When choosing an automobile or a house, a primary consideration is new or used. The same holds true for aggregate processing plants. Aggregate operators
When choosing an automobile or a house, a primary consideration is new or used. The same holds true for aggregate processing plants.
Aggregate operators can mix and match combinations of new, used and refurbished components when building a processing plant. And there's a matrix that takes into account things like price point, mining conditions, materials and production needs to help a buyer arrive at the best combination.
As bad as this recession has been, those who have the money to buy equipment are considering the different options. In fact, one of the recession's lasting effects may be a fundamental change in how the industry buys its crushing and screening equipment.
A REFURBISHED PORTABLE crushing and screening plant, on average, will cost about 40% to 50% less than a new plant, says Alan Odgers, CEO of JW Jones. ìWhen budget is an issue, and it darn-sure has been for the past two years, they're looking for every way to get that same production, working capabilities and quality of new components, but still save money,î he says.
JW Jones, based near Indianapolis, buys used crushing, sizing and washing components; some of that equipment it refurbishes. The company also carries a line of new equipment. That way, it can offer all used, all new, all refurbished or an a la carte selection from new, used and refurbished. Odgers says they have about $10 million worth of inventory on their lot.
ìWe put a lot of things together, and nothing is set in stone,î says Mike Carrell, JW Jones sales manager. ìWe try to tailor-build these plants to meet the customers' application needs as well as budget needs.î
With more than 25 years on the manufacturing side of the business, Mark Krause is one of the industry's authorities on crushing and screening. For the past three years he's been serving as Lafarge's process-optimization specialist.
ìWe are in the process of doing an analysis for our portable fleet in Colorado,î Krause says. ìOne of the things we're spending a lot of time talking about is maintenance costs and refurbishment versus uptime.î
That analysis is about two-thirds finished and could very well change how the company replaces its aging fleet of mobile crushers and screens. Much of that fleet is 20 years old, and the capital to replace it is much harder to come by. With less capital available, there's greater pressure to justify every purchase in terms of return on investment. Crushing and screening purchases are now facing the same scrutiny that loaders and haul trucks have faced, he says.
Krause says refurbished plants offered by manufacturers sell for about 80% of the cost of a new plant. That is also about the same difference in life expectancy ó the new plant will last about 20% longer than will a refurbished one.
ìWe're finding that remanned by the manufacturers probably is not worth the money,î Krause says.
Krause says they did send one unit ìthat we thought was junkî to an independent remanufacturer, and it came in at a price in line with what Odgers says is average: 40% less than new. ìIt doesn't look quiet as good, and maybe it has only 70% of the life of a new one,î Krause says. ìIt is very little drop off in the life expectancy for a lot less money.î
Carrell says that life expectancy of refurbished machines depends a lot on proper maintenance and the material it is handling. But, given proper maintenance, a refurbished cone crusher on a new chassis with a new screen should last five to six years, he says.
When JW Jones brings in a used crusher, it completely dismantles the machine and analyzes which parts are useable and which must be replaced, with the goal of getting the end product as close to new as possible. ìYou never really know what you have until you open them up,î Carrell says. When finished, he reports, ìsome have all new parts, some have 50% replacement parts.î
Some customers are looking for a custom-built plant, while others are looking for modified plants, Odgers says. ìA crusher coming out of the manufacturer on their chassis would be the highest price point,î he says. ìWe can take a brand new crushing component, mount it on our chassis, where labor is much less, and save the customer maybe $100,000.î
One aspect of the buying process that hasn't changed is the need to match the right equipment to the buyer's situation. That means considering weather conditions, materials being mined, remoteness of the site, and the operator's budget. And, typical of large dealers or manufacturers that sell direct, JW Jones provides consultation and analysis to help buyers choose the right plant.
TO GET THE plants it refurbishes, JW Jones has ìguys that make a good part of their living just knocking on doors looking for equipment,î Carrell says. Buying out of an operator's bone yard is where the best deals are had, he says. The company takes trade-ins as well.
For his part, Krause has seen an increased interest in buying used equipment. ìPeople are coming in and buying what we consider to be junk out of our bone yard or stuff that is worn out and would have been historically marginal for us to think about fixing up,î he says. ìPeople are buying them and shipping them overseas.î
For JW Jones, exports make up 70% of its sales with more than half of that going to Latin America. This diversification has helped the company do more than just weather the recession. Odgers says the company's best year was 2008, and 2009 was only off by 5%. ìOur niche kept us alive,î he says.
Yet, not all processing equipment lends itself equally to refurbishing. New screens and washers are not as expensive as are new cone or jaw crushers. Therefore, it can be more cost effective to buy screens new. Wash plants take a lot of abuse and are expensive to refurbish, again, making new the better option.
Krause agrees, saying that he'd steer clear of refurbished screens and impact crushers because of the low sticker price for new equipment. However, he would consider refurbished cone and jaw crushers.
Aside from cost and life expectancy, refurbished equipment also carries a different level of warranty. A refurbished piece from the manufacturer typically carries the same 12-month warranty as does a new machine, Krause says. JW Jones offers parts warranties from three to six months on its reconditioned machines. And buyers also sacrifice the latest and greatest when opting for used or refurbished.
ìIf you want refurbished these days, it is easy to find old technology,î Krause says. ìWe're not excited about buying old technology; we want new technology.î
One wildcard in the decision-making deck is Chinese- and Indian-made machines. These are more available and have improved quality at a low price, Krause says. ìIf it is a jaw, it would be hard for the Chinese to screw that up,î he says. ìThey've gotten a lot better in their quality.î American operations saw the first wave of Chinese-made processing equipment, and the quality was not there. However, many of those kinks were sorted out, and he does not find the same bad reputation or resistance to this equipment at European operations. But, when it comes to more complicated equipment like cone crushers, Krause says, ìwe haven't made that leap of faith.î
This, of course, all plays into the new way of thinking about processing equipment.
ìHistorically, as long as you could turn it on and it ran, it was still good,î Krause says. ìWe never looked at the trade-off of capital dollars versus maintenance dollars. We weren't worried about the job it was doing or how efficient it was; it ran, and that's all that really mattered.î
But the recession and its subsequent 30% to 50% drop in demand have changed all of that.
ìWe're trying to squeeze every hour out of [a plant] that we can,î Krause says. ìThat means we have to have the ultimate uptime. We've shortened the payback period, and our rate of return has to be greater than it used to be.î
Not only that, but companies are now rethinking their buying and operating strategies. That could involve using smaller plants and running more hours. The notion of running one shift was largely out of concern for labor costs. Now, companies are looking at investing less capital in equipment and running two shifts during busy periods, Krause says.
ìThat is going to be the result of this recession,î Krause says. ìThe big boys were all headed toward mega-plants of 3 million to 6 million tons per year; that's great in certain markets. We are going to be much more mobile with lower tons per hour and run more hours to stretch the limited capital we have available.î