Upgrade excavator or turn down work?

[JPSouth]

Lost a considerable sum in work lately, due to the fact that the sand-embedded river cobble found some areas around here is pretty unstable, easy to dig but requires a great deal of material removal to achieve depth and safe working conditions. My KX161 does fine, but the 24" bucket takes time compared to a midi. My rates are fair and allow me running/replacement costs plus profit. My machine works well for 60%-70% of my jobs. The time factor is what's costing me work - I can't reasonably charge the same as a guy who's completing the work in maybe half the time with a bigger machine.

My business plan is to rent when I need a piece of machinery that isn't scaled to my operation, expensive or specialized. Both jobs were trenching for water line and tying into a sewer line - simple enough digging, but with a time constraint - I had to refer a guy who does a great job and of course now loves me. Had checked out front on renting a 10-20 ton machine with bigger reach and bucket capacity. Found out that of 5 equipment rental places here, none rented those sizes out - minis and 30+ ton machines you could have all day long, week minimum on the 30s and up, day on the minis, which I of course already have. Explanation - everyone who needs that size already owns it, no call for it. Due to approach and clearance problems, a big hoe was not an option either place.

So now I'm considering whether to look at something that will drag a bigger bucket or referring yet more work. Those 2 jobs were 30 minutes away and a very easy 'n profitable week and a half's work for the 161. Most of my jobs would accommodate a slightly larger machine, but leery of taking out even a small loan to cover the difference between a good used hoe and selling mine, which is a paid-for '99 with 1300 hours and whistle clean. If I whack my rates to make up for taking longer, I feel I'm cutting my own throat. I just hadn't figured on the rental scene - according to a friend, it has only morphed into the present situation in the last 5 years or so.

If any of you have come to this fork in the road in the past, I'd be interested in what you came up with.

 

[Welder Dave]

1300 hours on 99 machine, I'd look at how much work I was expecting to get before spending more money on a bigger machine. Some operators but twice that on in a year.

 

[Ronsii]

I have to agree with Welder Dave, if you're only putting 70-80 hours a year on your current mini you would have to get a 'lot' more work lined up for the bigger machine to make it pencil out... We have an 07 mini and at well over 5000 hours it isn't kept nearly as busy as it should be.

 

[JPSouth]

1300 hours on 99 machine, I'd look at how much work I was expecting to get before spending more money on a bigger machine. Some operators but twice that on in a year.

Oops, goofed, I'm not the original owner, bought it last winter at 1300, now it has 1575 hrs. It brought back 80% of it's purchase price before freeze-up, and I have a couple more jobs I might be able to squeeze in once the present snowstorm subsides. It represents 1/4 of the machinery I use, I have a skiddy w/attachments, small TLB and dump truck, all of which get run weekly. We have a fairly short work season here, depending on spring/fall weather change - winters generally last at least 5 months if not 6, so someone in a warmer climate (or a very established outfit) will stack a lot of hours on that I can't. I don't have employees, so I set up to be running one rig when another is slow, hauling aggregate and concrete tear-out when dirtwork is slow, and visa-versa. I made 91% of my revenue goal this year, and am hoping to do a fair bit more next year. Which is why I'm being cautious and asking this group for advice - if something unforeseen happens and things go south, I'm leery of any debt whatsoever. I've worked for and also watched more than one business go under in my time, mostly because of too much equipment/debt combined with having to have the latest and greatest. I'm perfectly fine with yesterday's cream and a healthy business account.

 

[Canadian_digger]

What kind of setup do you have to move your equipment?

 

[JPSouth]

What kind of setup do you have to move your equipment?

'97 IH 2554 single axle dump, DT466 w/6 sp. Allison, 35K GVW. '95 24K Dakota tandem dually trailer, 19' bed w/5' swallowtail.

 

[The Peej]

I found when I had a 161 i found the 24" bucket was undersized for the machine. I got a high capacity 30" bucket and it felt very stable on the machine. I'd try upgrading your bucket first.

 

[JPSouth]

Good point - I did go into the local Kubota dealership and inquire about buckets. They had 3 NOS pin-ons for a 161-2 available at a warehouse in Missouri, and a 30" was in the pack - if I waited for regular route delivery, shipping was reasonable. A 36" was available from USA Attachments, but I felt that was more iron than what I wanted on that size machine. I heard somewhere that Werk-Brau builds their buckets, the 24" and 12" frost buckets I have are very well made.

 

[Graham1]

Good point - I did go into the local Kubota dealership and inquire about buckets. They had 3 NOS pin-ons for a 161-2 available at a warehouse in Missouri, and a 30" was in the pack - if I waited for regular route delivery, shipping was reasonable. A 36" was available from USA Attachments, but I felt that was more iron than what I wanted on that size machine. I heard somewhere that Werk-Brau builds their buckets, the 24" and 12" frost buckets I have are very well made.

Here in UK most of the best buckets come from bucket specialists, rather than excavator manufacturers/dealers. The manufacturers tend to supply pretty conservative sized general purpose buckets. If your machine can handle the extra weight without destroying the cycle time I’m sure there are many better options for you. I particularly like the Scandinavian shaped buckets which seem to hold a good volume and the weight of the bucket can be reduced by using tougher steel such as Hardox.
Graham

 

[Aliate]

I was in your exact situation, had a mini and had to refer out the bigger work for anything I couldnt handle. After a few months of that I said screw it and bought a 14T machine with 2500 hrs on it for a little over 100k. I make the payment, and the thing sure sits more than the mini. The difference is, the 130 keeps me on the job and the mini makes the money. Minis are nice but you hit a wall fast as far as capability goes, if you plan on staying relevant you need some horsepower at your disposal.

The work you are referring out is your opportunity to grow, take the risk and do it, or those referrals will eventually just skip over you as the middle man.

 

[lake side bob]

Also depends on how old you are! If you are nearing retirement age and your body is not young anymore, why would you want to take on all that debt.
Sounds like the machine will not pay for itself, not enough hours worked generating revenue to make equipment payments so where is the equipment payment $ going to come from?
Don't you think you need a bigger truck and trailer to haul that 30,000 pound machine around? Again more equipment payments where is the $ going to come from.
Most excavator contractors get so far into debt for equipment and every thing they own is on the line as collateral that they are economic slaves of their own making, and end up chasing work to generate revenue. There is a reason so many excavating contractors go broke or are just holding on.
Be careful equipment payments do not go a way just because you do not have the $ to pay them.
Being in the excavating business requires big dollar investment up front or taking out large loans from finance companies that (truthfully) are not the contractors best friends.

 

[td25c]

It's gonna be different for everyone depending on the job situation .

We like to " tag team " a 20 ton excavator along with a tracked skid loader with backhoe unit .

http://www.heavytruckforums.com/showthread.php?263-Some-Holmes-750-action&p=2470&viewfull=1#post2470

Them boy's like working together , aint much those two cant handle . http://www.heavytruckforums.com/showthread.php?263-Some-Holmes-750-action&p=2514&viewfull=1#post2514

https://www.heavyequipmentforums.com/threads/old-hy-hoe.8220/page-7#post-561500

 

[f311fr1]

We have a 12K mini and after renting a 18K on three different occasions for a month at a time we bit the bullet and bought one. We work it enough to make the payment and it helps to keep our tri axle on the road. It also has brought us several jobs that we would not have had with out it. So more work.

 

[JPSouth]

Appreciate all the good advice, decided to remain on point business plan-wise and stay small. I'm going to track with The Peej's plan of a 30' hi-cap bucket and stay with my mini, and add a grader attachment for my A300 and pursue more driveway and prep work. Am also looking at kind of an informal arrangement with a bigger outfit to trade some work now and then. Thanks to Depression-era parents, I prefer keeping both bankers and skunks at a comfortable distance; 2 missed jobs are not reason enough to turn a 180 and be saddled with 10% money every month. Especially considering it's not just the hoe - I'm under-trucked/trailered for much bigger than what I've presently got. Got a pretty fair log of work signed on when the weather breaks next spring, and as much as I hate referring work away, thinking that staying on target is my best move.

 

[Jonas302]

Very sensible plan and its probably going to make you good money as long as you can keep the mini busy
There are always bigger jobs and its hard to turn them away but even if you had the larger hoe there will still be jobs to turn away

 

[DGODGR]

I can appreciate your position and have been there myself. After reading this thread I have seen advice that seems to run along (2) different lines. Some are scared of the payments and others are not. As I said before I have been at your cross roads before and I respect that you have decided to stay small for now. That being said I want to offer my opinions about a couple of things and you can take them or leave them as you see fit (applies to all).
Buckets for your mini:
I'm not sure what size your 161 is (how much it weighs) and you didn't offer it. I will say that I have, what I assume to be, a smaller mini and I own a 13", 24" and 36" buckets. I feel as though I need the variety of buckets to get the jobs done as efficiently as possible. My machine is a Bobcat 435 and it weighs about 11k#. It seems to handle the bucket well enough and it is also a zero tail unit. I would think that your 161 could handle it as well and will probably be about 50% faster than using your 24" bucket in most situations.
TLB:
You said that you also had a small TLB. What is that? I have a small TLB (a Cat 416C) and in many applications I think it will out dig my mini by far. Particularly in the utility trenching arena (unless circumstances dictate a mini excavator is required such as needing to turn 180 to spoil, or other tight access limitations). I also have several bucket sizes for my TLB (including the largest...a 36").
Larger Trackhoe:
This is the scary part :0! I spent many years using my TLB as my primary dirt mover. I was usually by myself or had one helper. I noticed that to be competitive I was renting larger excavators (larger than my backhoe, 15-20tn size) to do much of my work. I think that I am not going out on a limb when I say it is pretty common knowledge that a larger excavator will move dirt more efficiently than a small one. Otherwise job sites would be littered with only small ones. Where I live it is NOT uncommon for equipment dealerships to rent excavators of all sizes (and I'm in a rural area). The issue is often that they are all out on rent when you are looking to rent one. The other issue is that they are very expensive to rent on the short term (i.e. weeks or days, and IMO even by the month). When I bought my first trackhoe (before I even had a mini) I saw that I was spending enough money in rent during the summer months than it would take to cover the purchase payments for the same machine for the entire year (or very close to it). As an added benefit the purchased hoe is always available and at your disposal when you need it. When paying rent on a machine all the money goes to someone else. When making payments I am investing in me. Larger trackhoes also tend to last much longer than minis do. Especially in tough digging conditions. Someday my hoe would (and did) outlast the payments. Contrary to what many have said, to me anyway, I actually have a larger profit margin built in to my larger hoe as well. Your markets may vary but this is what mine supports when doing things on an hourly basis. On a bid basis the larger hoe wins here too (faster digging = more jobs in same time frame) especially when you consider the shorter dig season that you say you have. Furthermore the larger hoe will better dig through the frost thus extending your dig season.
The larger hoe will also expand your possible work opportunities to include the jobs you are sending to others. I must admit that I was scared of having the big payments (and I bought brand new-and in December!!). When renting one can give it back and rent stops. Not so with the purchase. That being said it did not take long to get that hoe working and I have never looked back. I have been able to do more jobs and have more opportunity because I can handle more than what I could with only a small hoe. This has happened for me several times now (including when I bought my skid and mini). Once I bought the machine/s the work for them came.
I know quite a few guys who only run compact equipment and it seems to work fine for them. They like to say that they get more done for less money per hour. I'm not in there office so I cant really say for sure but that's not what I see in my office. To me it sounds like something the Bobcat salesman told them. I am aware that the purchase price is less for a mini but the lifespan is much less as well. For example: My mini currently has about 5,000 hours on the meter. It looks and feels as though it's close to the end. I have had to re-weld the boom back together, had serious repair to the swing motor, no more A/C, pretty loose pins and bushings, several leaks (final drives, valve bank, main pump, unknown leak from bottom of the house, etc.), have had to replace cylinders, has had the tracks and sprockets replaced at 4k hours, and I'm sure there is more. My 315CL has about 8,000 hours on it and it doesn't have half of the issues that the mini has. It still has the original undercarriage and I anticipate it will go to 10k hours or more. I have not had to rebuild either of the buckets on it (I have had to replace my 36" and rebuild the 24" on the mini), and no leaks on the final drives either. I will admit that I had to replace the hydraulic pumps at 6,000 hours and that was pricey. Now that this has been done the only thing that seems old on it is that the bucket and thumb bushings need to be replaced. It's not critical yet but it would go a long way to giving it back that "fresh and tight" feeling. Another thing that hasn't been mentioned here is the effort it takes to secure a bunch of small jobs (and billing /administration of a bunch of small jobs) vs that of larger jobs. It sounds to me like you are a small outfit. Probably pulling the levers of that 161 yourself. If so any time that you take to go look at a job is time NOT making money. How many jobs do you look at to get the ones that you get? How many bids do you put together to get the ones that you get? All that time is time that you are not making money or time that you are not spending with family, friends, or whatever floats your boat. Larger jobs, or longer jobs will usually require less leg work and logistical effort in my experience.
Size of Trackhoe:
There are a lot different trackhoe sizes. One for every job. I quite often find myself wanting a larger or smaller hoe (even though I currently own three hoes). Based on what you have said, where you're located and what my assumption is of the work that you do, I would recommend a 15 metric ton machine to start. I started with a Cat 315CL (with thumb) and would probably do it over again if I had to (might go with 20 tn zero tail). This is big enough to do most jobs and has a reduced cost per hour than a 20tn size and costs less to purchase. It will also fit on a 20tn trailer (I already had a 10 whl dump truck and 25tn trailer). If you can't mobe the unit yourself this may cause some problems. In my area I can get a machine moved for about $150 each way. This is not a huge deal and, in fact, I can't legally haul my 60,000# hoe on my current trailer so I sometimes have to pay to move it (will use my 25tn trailer if moving hoe within a subdivision). I thought that this would be a much bigger deal than it has actually turned out to be. It might be different for you but this has been my experience.
As I am writing this after you have made your decision (at least based on your last post) it may not have much of an impact for you. In reality you can make this decision any time it makes sense for you. It really boils down to following your gut. If your gut says stay small then stay small. I know that in my experience that voice has been based out of fear and may not be in my best interest. By all means proceed with caution but don't be afraid to take a little risk. Every time I have looked past the fear it has served me well. After all...you only live once and if we don't push our boundaries are we really living?

 

[Clguest]

Good review of alternative possibilities DGODGR. Thanks for taking time to share another approach.

 

[Coastal]

I had a 161-3...loved that machine, but I also had a 48" tilt bucket and thumb on it.... What a sweet setup that was. Oem undersized the buckets greatly. My pc27 had a 36" tilt and thumb, my new 50 has a 50" cleanup.... Lower profile buckets mind you, but still way bigger than the junk the dealers send out.

 

[Aliate]

I agree with DGODGR, when I sat there writing off a 20k check for a down payment knowing I had years of 4 digit payments coming after that it was a tough pill to swallow, but that machine has kept us on a T&M job for a year now and still going because they didnt need to bring someone else in when the mini was in over its head.

 

[JPSouth]

I'm not sure what size your 161 is (how much it weighs) and you didn't offer it. I will say that I have, what I assume to be, a smaller mini and I own a 13", 24" and 36" buckets. I feel as though I need the variety of buckets to get the jobs done as efficiently as possible. My machine is a Bobcat 435 and it weighs about 11k#. It seems to handle the bucket well enough and it is also a zero tail unit. I would think that your 161 could handle it as well and will probably be about 50% faster than using your 24" bucket in most situations.

It's a '99 KX161-2, pin-on 12" frost, 24" toothed, 36" brush rake, 21" street pads, either 42 or 47 h.p. depending on which set of specs you read. 12,300 pounds, hydraulic thumb on a foot control, which I assure you threw me for a loop after RH joystick thumb controls.

You said that you also had a small TLB. What is that?

2005 Kubota B21, 21 h.p. TLB, 16" toothed, 10" toothed, frost ripper with trenching attachment, mechanical thumb. Tiny but just right for small town jobs, will dig bigger than it's size.

Another thing that hasn't been mentioned here is the effort it takes to secure a bunch of small jobs (and billing /administration of a bunch of small jobs) vs that of larger jobs. It sounds to me like you are a small outfit. Probably pulling the levers of that 161 yourself. If so any time that you take to go look at a job is time NOT making money. How many jobs do you look at to get the ones that you get? How many bids do you put together to get the ones that you get? All that time is time that you are not making money or time that you are not spending with family, friends, or whatever floats your boat. Larger jobs, or longer jobs will usually require less leg work and logistical effort in my experience.

You are correct, I'm captain, cook and shovel hand of a one-horse outfit. A big job for me lasts maybe a week at most, and that's why I was considering a change in equipment. I spent most of my life working in a very production driven construction environment, like where the days begin far before dawn and don't end until the phone stops ringing and most normal people are thinking about hitting the sack. August of '16 a young lady yakking on her cell phone ran a red light while I was crossing on my old Harley springer, and that cost me a sound left leg and my job of over 20 years. I was lucky to have been doing this as side work for a few years and had something to fall back on. Thanks to spending nearly all of said life in this area, I had a fair base of people to start from, and do 90% of my work T/M, and 90% of what I look at I wind up doing. Which I realize is not normal - I'm not half the hand that most others here are when it comes to building business contacts and obtaining work. The area where I live is kind of booming now, and all the bigger outfits want little to do with rural work or small jobs. That is my niche, primarily by default, and in part because I have little patience for urban work and complaining neighbors calling the cops for a dab of topsoil on the street. I spent a lot of years dealing with that when I was employed, I can do it, but time for a break. Too many pointless headaches. Not to mention fighting the urge to cuff the offenders soundly about the head and shoulders.

I started with a Cat 315CL (with thumb) and would probably do it over again if I had to (might go with 20 tn zero tail).

Funny you should say this - an acquaintance presently has an 8000 hour, recently rebuilt undercarriage/pumps 315 for sale - it's pretty clean. What tempted me to start thinking in the first place.

If you can't mobe the unit yourself this may cause some problems. In my area I can get a machine moved for about $150 each way. This is not a huge deal and, in fact, I can't legally haul my 60,000# hoe on my current trailer so I sometimes have to pay to move it (will use my 25tn trailer if moving hoe within a subdivision). I thought that this would be a much bigger deal than it has actually turned out to be. It might be different for you but this has been my experience.

And this is part of the problem - getting a lowboy around here is $500 minimum and it's a week to two weeks out. I checked what it would take to pull dozer to a job I have next year, about an hour and a half away..it was $1000 round trip. They can get that from the bigger outfits, but a small operator like myself does not cater to a customer base who can afford it. Gonna hire a loal guy over there who has a '46 Cat D7 and knows how to use it. I can dress up the rough spots just fine.

By all means proceed with caution but don't be afraid to take a little risk. Every time I have looked past the fear it has served me well. After all...you only live once and if we don't push our boundaries are we really living?

Totally agree, well put. I'm not risk adverse, but narrow it to *calculated* risk. Doesn't always work, but having a good hole card never hurts. Thanks for a great reply!