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Help me take it to the next level.

Discussion in 'General Industry Questions' started by keif, Jan 4, 2022.

  1. AzIron

    AzIron Senior Member

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    I can relate to ksss. We have a couple 0 percent loans absolutely no reason to pay those off early. But if your buying used your not going to get that so you will have to weigh the options

    When I buy used I typically pay cash in full my view point is if it doesnt eat and is not working then it cost nothing to sit there so keep that in mind but when paying cash for equipment dont deplete your operating reserve to buy iron that can get you in trouble faster than payments
     
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  2. CM1995

    CM1995 Administrator

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    Agree with KSS and AZ on keeping ample operating cash and not overextending your credit lines.

    My philosophy is either have enough reserve cash to write a check for the entire amount you owe or at least enough cash to write a check for the difference in a fire sale without going broke. If you can't financially do one of those two things then one doesn't need to finance a tractor IMO.

    2009-2010 taught the ones who suffered through it that equipment can be worth next to nothing is no one is willing to buy it.

    Now I'll play devils advocate for our seasoned business owners - since all these newly printed dollars are causing massive inflation, the most your dollar is going to be worth is today. So if you need a machine and have the work to pay for it then it might be time to buy. Equipment is only going to cost more money.
     
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  3. aighead

    aighead Senior Member

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    It's transitory, give it 2 months and it'll be back to normal. (they said 6 months ago)
     
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  4. KSSS

    KSSS Senior Member

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    Occupation:
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    The inflation we are seeing now certainly adds a wrinkle to everyone's balance sheet. Totally agree that, at least for the short term, money is only decreasing in value. Costs of doing business are certainly not decreasing. What saves us right now is the amount of work, if that falls off (like it did in the late 2000's) then no matter your strategy, it is going to get tough. Some of the things that kept us moving then was diversification. Having a decent spread of commercial and private work, now we also do a lot of Gov. work. So hopefully this will serve well if shitty times return again. As to the OP's situation, having the ability to do small excavator and loader work can help keep the phone ringing. Being a one trick pony can be a little dangerous.
     
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  5. suladas

    suladas Senior Member

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    It doesn't seem like equipment prices have skyrocketed as bad as trucks and trailers. IMO I wouldn't be buying a truck or trailer right now unless I really needed it, prices will come down back to reality and a lot of people will be upside down on stuff, though if you had a ton of work for something it could offset it. I do agree with diversification. Which is why I don't just rely on new construction and do foundation repairs, weeping tile repairs, etc to older homes, that is work that will never dry up.

    As far as paying cash compared to financing I think it varies depending on size of company. If you only have a few pieces and some financed you don't necessarily need enough cash to pay them off, it's just as important how much other debt you have and what you need to bring in to live on, and maybe could get by if you had to go work for someone else. Whereas if you're bigger and have 5 digit equipment payments it's a totally different story.

    Guy I know just spent about a million bucks on trucks and equipment. Has about a dozen dump truck and wants to break into civil, all brand new fancy stuff. 3 loaded f450's, cat 302, 306,308, 2 299 CTL's and 2 goosenecks and still thinking about a new 200 hoe and a tractor trailer to haul it which would be like $650k more I bet. Hope it goes well for him but I think when he starts to work it come spring he's in for a rude awakening about how hard it is going to be to pay for that stuff. There is never any shortage of companies going bankrupt because they financed too much.

    Canada didn't get hit as bad with the recession and I was fresh out of high school working for my dad so I can't say I paid much attention I was still working full-time. While I hope it doesn't happen, I know even if things get bad will get through it no problem, having everything paid for brings a lot of security. No matter what happens though I will never finance another piece of equipment, if I can't pay for it in cash i'm not buying it.
     
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  6. AzIron

    AzIron Senior Member

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    The equipment inflation on new iron is just getting started but I would guess new iron going to reflect how used equipment has gone up in value

    Auction prices here are unprecedented right now and since new orders are months out I see everything continuing to go up in value till the music stops and it's my belief that the harder the market pushes work the more dramatic the rug pull will be

    I bought a jd 35 mini ex last year for 45 grand with 20 hours on it right now out the door with no hours is pushing 60 grand that's just one example I am pricing some new backhoes its 7 months to delivery and there about 15 percent more expensive than 2 years ago and it wouldn't shock me if they go up more in February if I dont order now

    So cm how far does your crystal ball see cause the way I see it we are making growth decisions for equipment a year ahead of actual machine use and a year ahead of starting a potential operator
     
  7. CM1995

    CM1995 Administrator

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    That's my worry that the train is about to slow down, it almost has too. However big institutional, industrial and gov't should be fairly robust for the next couple of years. If the majority of our work (it's not) was single family residential I would be diversifying right now - just my $.02. Multifamily here is robust and demand appears to be strong over the next 12-18 months.

    At least here it would be tough to make any real money with that spread of iron doing general civil works. Now if he was into something specialized like foundation repair, synthetic turf, wet utilities - maybe. Otherwise an outfit like ours with 2 - 50K hoes, 2 - D5's and support equip will run circles around that line up doing small commercial jobs.
     
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  8. suladas

    suladas Senior Member

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    I think he is really out of touch, he use to work for a good size civil company that most of their work is city stuff, but that was at least 8 years ago and what I heard is the owners of that company are no longer fond of him. There is tons of large companies out there no way will he be able to get in with the city directly (doesn't have equipment for it anyway), maybe as a sub but even then there's so many guys in it right now. It's insane the amount of new iron around the city in the last few years, hate to say it but in the next few years I think quite a few won't be around. Probably biggest problem is while he has good dump truck drivers, has no one with any operating experience besides himself but considering how long ago it was, I think even if he has the work it will not go very good. His hope is city work like water repairs, sewer replacement, new subdivisions, etc. Fond dream, but doesn't have equipment, experience or contacts for it. I think he also forgets who gives him a lot of his work, he is in with a few big generals for trucking, but if they find out he's trying to compete for same work he may find he looses a lot of trucking. I think best case is he will get some work subbing out the equipment by the hour but hard to make any money doing that. He knows he can't even try starting out in residential basements even if he buys a 20 ton as he will loose money trying to compete.

    Not sure how much iron has actually went up, said a new Cat 210 was $275k without thumb or extra attachments, definitely not cheap but no idea what they use to be either.
     
  9. suladas

    suladas Senior Member

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    The one price I am baffled by is trailers. Like it's getting to the point why not just make trailers out of diamonds or gold, they'll be cheaper! $30k for a 3x10,000lb gooseneck, I remember in 2015 when I was looking same trailer was $14k. Or worse, trailer I bought last april $9k now over $13k and you can't even find one if you wanted to pay that much.

    Really thinking hard about selling dump truck, 25 ton trailer, pickup and said trailer probably get $100k easy buy tractor and lowboy and go down to one truck and make out like a bandit and pocket $50k.
     
  10. CM1995

    CM1995 Administrator

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    Now that's a loaded question...

    My crystal ball is fuzzy. Currently our work load is steady within our markets - commercial and institutional. Our local industrial market is strong with distribution and manufacturing projects. We don't do any single family residential but do have 2 multi-family projects on the discussion table. These projects are 2-3 story concrete parking decks with 4-5 story wood wrapped apartments on the southside of the city.

    Same here on equipment - looking a year out which is difficult to do. Bought a new D3 last year, our 2 - 279D's are in great shape, 953 doesn't get used much but has age, D5G has some hours on it but will make a great back up machine and the 321DL has 7K hours but still runs strong.

    This year I would like to trade in our 325FL for a next gen 325 or 335. Thinking about going up a size for larger jobs, the higher lifting capacity is nice with larger pre-cast structures we are starting to see more of. Crack dealer told me 325's and 335's are 5-6 months out however we can get a 330 or 336 rather quickly. A month ago they had a couple on the lot.

    As an insurance policy over the last couple of years wife and I obtained our GC license, Sub license and State DBE status as both GC and Sub. Those designations will help with government and large institutional contracts when the private commercial market slows down.

    As far as labor goes our county has the lowest unemployment rate in the entire state so finding qualified help is non-existent. To counter that we're going to invest in newer equip and tech to the extent we feel comfortable economic wise with. This year I would like to add full auto GPS to our D3 and upgrade to a next Gen hoe. We'll see how the workload goes.
     
    Last edited: Jan 8, 2022
    aighead likes this.
  11. AzIron

    AzIron Senior Member

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    I get the tech I just bought a laser box for the skid steer for doing ABC grading for concrete work i looked at gps but half the slab grading work is already under roof so went the laser route
     
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  12. CM1995

    CM1995 Administrator

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    Usually we do the same. Bought an '18 305E2 last year and decided to pay nothing down and finance through Cat Fin. at just under 4% for 4 years. Payment is roughly $1200 a month which is a weeks worth of rental with all the fees included. We use it on average more than a week per month so it made sense to finally buy one with money as cheap as it is.
     
  13. CM1995

    CM1995 Administrator

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    The laser boxes are fantastic for slab work, the larger the better. The laser is more accurate as well on flat or single slope grades. Bought one back in '18 for a warehouse addition. 2 operators put down 1500 TNS in 3 days to 1/2" tolerance over 50K SF. Never could've done that with blue tops.

    IMG_0332.jpeg
     
  14. cuttin edge

    cuttin edge Senior Member

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    Company I'm with has been in the business since 1945. They were big, then they got small. They got big again, then they almost lost everything. Had to be bailed out by 2 other companies. They stayed small, and paid off a lot of debt, then grew, and got to the position of paying cash for a lot of stuff. WE get most of the city stuff. Water and sewer, paving, concrete. We have our own quarry, and gravel pits. Crushers, asphalt plant, trucks and equipment. Our crusher spread is fairly new, and they keep the loaders new every 5 years or so. Asphalt plant is from the 50s and 60s with a few upgrades, dust collection and butane burner. New kid on the block jumped in, and bought a bigger newer plant. Can't seem to figure out how to pave. Had to redo some city streets, and everything they pave is full of waterholes. Can't get any government work for this reason, and that is a big plant for paving 10 ton driveways. The big boys come it every now and then and take most of the government paving, but it's hard to compete against us for city work because we don't have to haul material in from out of town. Work has been steady, but someone is going to have to pay for covid pretty soon.
     
  15. JLarson

    JLarson Senior Member

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    I too like stuff I can write a check for lol, even better if I can put it on a card and pay it if it's small enough plus I get points. Even better if I can have on of my equipment customers do it for me and avoid buying it all together lol.
     
  16. CM1995

    CM1995 Administrator

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    I hear ya. Last month we put a $19K dumpster bill from a demo on our AMEX since the roll off company accepted credit cards...:D

    Wife and I our going on an Alaskan cruise in August and it looks like we'll be flying 1st class to Seattle with miles.:)
     
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  17. KSSS

    KSSS Senior Member

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    You are not kidding on trailers, last year I was going to buy a new gooseneck Diamond C trailer 32' 24K. I was stupid and didn't buy it. I had to buy it this year, and paid 7K more for waiting a year. I got good money for my used Walton which was 20 years old same size and GVW, but still I was floored at how much trailer prices have increased. If this one lasts as long as the Walton, it will be a spread out for a long time but dam waiting a year was very expensive.
     
  18. JLarson

    JLarson Senior Member

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    I wouldn't buy a new trailer ever, they're all ****, overpriced ****.
     
  19. MikeVG

    MikeVG Member

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    Same here. Prices on used ones too are just outta sight. Might as well buy new if you need it bad enough.
     
  20. keif

    keif Active Member

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    Does anyone have a lead on a trencher or vibratory plow machine that has the setup for boring under driveways? I got hooked up with a company that can give me all the work I want but I have to be able to go under driveways. Right now none of the dealers around me have any of these machines in stock... Machine must weight under 8k lbs so I don't have to buy a new truck and trailers.