Aggregates Manager Digital Magazine
Issue link: http://read.dmtmag.com/i/689568
SPECIAL REPORT • 12 budgets will remain the same. A combined 14 percent say they will have smaller budgets this year. Among producers who say they will have larger bud- gets, more than two-thirds (67.6 percent) say the increase will be between 1 and 20 percent. An additional one-fifth (21.6 percent) say budgets will bump by 21 to 40 percent. Less than one in 10 (8.1 percent) anticipate that budgets will increase by 41 to 60 percent. Finally, 2.7 percent of respon- dents say their budgets will jump by 81 to 100 percent. Of those who anticipate a decrease in spending, the most commonly cited decrease (44.3 percent) was 1 to 20 percent. An additional 27.8 percent say budgets will drop by 21 to 40 percent, and 16.7 percent predict a spending cut of 41 to 60 percent. Less than 6 percent (5.6 percent each) of respondents expect budget decreases of either 61 to 80 or 81 to 100 percent. What equipment categories are hot? One trend worth noting is that smaller percentages of pro- ducers report increases in spending for equipment mainte- nance (see Table 1). While equipment and truck maintenance were among the leading categories of increased spending in last year's survey, the percentage of operators reporting higher spending levels dropped in both areas this year, with a 15-percent decrease among operators reporting increased spending in equipment maintenance and a nearly 10-percent decrease in truck maintenance. It is worth noting that anecdotal responses overwhelm- ingly indicate that maintenance issues were still among their company's greatest equipment challenges. These responses came from both those who say they will be making new purchases — indicating that it may be a driving factor for equipment acquisition — as well as those who say they are holding spending budgets steady. The equipment category most likely to experience increased investment, according to this year's respondents, is automation and technology. Nearly 30 percent (29.1) say they will spend more in this category, while only 2.4 percent plan to trim investments here. Other categories to show gains against last year's anticipated spending include ticketing equipment (up 5.8 percent), drills (up 1.9 percent), and porta- ble plants (up 1.1 percent). When asked about investment in long-term equip- ment purchases rather than consumable ones, nearly half of respondents (48.0 percent, up 1.2 percent over 2015) report they spent 1 to 20 percent of their capital expenditures bud- get on items such as crushers, screens, classifying tanks, and mobile equipment. In addition, the following spending trends were reported: • 26.0 percent (up 2.6 percent over 2015) spent 21 to 40 percent of their budgets on long-term investments, • 14.2 percent (down 0.7 percent from 2015) spent 41 to 60 percent of their budgets on long-term investments, • 4.7 percent (down 4.5 percent from 2015) spent 61 to 80 percent of their budgets on long-term investments, and • 7.1 percent (down 1.0 percent from 2015) spent 81 to 100 percent of their budgets on long-term investments. Looking forward, 15.0 percent of respondents say that the percentage of their capital expenditures directed toward long-term investment will grow, while 60.6 percent say it will remain the same and 24.4 percent say it will decline. Buying new vs. used Faced with various options for equipment acquisition, operators indicated their purchasing preference by equip- ment type. Leading the way among new equipment to be purchased in the upcoming year were screen media (46.5 percent), wheel loaders (37.0 percent), automation/technol- ogy (34.6 percent), screen boxes (29.9 percent), and a tie between conveyors and scales (26.0 percent each). It's worth noting that the percentage of operators who plan to purchase new equipment in each of these categories is higher than in last year's study. While most are within a few percentage points of last year's results, buying intentions for new wheel loaders are up by 10 percent compared to 2015. Not one equipment category showed a higher per- centage of producers that plan to purchase used equipment rather than new equipment. Conveyors (15.0 percent) are the most likely equipment to be purchased used this year. Other noteworthy spending categories among anticipated used equipment purchases include excavators (11.0 per- cent), off-highway trucks (9.4 percent), and a three-way tie between crushers, portable plants, and wheel loaders (8.7 percent each). In terms of short-term equipment acquisitions, some movement can be noted from last year's reports. In 2015, wheel loaders and excavators led the way among leases and rentals. This year, only 5.5 percent of respondents indicated plans to lease or rent either type of equipment, down 0.9 percent from last year. Rather, dozers are the most likely lease or rental acquisition, with 7.9 percent of producers making such plans. Other top categories for lease and rental include class 8 trucks (7.1 percent) and portable plants (6.3 percent). One respondent noted anecdotally that his opera- tion switched from buying to leasing this year, but plans to return to purchasing. Another noted that he was updating his equipment fleet by budgeting a few pieces at a time and adding leases into the financing mix. Purchasing priorities Not surprisingly, reliability continues to be the most im- portant factor for producers when they make an equipment purchase (see Table 2). A total of 76.4 percent rated reliability as extremely important, with an additional 18.9 percent who listed it as very important. Safety was the second highest priority with 73.2 percent who described it as extremely important and 19.7 percent who called it very important. Parts availability garnered a rating of extremely important from 71.3 percent of respon- dents, with an additional 23.6 percent who listed it as very