When to buy and when to sell

INTERVIEW: Ryan Priestly, CEO of Priestly Demolition Inc, reveals how the company manages a 150-unit-strong equipment fleet.

Priestly keeps all its machines correctly kitted out for the required works.

Priestly’s equipment fleet comprises over 150 machines, and with everything from high reach all the way through to mini excavators, managing it efficiently is a key priority.

Over the years Priestly has moved more and more towards standardising its fleet. As a result, today its machine lineup consists primarily of just a handful of equipment brands.

Of those, machines from Caterpillar and Bobcat make up the majority, however there are also a few machines from the likes of Kubota, Kobelco and Hitachi.

Brands aside, Ryan says that Priestly has always tried to outfit its fleet with a “variety of sizes”. Around 15 to 20% of the company’s machines are in the two to six-tonne class.

“We do a lot of work with our little machines inside of buildings. We’re constantly stripping out buildings or doing slab removals, and even some excavation work for renovation projects where they keep up the facade. You need those smaller machines for that specialised work.”

Ryan tells D&Ri that this type of specialised work, for which the company also uses machines in the eight-tonne class, accounts for an average of roughly 30% of a project’s scope across the board.

“I always say we use our mini excavators and our skid steers like wheelbarrows.

Ryan Priestly, CEO at Priestly Demolition Inc.

"They are literally the new wheelbarrow.

“Don’t get me wrong, we still have wheelbarrows here, but we have a lot more mini excavators than we do wheelbarrows."

He adds: “Because you have to do the work with as much mechanical support as you can to be productive and efficient.”

“We do have a lot of Bobcats and the one thing about Bobcat is they have the full spectrum of sizes.

“And Bobcat has a lot of attachments as well, so they’re very attachment friendly machines.”

Given the amount of work these machines do, knowing when to replace them is as important to ensuring demolition operations can continue efficiently, as it is to maintaining company finances.

WHEN IS IT TIME TO REPLACE YOUR EXCAVATOR?

Ryan explains that the resale value of equipment plays a significant role in when it replaces machinery.

“We try to figure out what the 'sweet spot' is on the resale value. Once that machine hits this amount of time or hours, this sweet spot, we should sell it. Get a new one.

The company predominantly uses mini excavators for stripping out and indoor demolition.

ALL PHOTOS: PRIESTLY DEMOLITION INC

Priestly maintains a fleet of more than 150 machines.

“Sometimes a mini excavator will have 1,000 hours on it, but it will look like its got 4,000. Sometimes it will have 4,000 hours but it looks like it has 1,000.

“So, I would say anywhere between 1,000 and 4,000 hours is sort of the ‘sweet spot’. That’s somewhere between five and seven years old.”

In addition to its mini excavators, the company also has a fair number of 20-t excavators.

As a machine that often gets transported to a lot of different demolition sites, “we want that to be new and current all the time,” says Ryan. “So, after it gets a certain number of hours, say eight to 10,000 hours, we want to make sure we keep changing that over and keep it new and fresh.”

FLEET ANALYSIS

When it comes to buying new equipment, Ryan says: “We try to do a yearly analysis on what we think we’re going to need, and then we act on that.”

“We segment our fleet into different categories. For example, daily users, specialized machines - our high reach excavators, and 20-t excavators etc.”

It is an approach that requires the expertise of around five members of the team, with “two to three people carrying out the analysis, and another two to three people handling the purchase”, with one or two of those individuals involved in both aspects.

BUYING NEW EQUIPMENT

As Ryan previously explained, a key focus for the team when it comes to buying new excavators is how well the machines hold their value.

“We try and look at the resale value. So for instance, Caterpillar on the resale end is probably always top in class. And on the mini excavator range, I’d say Bobcat is right in line with that.

“Hence why we wouldn’t necessarily look at off brand. For example, there’s been a real influx of new machine brands, particularly from Asia. They look fine and they probably run fine, but the minute you break them, what do you do?

“Where do you get the parts? Where do you get the support? It doesn’t matter if you saved $10.00 on the machine if you can’t get it up and running.”

“And unfortunately, with our work, we tend to break a lot of stuff,” Ryan laughs.

“You know, you’re breaking concrete and rebar and all of a sudden the rebar scratches a cylinder, or the rebar scratches the paint or it goes up through the panel and pokes a hole or something…

“And I’m not talking about replacing hydraulic lines, it’s more of a component issue. So that part, I feel, has still got tremendous value to us on when it comes to return on investment (ROI).”

THE ROLE OF THE EQUIPMENT DEALER

Another vital part to the management of Priestly’s fleet is the network and support available from its equipment dealers.

Ryan explains: “When you’re doing a project and you’re down, it’s not important until it’s important. And then it becomes: ‘stop everything you’re doing, and please come fix our machine’”.

“We can’t wait until next week to have a downed machine up and running. And you can’t be relying on someone to get back to you or show up the following day. That just doesn’t work in construction.”

He adds: “Toronto wakes up at 5:00 AM and the day is planned by about 7:30 AM. If you call after 7:30, you’re really talking about the next day, because of the traffic and because of the logistics and because of everything."

AVOIDING DOWNTIME

To help minimise the impact of downed machinery, particularly when the piece of equipment is essential to the completion of the works, Priestly often ensures it has a second, spare machine onsite.

“We do that more than you would think,” Ryan reveals. “Because when it breaks, the only way to get up and running quickly is to have another machine there.

“So a lot of times we’ll have a second machine on a job where it’s critical in terms of time.”

Although this is not something that all contractors, even Priestly, can do all of the time. And then of course, there’s the other side of the equipment fleet to look at; excavator attachment tools.

Looking to the near the future, Ryan says that Priestly will soon be standardising this part of its fleet as well.

With huge advancements being made in electric powered attachments, how contractors such as Priestly will handle this over the coming months and years will be interesting to see. Read our attachments feature to find out more. ■