CED

June 2015

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BAIR Products, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 BidSpotter.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Construction Equipment Guide . . . . . . . . . . . . . . . . . . . . . . . . . .8 EPG Insurance, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 GE Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 ICUEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Infor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 LayMor Sweepers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Okada America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Ritchie Bros. Auctioneers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Sakai America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31 Screen Machine Industries, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 48 Sentry Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IFC Solesbee's Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Sumitomo Finance and Leasing Co. . . . . . . . . . . . . . . . . . . . . . 46 8QLÀHG3XUFKDVLQJ*URXS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IBC WTP Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 XAPT Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . OBC $VWKHRIÀFLDOPDJD]LQHRI$VVRFLDWHG(TXLSPHQW'LVWULEXWRUVWKLVSXEOLFDWLRQFDUULHVDXWKRULWDWLYHQRWLFHVDQGDUWLFOHVLQUHJDUGWRWKHDFWLYLWLHVRIWKHDVVRFLDWLRQ,QDOO RWKHUUHVSHFWVWKHDVVRFLDWLRQFDQQRWEHUHVSRQVLEOHIRUWKHFRQWHQWVWKHUHRIRUWKHRSLQLRQVRIFRQWULEXWRUV&RS\ULJKWE\$VVRFLDWHG(TXLSPHQW'LVWULEXWRUV &RQVWUXFWLRQ(TXLSPHQW'LVWULEXWLRQ,661LVSXEOLVKHGPRQWKO\DVWKHRIÀFLDOMRXUQDORI$VVRFLDWHG(TXLSPHQW'LVWULEXWRUV6XEVFULSWLRQUDWH³SHU\HDU IRUPHPEHUVSHU\HDUIRUQRQPHPEHUV2IÀFHRISXEOLFDWLRQ:QG6W6XLWH2DN%URRN,OO3KRQH3HULRGLFDOVSRVWDJHDW+LQVGDOH,OO DQGRWKHUSRVWRIÀFHV$GGLWLRQDOHQWU\3RQWLDF,OO32670$67(56HQGDGGUHVVFKDQJHVWR&RQVWUXFWLRQ(TXLSPHQW'LVWULEXWLRQ:QG6W6XLWH Oak Brook, Ill. 60523 advertisers' index >> PERSPECTIVE June 2015 | Construction Equipment Distribution | www.cedmag.com | 55 these owners and operators… We went so far as to laminate extra signage to hang in the cabs. We've really tried to go over the top. e reality is where do you recover that cost?" ere is also concern about the resale value of equipment and the availability of ultra low emission fuel. In the U.S., when the new emission standards were set, the Environmental Protection Agency worked with engine manufacturers and the fuel industry to ensure the necessary fuel was available, Manfredi said. But looking at where the fuel is available elsewhere in the world, he observes it can mainly be found in North America, Australia, Europe and Japan. "You have most of the world, which is also most of the market for used equip- ment, coming out of North America, and they do not have access to this fuel – so that is a big dilemma," Manfredi said. "Where are the used machines going to go that are coming out as the Tier 4 fleets start to age?" he asks. "Who is going to buy? How is that going affect the residual value? What does that do to the cost of financing machines? Who is going to take that risk?" For example, Manfredi took a hypothetical Tier 1 machine that cost $100,000 new and determined that it would have an end-residual value of about $25,000. With a Tier 4 interim and Tier 4 final machine, you've added about 25 percent to the cost, he said. "So now instead of $100,000 machine you have $125,000 machine," he said. e dilemma for people who are trying to roll those out of their fleet, and the dilemma for finance companies is that machine is still only worth $25,000 seven years down the road. If buyers in South America want the machines they will pay a higher price. But it's not likely. It's putting a tremendous amount of pressure on that end value. Rental companies have to address finances going forward. And finance companies have to decide what they are going to do about that end value. Someone has to absorb the difference in those values. at is what I see as the major issue in this whole event as all these emis- sion regulated products roll into the marketplace." But despite the challenges and concerns, the industry has progressed and overcome many issues already, Watton said. "We had issues," he said. "e biggest problem for us is that we've struggled with operator issues. "So we try to do due diligence in operator training, and hope when the guy gets on and you tell him how it's going to work, it does. "Right now, we're two seasons into having Tier 4 up and going. I seldom have a true Tier 4 related issue. We've done a good job here explaining what the product is. We've really embraced it. We've gotten our customers to embrace it. Salesmen have to be proac- tive. Managers have to be proactive. Anyone who can share the story has to share the story." LORI TOBIAS is a journalist of more than 20 years, including time at the Rocky Mountain News as a columnist and feature writer and 10 years at The Oregonian. She currently freelances for numerous publications from her home on the Oregon Coast. She can be reached at ltwriter0815@gmail.com. ("Reflections on Rental and the Tier 4 Revolution" continued from page 41)

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