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View Full Version : Keep it or Get Rid of it?


RockSet N' Grade
11-23-2007, 08:36 PM
For any of you actually in the business: At what point do you decide to get rid of a piece of equipment? Is your decision based on depreciation, repair costs, life expectancy? Do you ever buy used and fix it up to new or has it been better to buy new - use it and dump it ? I know this has been discussed, but I am still searching for insights........

bobcat_ron
11-23-2007, 09:14 PM
For me it's when I try anything that sure as hell feels alot better than the crap I'm running now.

Construct'O
11-23-2007, 09:56 PM
For any of you actually in the business: At what point do you decide to get rid of a piece of equipment? Is your decision based on depreciation, repair costs, life expectancy? Do you ever buy used and fix it up to new or has it been better to buy new - use it and dump it ? I know this has been discussed, but I am still searching for insights........

Over the years,started out new,then added used,then keep working my way up to new and then leveled off from there.

Of course that has been ages ago now,and new is out for me now because of the big hit when it leaves the dealer.If younger it would be new again.

Most of my new(old mchine) are still working hard because of the strict care i have given them.Work them hard but don't abuse them.

The last go around for me as far as the big iron was low hour older machine used.It is working out good so far.

CTL was new,traded high mantience machine and large repair bills for the furture stareing me in the eye.Dependablity was getting to be a big issue,plus more options as for uses with the CTL.

Sometimes you do it because it makes you feel better.Again need to have a plan in place to make it earn enough money to make it pay it's way in the business.Alway like for each machine to pay it's way in the company.

Always hating having too take money from other working machine to carry the others,but sometimes you have to do what you have to do.If the work doesn't come for that machine it needs to hit the road and try something else or flip the real working machine for a new.

As for me, used big iron, from now on and new for the lower end stuff.Hard going ,working days are coming closer to the end.A person need to realize nothings for ever.

If you have family that can or wants,plus as the ability to make it work still for you into your golden years then that might give you another option.

Good luck on your decision!!!!!!!:usflag:

bobcat_ron
11-23-2007, 10:23 PM
It's always better to make equipment payments that repairs, that's the way I see it now.

Scag48
11-24-2007, 01:39 AM
We've had new equipment only, don't really have any experience from the other side of the fence yet. I know when I get going on my own I will be buying used for sure, without question.

A buddy of mine is looking to pick up a really rough Hitachi EX200 and get it going again. It needs a lot of work, probably $20K worth of work, but after it's all said and done he'll have a relatively low hour 200 for pretty cheap. He says he doesn't mind wrenching on it even if it takes a whole year to get it running, he enjoys working on stuff and has the space to do so.

Gravel Rat
11-24-2007, 01:56 AM
The contractors I worked for if the repairs are exceeding the the cost of a payment on a new machine then its time to buy a new machine. Most contractors will keep a old machine and use it for site work.

One of the local contractors had a 150 Hitachi it was getting up in hours he decided to keep it. Then the major problems started happening then the repair bills started rolling in. At the end of it he bought a new machine and sold the old one for a big loss. It started with some minor engine problems then the main hydraulic pump went from there is snowballed.

Sometimes you got to cut your losses and loose some money because dumping money into a dead horse doesn't work :laugh:

dozerman21
11-24-2007, 09:31 AM
RSG, for me it's a combination of repair costs, depreciation, and life expectancy, although if you really want to dump money into a machine you can keep it working for as long as you want. Like said earlier, some machines just don't have the life span like others... i.e skid steer versus a larger excavator.

For me, I try to keep my primary machines (dozer and CTL) new and updated, and the other pieces of equipment that aren't used daily just need to be reliable and not a money pit.

ksss
11-24-2007, 11:38 AM
I look at the advancements made on the new iron verse the used or model I may have. If the I think that the productivity advancement is significant enough I will make the purchase. Dependability is an issue. When I bought the new roller this Fall I could not take any more down time. The resale was decent and I want a machine I could depend on. ConstructO looks at this as I do it appears. Sometimes other pieces may have to carry a new purchase for a while, but that is how we expand our business. I will never buy a new excavator (160 size) the one have is a great machine and I love the zero payment. I will continue to rotate the smaller iron fairly regularly.

YellowDogSVC
11-24-2007, 12:52 PM
For what I do part of the time, I keep my skidsteers updated because of the demands of brush mowing. For chippers, I try to keep them running as long as possible and just paid off my big one. For trucks, as long as they are running and not spending more time in the shop than on the road, I will try and keep them. Ditto for attachments. I own a lot of Bobcat attachments from tree shear to grapples, grader, auger, etc., and as long as they do their job without tons of repairs I try and keep them. Skid steers are different for me as I stated above. Technology changes pretty fast on them compared to dozer technology so turnover is part of my business plan.

Fieldman12
11-24-2007, 02:04 PM
I am still new to this game but it is pretty much the same as farm equipment. I try to buy equipment that is three or four years old that has been taken very good care of. I also compare that price to a new machine. If the price is way less than the new machine I go for the used as long as I feel it is very, very reliable almost as much as new. Like ksss, said i compare what the new has to offer versus the used. Usually on a machine no older than that there is not too many differences. As for skid steers though I can see many differences especially now with pilots starting to get popular and so on. Like my cousin and me where talking over the weekend that is also a equipment operator. He says they find in allot of cases the old machinery working just as good if not better than the new stuff. Granted they take very good care of there old stuff but that is how it should be. I try to take care of my equipment because I feel it takes care of me. So I guess in the end number one is down time. Down time cost allot of money. Just think of the money you could be bringing in if it was not broke down. Trade in value is also nice because it helps make your payments cheaper and you do not have to cough up the down payment. Another is speed of the machine. Allot of times newer stuff can make the job quicker than an old piece of equipment but this is not true in all cases. Now if I was going to buy a big D6 dozer there is no way I could afford one even three or four years old. I would at least have to go back 10 years.

janb
11-26-2007, 05:25 AM
RnGrade... I thought you were looking at retiring (ha, ha...), or at least slowing down...

As I approach that I look at what I feel is the most profitable segment of the business that I could continue to do in early slowdown stage. For Commodity work, the young buckaroos are willing to work much cheaper than I, and they likely have many more payments and mouths to feed.

I weigh the following:
1) I consider my tax year earnings status (you want to think about this real soon!) This includes existing and future depreciation, and especially the use of section 179 (accelerated depreciation) to offset earnings, or 1031 exchanges to defer gain / balance 'recapture'

2) Potential productivity advances

3) machine utilization... (If it is my main breadwinner, then it HAS to work fast and dependably)

4) Hired help... what is best use of them (preferably none, when it come to accounting)

5) Maintenance and repair costs

6) future business plans

7) resale value, in case I get the urge to move to Tahiti

good luck!

RockSet N' Grade
11-26-2007, 09:05 AM
JanB..........Tahiti? You gonna be like that movie star and buy your own island? I am curious about when you would get rid of a machine based on repairs? At what point is enough, enough? When repairs exceed payment of new? What if that piece is paid for and your repair bills start accelerating? Do you consider trading in and getting new and taking on payments again? At what point in the life of a machine after purchased do you find that you get the most resale value for it? I have planned well for uncle sam, got a business plan which changes constantly - but the gross earned stays about the same and the rest of 1-7 I have given consideration. I have fixed up my machine to almost new condition except motor, main pump and super-structure and now ponder whether to upgrade or because I am in so deep, just to use it for the next 4,000 hrs or so.......

cddva
11-26-2007, 01:46 PM
RockSet - are you referring to your Gehl mini? I'm interested in the responses to this thread too, as I considered the same question recently on my RC50. I know you've said your dealer has been good about giving you loaner's when the machine breaks down but I know even that gets to be alot of hassle running machines back and forth versus just "going to work". Good luck with your decision!

Construct'O
11-26-2007, 09:48 PM
Since winter in your area like mine is close to being here.You need to do some shopping and check prices and trades and also get some repair costs.

Unless your planning on wanting to hit things harder the next few years,then go with the repair possiblitys.Bepending on when your planning on retiring.If you think your going to stay healthy for 7 more years?

Several more things to think about then just when to decide when the right time to get rid of it is.

Like i said in early post that has to be taking into consideration also.When younger new was more to my likeing,because i pretty well knew my cost,and that i was planning on working the machine for a long time.So the hit right off the bat wasn't a big deal.It was going to be a long term thing.

If you buy new now,and things changes as in your ability to work for your desired time frame ,lets say 7, then new.If it is going to be short term just to finish out until retirement then i would so with what i have or trade for a low hour late model used machine.

I spent last year about a third of what my machine was actually worth for repairs.It still needs more,but when all said and done it has been doing good since repairs.If i sold it today what i spent wouldn't make the machine worth a thrid more ,as bad as i wish it would.It has to be worked out of it.

Just doesn't work that way.All machine depreciate,we know from the day they leave the lots.Very few gain in value.So if you buy new and have to retire early you will probably lose money on it.But if you contiue to work your 7 years it will make your money over the cost and have a value left for resale.

Your like me,catch 22,to young to quit and to old to dive in head first !!!!!!!:usflag:

RockSet N' Grade
11-26-2007, 10:22 PM
Constructo..........yea, that's it.......just couldn't put my finger on it. When I close my eyes, I think I am 20 something..........open my eyes and look in the mirror at a stranger looking back at me. I got it now, thanks.........

janb
11-28-2007, 02:34 AM
RnGrade... if it is a robust and serviceable chunk of iron, I tend to keep it, as I am not so keen on the ridiculous expense of fixing newer stuff (electronics are very expensive by the pound...) I would be quite happy with a really classy older fleet that was paid off, than having to worry about keeping cash flow for payments - I'm leary of the mid range economy situation (not to be bleak, just realistic - and out of debt) Of course there is a point where you need to stay competitive and productive (like a high flow Xcavator would make me happier) For a skid in general use, I wouldn't break the bank to get a few bells and whistles (and more things to fix)

I would be very unhappy to buy new and them have some of the frequent breakdowns I hear of, you need to be very picky about what you 'upgrade' to. (as always)

I got to a point that I bought investment stock in CASE when my parts costs were driving me nuts. Fortunately, Fiat-Allis came along and bought CASE, making me more money in stock price gain than my ole beater machine did that year. (I still have the machine btw)