the machines have been maintained correctly. Always ask what options are on the machines and what benefits they will have for the application.”

“Ensure that the equipment you choose is the right equipment for the application, not just what is available from the closest hirer to your location,” Czerkasow emphasises. “Transporting in hired equipment from a further located supplier may be a considerably cheaper option if you get the most effective and efficient production outcome.”

“Make sure that you have confirmed the terms of hire and the minimum requirements, as these vary from supplier to supplier,” Watterson warns. “Also make sure that the equipment complies with the AS1755 guarding standard, or MDG15 in NSW. Let the supplier know if the intentions are to get hire equipment in with the view to owning it so that you get the best deal possible.”

“Consider rental providers that offer machines that are new or near new and reliable, and meet all required safety standards,” Pisani said. “Good access to parts and local service support, and leading innovation and technology are other factors that shouldn’t be ignored.”












ABOUT THE AUTHOR
Damian Christie
Editor • Quarry Magazine

Damian Christie is the editor and a chief writer of Quarry magazine. To contact Damian, please click here.








Saturday, 18 August, 2018 05:14am
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