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The Offi cial Publication of the Association of Equipment Management Professionals
>> PAGE 24
The Offi cial Publication of th
Managing the Parts Supply Chain
>> PAGE 18
Stage Set To Discuss Results of Fleet Replacement Study
>> PAGE 30
>> PAGE 18
Stage Set
Courting Diversity
>> PAGE 26
>>> GPAPAGEGE 2244
Telematics: Worth Another Look
WINTER 2016
Juan Ramirez, Jr., CEM, Equipment Manager at
Bechtel OG&C
Finally, all your equipment and vehicles – on one screen.
Harnessing the power of the AEMP telematics standard to deliver better job costing, billing
and bottom lines for your business.
TM
Telogis.com/AEMP
Copyright © 2016. All Rights Reserved. Telogis® is a registered trademark of Telogis, Inc. All other registered trademarks are the property of their respective owners.
aemp.org
The Official Publication of the Association of Equipment Management Professionals
AEMP PARTNERS FOR GROWTH
contents
3
WINTER 2016
18
24 26 30
COVER PHOTO: Juan Ramirez, Jr., CEM, is equipment manager with Bechtel OG&C. Credit: MQDigitalStudio
MANAGEMENT
18 Managing the Parts
Supply Chain
In-house or outsourced, parts need to be readily available when required
EFFECTIVE PRACTICES
24 Telematics: Worth
Another Look
Much has changed since the early days of telematics, and it’s worth another look
STRATEGIC ISSUES
26 Courting Diversity
Tomorrow’s workforce requires developing strategies today
MAINTENANCE MANAGEMENT
30 Stage Set to Discuss
Results of Fleet
Replacement Study
AEMP membership survey reveals fl eet managers’ opinions about fl eet replacement
DEPARTMENTS
05 The Chairman’s Corner
06 AEMP News
>> 2016-2017 Board of Directors
>> How Will Machine Learning Change Your Job?
>> Equipment Companies: Have Questions About Your Customers?
>> Being an AEMP Fleet Master Recognizes The Front Line
>> AEMP’s EquipmentSHIFT Conference: Educational and Attendance Success
www.castrol.com/hd
aemp.org 5
CHAIRMAN’S CORNER
As chairman of your organization, I am privy to a tremendous amount of
information coming from a variety of sources. As a private citizen, I am even
more inundated with news from every possible venue, including
conversations with many of our association’s membership. One thing that
rings true with all I see, hear and read is that this year’s election campaign
was, without a doubt, one of the most decisive. And likely the most divisive.
By the time this makes it to print, our process of electing a new president
and Congress will be over, and all of the discourse should be subsiding. I
am hopeful that a new administration, regardless of political party, will work
to bring this country back together as the great leader among nations of
which it has had a 240-year history.
The next administration faces tremendous challenges, most importantly here at home. Record
unemployment, a deteriorating infrastructure, and a declining middle class are key to those issues.
I don’t presume to be a macro-economist capable of directing policy, but I understand that
construction spending on the scale that this country needs is very likely the tool that is needed to
fix the problems I mentioned. A dollar spent on construction projects has the largest multiplier of
any dollar; i.e., every infrastructure contract dollar given out is spent over and over more times than
any other type of governmental spending. Infrastructure spending on clean water issues, improved
and expanded roadways, revamping of our antiquated electrical grid, and on and on have the
potential to help address more issues than any political candidate taking the time to discuss in
depth. This nation came out of the worst economic time of its history, the Great Depression, by
way of a series of government debt funded construction projects under what became known as
The New Deal. In 1935, the WPA, or Work Progress Administration, received an initial funding of
$4.9 billion to start this series of projects. In today’s dollars that would be more than $86.4 billion!
Parks, bridges, dams, wastewater treatment plants, and all manner of public structures were
funded and built through the work of this federal agency. It makes me wonder what this country
could make of itself once again if our representatives in government were to join together and
work toward a solution such as the one I just mentioned.
We routinely discuss the lack of skilled tradesmen in this country, but we haven’t seen the leadership
in our nation’s capital agree on a plan to implement anything that would help solve that dilemma.
We can pour all the money we want into higher education but overlook some basic truths: Not every
person is destined to become an engineer, doctor, or lawyer. Our country’s middle class was built by
factory workers, carpenters, welders, and other tradesmen who are now lacking because of a
societal outlook on these jobs as demeaning and less worthy. A turnabout in focus on what types of
careers are rewarding and appreciated is long overdue. Regardless of who won the election and
regardless of whose slogan I might be plagiarizing, it’s time to make America great again. Our
industry and AEMP must lead the way and make that happen. Are you ready to help lead?
John Meese, CEM, Waste Management
AEMP Chairman of the Board
2016-2017 AEMP Board of Directors
AEMP NEWS
6 winter 2016
Executive Committee
Chairman of the Board John Meese, CEM, Waste Management, Inc.
Chairman ElectDon Gengelbach, CEM,Mulzer Crushed Stone, Inc.
Vice ChairGreg Peet, CEM, Helm Group, Inc.
Vice ChairWilliam “Barth” Burgett, Kokosing Construction Company
Vice ChairPaul Kitko, Glenn O. Hawbaker
Secretary/TreasurerDave Gorski, CEM, K-Five Construction
Immediate Past ChairKen Burke, CEM, Sarans Canada
President & Chief Staff OfficerStan Orr, FASAE, CAE Ex-Officio
Elected Directors
Director of ConstructionJason Ruggles, Infrastructure & Energy Alternatives, LLC
Director of GovernmentalDavid Bolderoff, CEM, Sanitation Districtsof Los Angeles County
Director of MiningKirby Yakemchuk, P.E., CEM, Ledcor Group
Director of Strategic PartnersMike Gidaspow, Komatsu America
Director of AssociatesJoe Baker, J.J. Kane Appraisal Services
Appointed Directors
These directors are appointed by the Chairman of the Board based on specific individual experiences and skill sets that can aide AEMP in advancing its mission.
Barry Schlouch, CEM, Schlouch, Inc.
Roger Mohr, John Deere Construction & Forestry, Chairman to the AEMP Foundation Board Liaison
Advisory Board
The 2015-2016 Advisory Board has also been appointed by the incoming chairman. These individuals serve in an advisory position on the board of
directors and assist the elected members in their decision making as provided for in the AEMP Bylaws:
Chairman Mike Gidaspow, Komatsu America Corp.
Rick Blesi, Construction Equipment
Roberto Bogdanoff, Volvo Construction Equipment
Randy Brooks, Caterpillar Corp.
Jeff Cohen, Telogis
Geoffrey Love, Randall Reilly
Sean Dunphy, Equipment Today
Dennis Walker, United Rentals
Wayne Harriman, Case Construction Equipment
John Gebhard, Castrol Heavy Duty Lubricants
Cloyce Newton, Trimble
Mike Watkins, John Deere Construction & Forestry
Garrett Schemmel, EquipmentWatch
Equipment Manager is the official pub-lication of the Association of Equipment Management Professionals.
Statements of fact and opinion are the responsibility of the authors alone and do not imply an opinion on the part of the officers or members of AEMP.
Equipment Manager is published quar-terly and is provided as a service to all AEMP members. Nonmembers can qualify to receive the publication by going to www.aemp.org.
For further information on equipment management topics, or to provide opin-ion of contributors, contact: Publisher, AEMP, P.O. Box 1368, Glenwood Springs, CO 81602, or call 970-384-0510.
©2016 AEMP. Published by the Associa-tion of Equipment Management Profes-sionals. Produced by Construction Equipment magazine.
All rights reserved. Materials may not be reproduced or translated without written permission from the publisher. Contact AEMP for reprint permission. For back issues go to www.aemp.org.
Postmaster: Send address changes to Equipment Manager Circulation, AEMP Headquarters, P.O. Box 1368, Glen-wood Springs, CO 81602-1368.
Editorial Offices: Cindy Challis Orr, 970-928-3403, [email protected]
Advertising Offices: Rich Thompson, 952-449-1592, [email protected]
Member Services: Cindy Challis Orr, 970-928-3403, [email protected]
AEMP
AEMP and the AEMP Foundation work together to bring the most comprehensive collection of services and resources to equipment manage-ment professionals. AEMP is an individual membership organization. Its members manage private and public fleets in 18 countries.
Our Cause (why we exist) AEMP helps fleet professionals build fleet efficien-cies through world-class education and collaboration.
Our Value (what we do) AEMP connects great ideas and great people to inspire innovation within the heavy equipment industry.
Our Promise (how we serve our stake-holders) AEMP delivers a collaborative community within the Equipment Triangle, with exceptional tools to make equipment managers successful.
Our Guarantee If any AEMP program, product or service does not fulfill our promise, we will make the situation right or refund your money.
For proof, visit JohnDeere.com/Big
BIG MACHINES. BIG SUPPORT.
When you choose John Deere heavy equipment, support includes 24/7 machine monitoring, remote diagnostic and programming capability, and world-class parts availability. Not to mention annually UH�FHUWLƟHG�WHFKQLFLDQV�EDFNHG�E\�IDFWRU\�WHFK�VSHFLDOLVWV�ZKR�DUH�ready to drop in when needed. Together, we’re building big things.
AEMP NEWS
8
On May 11, 1997, IBM made history when its Deep Blue computer won a six-game match with world
chess champion Garry Kasparov. IBM wasn’t just playing a game, however. They were pushing forward the capac-ity of computers to handle complex calculations of prob-ability, risk analysis and trend analysis, and to search vast quantities of data for relevant information. Since then, IBM has developed Watson, a supercomputer capable of beating the champions of the Jeopardy! trivia game show. Again, it’s not just a game. Combined with vast amounts of data stored via cloud computing, Watson is an example of artificial intelligence (A.I.) that is already changing the way work is done in many industries, including healthcare, military tech-nology, financial commod-ities trading, engineering, architecture, and construction.
For example, A.I. is affecting the automobile industry, particularly the competitive world of auto racing. Honda R&D has been using IBM’s Watson platform to gather and analyze data from its hybrid racecar engines in real time. “We get real-time data off the engines…to better understand every-thing, from engine pressure to temperature to velocity,” says Karen Newman, vice president of services at
IBM (Reese, 2016). The analytics help improve the cars after each race and keep the cars well-maintained. This technology will find its way into regular automobiles and other vehicle applications.
“When you can challenge the technology at these kinds of speeds and feeds,” said Newman, “I think it really helps us to know how well it works, so we can apply it to other less intense—under 200 mph—kinds of environments,
Artificial Intelligence and
Equipment Management:
How Will Machine Learning
Change Your Job?BY SHARON ANDERSON YOUNG, MBA
winter 2016
9
and have confidence that it will be very successful.”Improvements in safety have been the biggest benefit
of using A.I. in racecar driving. Another motivation is the bottom line. “When you’re using these parts and moving vehicles under stressful conditions, there’s a lot of wear and tear that’s expensive,” said Newman. “These are very, very expensive pieces of equipment. If you can use the technology so that you’re not burning things out as fast, that’s value that a company can have in the long run” (Reese, 2016). Equipment fleet managers can easily relate and are already well-acquainted with using telematics to collect and track similar data points. A.I. is bound to use cutting-edge algorithms to mine telematics data and pro-vide recommendations faster than ever before.
“Construction companies have already started adopt-ing the use of artificial intelligence within the field, and tech companies are starting to recognize the impact A.I. will have in the construction industry,” says Diego Ventura, CEO of noHold, an A.I. developer in Silicon Valley. “As for the future, A.I. is still in its elementary stage. When you take a step back and look at how much growth A.I. still has, the possibilities are endless for A.I. to impact any industry” (Ventura, 2016).
Precision agricultural technology is leading the way in automated field robotics, and robotic bulldozers that do not require a human operator may become a common
thing at future construction sites. While this shift would reduce available jobs for equipment operators, it could also eliminate the dangers of human operation.
“Heightened, computerized senses tend to be more alert than those of a human,” says Kyle Plate, Mascus USA. “Recent advancements in self-driving or assisted driving cars are a good modern day example of this, in that sensors built into vehicles of this nature can detect, realize and electronically react in real time to perceived danger faster than a human driver can, in most cases. While there is virtually no way to prevent 100 percent of accidents on the road even if every person owned an autopilot car, the number of accidents would likely decrease dramatically. The same goes for a construction site, if heavy equipment of the future indeed does go the
artificial intelligence route.” As with previous industrial revolutions, job changes
due to A.I.—sometimes called the “Fourth Industrial Revolution”—are anticipated in many sectors. The World Economics Forum (WEF) recently published a report estimating a loss of half a million jobs in the construction sector by 2020 due to advances in A.I., machine learning, and robotics (Grayson, 2016). The report notes this tech-nology is more likely to change how specific tasks are done rather than completely eliminating jobs, freeing workers to focus on new tasks that will require rapidly changing core skillsets. Mustafa Suleyman, cofounder of an A.I. startup called DeepMind, agrees, saying advances in A.I. technologies are a long way from replacing work-ers outright, but are best used to help humans with work-related tasks (Varian, 2016).
This will affect far more than just low-skilled labor or machine operations jobs. The WEF report encourages employers to consider how to develop their employees’ education and skills for a “talent revolution” that matches the technology revolution. “Businesses will need to put talent development and future workforce strategy front and center to their growth. Firms can no longer be pas-sive consumers of ready-made human capital. They require a new mindset to meet their talent needs and to optimize social outcomes” (Grayson, 2016). Anticipating
what changes the technology will bring and how to design effective new training and education for newly required skills is the challenge.
Anthony Goldbloom is an expert on machine-learning and data processing science. His organization, a think-tank of data scientists called Kaggle, has developed algorithms for machines capable of reading and grading high school essays or scanning high-resolution photographs of an eye to diagnose certain eye diseases with remarkable accuracy. He posits that A.I. will soon be capable of conducting audits and even reading “boilerplate” language in legal contracts as well as other tasks, and will thus change the work of most skilled professions, including teachers, doc-tors, accountants and lawyers. He says, “We have no chance of competing with machines on frequent,
“Construction companies have already started adopting the use of artificial intelligence within the field, and tech companies are starting to recognize the impact A.I. will have in the construction industry.”— Diego Ventura, CEO of noHold
aemp.org
AEMP NEWS
10 winter 2016
Todd Perrine, CEM, vice president and product sup-port manager for Leslie Equipment Co., knows what
his company of 200+ employees needs: an efficient way to learn what really makes their customers coming back. And Perrine knows that the right conference with the appropri-ate focus is one of the best ways to meet this need.
The conference that meets that criteria is the 35th Management Conference & Annual Meeting of the Association of Equipment Management Professionals (AEMP), to be held March 4-6, 2017 in Las Vegas.
Hundreds of fleet heavy equipment managers will gather for the best combination of technology, training, and networking opportunities. By registering for AEMP’s meeting, attendees are also registering for CONEXPO-CON/AGG, making CONEXPO-CON/AGG much more affordable.
The AEMP conference will feature, among other
things, the results of a survey of fleet managers and their thoughts on equipment replacement policies.
Emerging TrendsPerrine wants to know emerging trends and be informed when his customers start asking questions, and he knows that AEMP offers the best opportunity for face-to-face conversations with equipment professionals who will speak the unvarnished truth about their needs for specific products and services. And that’s why he has been a regu-lar attendee at AEMP conferences.
“We’ve been attending AEMP meetings for more than 10 years, and they always provide maximum ROI. At AEMP meetings we have learned what fleet managers are doing now and how they assess various machine brands; this gives us a really helpful perspective on the good, the bad and the ugly, and that’s why Leslie’s staff consistently
Equipment Companies: Have
Questions About Your Customers?
AEMP Has Answers.
BY RICHARD K. JEFFERSON
high-volume tasks. But there are things that we can do that machines can’t do. We have the ability to connect seem-ingly disparate threads to solve problems we’ve never seen before…. Machines cannot compete with us when it comes to tackling novel situations” (Goldbloom, 2016). Goldbloom estimates work done by humans will focus on creative solutions such as marketing campaigns, business strategy, and how to apply the data processed by machines.
Considering the benefits of safer equipment opera-tions and faster telematics data processing, the “Fourth Industrial Revolution” brought about by A.I. could be good news for busy fleet managers who need to sort through an ever-increasing flow of information in order to determine effective business strategies and other cre-ative solutions. Seeking new challenges and constantly learning new skills will present the best opportunities for you and your employees to stay ahead of the machines.
SourcesGoldbloom, Anthony. “The Jobs We’ll Lose to Machines – and the Ones We Won’t.” TED2016. Filmed Feb. 2016, Ret. 10/10/2016 from http://www.ted.com/talks/
anthony_goldbloom_the_jobs_we_ll_lose_to_machines_and_the_ones_we_won_t
Grayson, Wayne. “AI, Robotics Expected to Claim Nearly 500,000 Construction Jobs by 2020.” EquipmentWorld.com. 01/25/2016, Ret. 10/11/2016 from http://www.equipmentworld.com/ai-robotics-expected-to-claim-nearly-500000-construction-jobs-by-2020/
Plate, Kyle. “Will Heavy Equipment Ever Become Completely Automated?” mascus.com/blog. 08/11/2016, Ret. 10/12/2016 from http://blog.mascus.com/blog/2016/08/11/will-heavy-equipment-ever-become-completely-automated/
Reese, Hope. “How Honda’s F1 Race Engines use IBM Watson to Analyze Data, Boost Efficiency, and Shape Strategies.” TechRepublic.com. 10/10/2016, Ret. 10/11/2016 from http://www.techrepublic.com/article/how-hondas-f1-racecars-use-ibm-watson-to-analyze-data-boost-efficiency-and-shape-strategies/
Varian, Jonathan. “Google Artificial Intelligence Guru Says A.I. Won’t Kill Jobs.” Fortune.com, 10/10/2016, Ret. 10/11/2016 from http://fortune.com/2016/10/10/google-artificial-intelligence-deepmind-jobs/
Ventura, Diego, “Artificial Intelligence in the Construction Industry.” CONEXPO-CON/AGG.com/news. 8/19/2016, Ret. 10/11/2016 from http://www.conexpoconagg.com/news/august-2016/artificial-intelligence-in-the-construction-indust/
UnitedRentals.com | 800.UR.RENTS
© 2015 United Rentals, Inc.
Anytime, anywhere, on any deviceManage your rental fleet with UR Control®
UnitedRentals.com/URcontrol
From safety/operator training and equipment management
technologies, to custom solutions engineered to meet
specialized job requirements, United Rentals offers much
more than just the world’s largest rental fleet. It takes a lot
to get the job done right. We’re here to help.
When you think resources,think beyond equipment.
AEMP NEWS
12 winter 2015
In 2017, the newest Fleet Masters will be named by the Association of Equipment Management and
Professionals (AEMP) and Construction Equipment at AEMP’s 35th Management Conference & Annual Meeting, to be held March 4-6 in Las Vegas. The dead-line for submitting forms for the 2017 Fleet Master pro-gram is Dec. 16, 2016.
When you register for AEMP’s Management Conference & Annual Meeting at www.AEMP.org, you will also be registered simultaneously for CONEXPO-CON/AGG. This will greatly reduce your registration for CONEXPO-CON/AGG, as you will see below.
But what can we say about Fleet Masters? They are industry leaders and educators in their own right.
Educators and AdvocatesThe 2016 Fleet Master winner for large fleets, Gil Gilbert, has posted a blog on the AEMP site entitled “The Internet of Things (IoT) is Changing Heavy Equipment Fleet Management.” Gilbert is a Certified Equipment Manager (CEM) and the fleet director of Henkels & McCoy (H&K) Pipeline Division.
In the Fleet Master program, large fleets like the one Gilbert manages have an estimated replacement value (ERV) of more than $100 million. CEM is the premiere professional credential for fleet managers overseeing heavy equipment fleets; a minimum of five years of expe-rience is required to apply. For more information visit www.AEMP.org.
Telematics is a subset of IoT, and in his post, Gilbert shares how H&K uses IoT solutions for preventive maintenance (PM). With PM alerts triggered in advance by 40 running hours, and the fact that Gilbert reports that his IoT-based “process has taken our completed PM from 60% to over 95%,” it’s easy to see why the Fleet Master Gilbert would want to share his success using IoT solutions.
Since there’s much more useful information on
Being an AEMP Fleet Master
Recognizes the Front Line
FLEET MASTERS SUBMISSION DEADLINE IS DECEMBER 16
says they find real value in AEMP meetings,” Perrine said. “The thing I might like best about AEMP meetings
may be that we all bring back ideas we can implement immediately; the customers attending AEMP events give us real-world feedback about what they have learned from managing their fleets,” Perrine said.
The full training and testing for the Certified Equipment Manager (CEM), as well as training and test-ing for the Certified Equipment Support Professional (CESP), will be offered at the AEMP Management Conference & Annual Meeting. The exams for certifica-tions will be administered at 8 a.m. Tuesday, March 7. CONEXPO-CON/AGG starts at 9 a.m. the same day.
What Does Your AEMP Registration Include?Registration to the 2017 AEMP Management
Conference & Annual Meeting includes entrance fees into CONEXPO-CON/AGG, a value of up to $249 per attendee. If you are an AEMP member and only plan to attend CONEXPO-CON/AGG, registering through AEMP still saves you up to 40 percent. If your company sends multiple staff members, this can save you a sub-stantial amount. Register for the meeting by visiting www.AEMP.org.
AEMP has a block of rooms at the Tuscany Suites & Casino, located at 255 E. Flamingo Road. The Tuscany is off the Las Vegas Strip and has a relaxed atmosphere. The hotel is also easily accessible to the convention center, where CONEXPO-CON/AGG is being held.
Register today www.AEMP.org, and we’ll see you at AEMP’s 35th Management Conference & Annual Meeting.
Gilbert’s blog, you might find it beneficial to check it out at the Blog tab at the top of the page at www.AEMP.org.
Small Fleets Barry Schlouch, president and co-founder of Schlouch Inc., is the 2016 Fleet Master in the category of fleets with $10 – $100 million ERV. According to Schlouch, the rec-ognition of Fleet Master was good for his company. The award led to an opportunity for Schlouch’s company to share best practices with other fleet managers, but one of the most important results was what the recognition meant to entire company and its staff. “We believe the front line creates the bottom line,” Schlouch said.
“We included our team in the submittal process. It required us to think through our strategy, priorities and efforts put forth to strive for fleet excellence. We learned a lot about ourselves during the submittal process. Self-reflection can be a good thing as continue to found new ways for improvement,” Schlouch said.
The recognition was so significant that Schlouch said he brought key staff to the AEMP Annual Meeting for the awards ceremony. Schlouch said his fleet service plan-ner, Tina Delong, “works hard every day to make sure that machines are serviced on time and up and running safely and efficiently. As a business owner, it brought tears to my eyes to see the pride in our team on the stage
to accept the award.” Equipment managers already know how the IoT
affects everything in fleet management, but it could also change the way fleet insurance rates are set. For reference, see the AEMP blog post about David Shillingford and his work, entitled “Risk Management for Heavy Equipment Managers: The future of heavy equipment insurance lies with the Internet of Things.”
Remember that your registration to the 2017 AEMP Management Conference & Annual Meeting will also include registration for CONEXPO-CON/AGG. The registration rates are $149 for early bird, $195 in advance, and $249 at the door.
The Association of Equipment Management Professionals (AEMP) is the premier organization serving those who manage and maintain heavy equipment. AEMP helps you attain the contacts, knowledge, career development and personal growth needed for success. Membership will help you operate at peak performance and make lasting contributions to your organization’s growth. In short, help you be your best.
Every year we honor our members and contributors to the industry to keep driving forward. Visit each award area for more information about how you can get involved with honoring the people and organizations that are performing at the top of their game.
aemp.org 13
“As a business owner, it brought tears to my eyes to see the pride in our team on the stage to accept the award.”— Barry Schlouch, President and Co-Founder Schlouch, Inc.
EquipmentSHIFT 2016, AEMP’s fall conference in downtown Memphis, Tenn., was lauded by attendees
for the high quality of its educational offerings. The con-ference was at the world-famous Peabody Hotel.
Drag racer Antron Brown, the opening keynote speaker, shared lessons from his life and profession.
While growing up, Brown worked in the family’s suc-cessful septic tank business. This, he said, provided him
with powerful incentives to succeed: “I knew what was waiting for me if I failed at racing,” he said.
The right people are critical for success, Brown explained, and “every leader can learn from anyone they work with. You can learn more about safety from every-one, and keep safety uppermost,” Brown said.
Brown’s mantra for safety and for winning: prepare, prepare, prepare. Despite the super-revved,
AEMP’s EquipmentSHIFT
Conference: Educational and
Attendance Success
and AEMP Partners for Growth
For your support at the EquipmentSHIFT meeting in Memphis!
www.aemp.org
Thank You Sponsors
aemp.org 15
AEMP NEWS
adrenaline-charged win-or-lose seconds of competition, the race is won more in the preparation rather than just on the track.
Brown won his third Top Fuel championship, and his sec-ond consecutive championship, in the National Hot Rod Association’s Top Fuel division at the Las Vegas Motor Speedway in 2016, after previ-ously winning in 2012 and 2015. Brown drives the Matco Tools Toyota car for Don Schumacher Racing, and is in the record books as the first Top Fuel African American champion.
Other Highlights Brad Coverdale, director of fleet sourcing and support at Sunbelt Rentals, shared how Sunbelt used the Great Recession of 2008-2009 to improve his com-pany’s performance through automation that eliminated expensive system duplications. Sunbelt even relied on telematics to standardize office operations across the country.
Danielle Trosclair, program manager with the Corporate America Supports You (CASY) National Guard Employment Network, explained how veterans are highly trained and ready for a civilian role in fleet man-agement. There are 1 million veterans now seeking full-time positions, and 200,000 more are leaving the service each year.
A panel discussed the changing equipment rental mar-kets: Life-cycle and ownership costs, the high caliber of rental fleets, and the need for some fleet managers to be more “asset light,” all figured in the discussion. The panel was composed of:
• Colin Evran, founder of the Yard Club • John Fleming, CEO, founder of The Exchange • William Schlacks, CEO, co-founder of
EquipmentShare Meghan Grace, co-author of Generation Z Goes to
College, said there are key differences between Gen Z, born 1995-2000, and Millennials, the just generation before that. Millennials are optimistic, focused on “me,” and prefer pre-scheduled learning. Gen Z is more realis-tic, more focused on “we,” and much prefer “on demand/
just in time learning.” Dr. Alexander A. Schuessler, president of
International Group and founder of SmartEquip, explained that pilot programs are necessary but challeng-ing, since they usually do not proceed on a linear one-to-one scale. Regarding linear projections, pilot pro-grams are an excellent means for predicting the full-scale impact of new technology.
Mike Bierschbach, director of fleet technology and intelligence at United Rentals, shared that telematics affects customer satisfaction, employee engagement, safety, compliance, and importantly, sustainability. You can find ways to have leadership understand the data, and how it will improve decision making.
Emmanuel de Maistre, vice president of the AEC department at Airware and co-founder of Redbird, explained that the future of drones is here, now. Do you need to survey a mining or construction site? You will use a drone. Do you need an aerial perspective on infra-structure networks? You will use a drone. Do you need to keep tabs on agricultural land? You will use a drone, just like your neighbor does. Surveying a job site will never be the same.
Another panel discussed how telematics plays a vital
At EquipmentSHIFT 2016, a discussion on drones by Airware’s Emmanuel de Maistre spoke on how the future of industries will be dominated by the technology. Maistre said drones will be heavily relied on to survey job sites, gain aerial perspectives on infrastructure, and more.
16 winter 2015
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AEMP NEWS
connective role on all sides of the Equipment Triangle. For instance, the panel covered the need to “narrow the GAP between customers, dealers and OEMs” through telematics. Panelists delved into predictive maintenance, and how telematics is critical to minimizing downtime, increasing wrench time and keeping warranties valid. After all, the future of maintenance is predictive mainte-nance. The panel was comprised of:
• John Howerton, director of construction equipment sales, Teletrac Navman
• Steve Riddle, operations foreman, Branch Highways Equipment
• Leo Wambold, technology consultant, James River Equipment
David Shillingford, president of Pegasus Analytic Innovations and founder of National Equipment Register, delivered the closing keynote and provided a look at how fleet insurance is changing even now. The automotive industry is out front, and insurers like Progressive and Allstate have already started their pilot programs to set insurance rates based on data. Insurance for heavy equipment fleets cannot be far behind.
Leadership: Beyond ManagementYou are probably a great manager, but leadership demands more.
Applying effective management strategies to your fl eet operations is necessary to stay in business, but you need more to be the market leader you want to be. The dynamic nature of this industry includes telematics, Tier IV regulations, safety considerations, and many other topics separating the leaders from followers at an ever increasing rate. Becoming a leader in the equipment management profession will help you and your company realize your full potential. Connect with other industry leaders at this conference – the networking alone is worth the cost of registration!
35th Management Conference & Annual MeetingMarch 4-6, 2017 Las Vegas, NV
WH
O • Equipment Managers and their fl eet management team
• CEOs, CFOs
• Anyone who impacts your fleet intensive company
SESS
ION
HIG
HLI
GH
TS • New Technologies that Improve Safety and Reduce Your Costs
• The Impact of the 2016 Election Cycle on Your Fleet
• How Tier 4 Final is Changing the Game, and What’s Coming Next
• The Equipment Triangle: More Important Now than Ever
• How to Make a Case for Telematics Adoption in the C-suite
• Leveraging AEMP University to Train Your Staff
• How to Prepare Fleet Organization for the Next Recession
• Contractor to Contractor Rentals: What to Watch For
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18 winter 2016
Historians have known throughout the ages that conquering armies can be stopped in their tracks for lack of a dependable supply chain,” says Leigh
Dennis, CEM, manager of fleet services, Carolina Sunrock. “Getting too far away from the supply sources stretches resources to the point where progress simply stops. Success of any campaign or business depends on the
logistics of supply-chain management.”The effect of a poorly managed supply chain, he says,
“is devastating to morale.”“Inventory management is not necessarily glorious, but
it is absolutely essential to the success of an organization,” Dennis says. “It is, perhaps, the strongest link in the sup-ply chain that maintains availability of parts and supplies
In-house or outsourced, parts need to be readily available when required
MANAGING THE PARTS SUPPLY CHAIN
BY G. C. SKIPPER, CONTRIBUTING EDITOR
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Equipment Manager
>> Parts Specialist David Valazquez issues parts to Fleet Technician Jacob Green at Manatee County Fleet Services.
aemp.org
that keep trucks moving and equipment working. “When it comes to preventive maintenance, inspection,
and condition inspection monitoring and repairs, parts management is always a work in progress, adapting to the evolution of technologies in markets that it both draws from and supplies.”
Balancing on-hand parts inventory levels with the levels of parts used less frequently is determined by a number of variables, he says. Chief among these variables is demand “D”: increased asset utilization demand. The ebb and flow of demand can also be affected by a number of factors that come from different customers and their individual needs.
“One customer may not have resources to maintain a parts inventory,” Dennis says. “Another customer may pur-chase parts in bulk to save on ordering and shipping costs by taking advantage of quantity price breaks. The fortunes of each customer will affect frequency of parts sales at dif-ferent times.”
Normally, historical sales data will roll into reports that help determine inventory and level out the extremes. “The down side of this is that, in many cases, it is reac-tive in nature,” he says.
The downtime factor is another consideration. Parts management is all about getting the most value out of parts and supplies, he says. “Here, parts value is maximized through the use of proactive planning. A key element of operating efficiency is utilizing inventory as a tool to miti-gate potential downtime and support operational effi-ciency,” Dennis says.
There are risks at times, he points out, since often you gamble on what you keep in stock for immediate needs versus what you ask your dealers to keep on the shelf for non-emergency use and restock.
That said, there are several ways to help alleviate wait time and reduce inventory costs. For instance, vendors can put mission-critical, higher-value parts on consignment at your location, says Dennis. “This guarantees parts availabil-ity for you and sales the vendor needs. This system works for anything from hydraulic pumps, steering gear boxes, and valves to mining tires and bucket cutting edges.”
Then there is the “pesky X-factor,” he says. These are consumable supplies and safety items. One way to help cut costs on these is to install automated, customized vending machines. “They are excellent tools that provide both parts and supply availability as well as the tools to apply cost-control items,” says Dennis.
The best way for parts to leave inventory is through an automated system that identifies the item and charges it out through the work order system.
Parts depreciation usually begins after the economic shelf life expires. “This is usually an internal setting that can be triggered by any number of variables, such as return-to-vendor deadlines, design obsolescence, and parts warranty expiration dates.
“If you operate at a higher level of fleet standardization of machines and procedures, then processes and parts plan-ning becomes essential to operational efficiency. Therefore, when spec’ing a new machine, identifying service and wear parts commonality and identifying what you are or will be using, are top priorities.”
Steve Frazier, CEM, is director of equipment operations at AECOM, working worldwide in power industry, environ-mental, governmental and civil projects. Fleet size varies depending on the nature, length and location of the project.
“With the oil and gas business, we’ve probably elimi-nated 3,000 pieces of equipment,” Frazier says. “We do a
19
Online Tools for Parts
Among the online tools available for parts management is an appli-cation AECOM’s Steve Frazier, CEM, discovered called Tool Hound. He says the application ranks high on the preferred lists of companies and OEMs.
The web-based app not only sets minimum and maximum lev-els for inventory control and tool management, it also greatly assists with cost reporting. Inventory levels, such as filters and air cleaners, are current and up to date.
Like all applications, Tool Hound continues to improve and
update its system capabilities to meet AECOM’s needs and requirements, Frazier says.
“A new program could come out tomorrow, but again, the technology we use now is some-thing that evolves,” says Frazier. “A change like that involves a lot of people, so we have to make sure we’re not going down a path of failure.”
Mike Brennan, CEM, says online technology “has been a godsend for us. We are able to go to our vendors’ website or use Google to make purchases. It has really opened a lot of doors for us.”
It used to be a real challenge, he says. There were no books avail-able for what you were looking for. You had to take a picture of what-ever you wanted and fax it to the supplier. Now, with access to the world by computer, all you have to do is type in a part or description and you can find almost anything online, Brennan says.
Prior to today’s technology, Brennan says, multiple time-con-suming phone calls had to be made. “Now I can go out, use my cell phone to take a picture, send it to a vendor, and get an immediate response. What a big difference.”
20 winter 2016
lot of leasing and rentals. We do procure, depending on the length of the job, whatever makes sense financially. Our overall fleet number is very fluid because of the industry. Obviously, we like the warranty-type equipment leases and those types of things to lower our operating costs.”
Maximum levels of maintenance and service items are required on site at large jobs that are equipment intensive, according to Frazier. “Each project has different require-ments, and each may be managed differently,” he says. “In some areas, we may rely on local vendors and suppliers and not maintain a parts inventory. In some cases, there are a lot of rental fleets with a multiple inventory of parts, but no consumable items. We try to manage those as consis-tently as possible.
“When we get ready to start a project, our vendors are a lifeline to equipment uptime and the project itself. We try to negotiate with the local dealer, who at least has OEM-recommended parts and parts lists. It is a win-win situa-tion when we include them in the Equipment Triangle to assist us in having a profitable project.”
Single- and multiple-source vendors and suppliers have both advantages and disadvantages, according to Frazier. Developing a single-source relationship has an advantage in that it creates competitiveness and reduces overall
operations cost. The disadvantage is the lack of competi-tiveness from internal area local supply sources, a source that is not close and readily accessible.
“The object is to maintain and operate our fleet,” he says, “and the requirement expected for our uptime, sched-ule, and productivity are critical.
A number of factors, including not having accessible parts and unforeseen maintenance that contribute to downtime, have to be carefully watched since they can increase the overall cost of a project, especially in a corpo-rate-intensive fleet, Frazier says. Yet, there is always room for improvement in any aspect of equipment and fleet management. “You have to continue looking for items and procedures that can give us a competitive advantage on our overall maintenance cost and project success.”
Mike Brennan, CEM, manager of fleet services, and Angie Sharpe, materials manager, operate parts supply for Manatee County (Fla.) Fleet Services like a just-in-time supply operation.
“We do have stock and inventory of high-moving prod-uct, but our basic philosophy is when we know a machine is coming in we order the parts that are needed and get them in here,” Brennan says. “The team that Angie has is well-versed at doing this. Combined, they have more than 75 years experience, and over the last calendar year they
>> Materials Manager Angie Sharpe and Parts Specialist Joe Burch perform the monthly cyclical inventory at Manatee County Fleet Services.
Equipment Manager
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have supplied 80 percent of the parts we need to service vehicles and machines for the various county divisions, such as public works, parks and recreation, property man-agement, natural resources, and a host of other administra-tive departments including public safety and public transit vehicles in less than two hours.”
Sharpe says she inventories ordinary routine maintenance replacement items, such as filters, brakes, lights and tires, and has several local vendors for non-inventoried mainte-nance-type items. To put something into inventory, “we usually set a minimum three-turn in a 12-month period.”
“We’re talking about outsource parts,” Brennan says. “We stock inventory parts that we use on a regular basis. When we do preventive maintenance inspections or get reports that repairs are needed, we will order the item. When you have a repair generated from PM, those parts generally are ordered right then. We will not have them in stock.”
“To control in-house inventory levels, reports are run that show issues by calendar year. That’s what we go by,” Sharpe says. “If items in our inventory are not moving or the parts are obsolete, they are the first to go.”
Brennan explains the steps used in managing the shop department. “The equipment goes into the shop, and after it is determined what parts are needed for repairs, the tech-nician many times goes online and pulls the schematics of the unit, gets the part numbers, and takes them to the parts window.”
The technicians are not restricted financially. If the part seems to cost an exceptional amount, the supervisor is called “to see if it’s needed and he’s good with it,” Brennan says.
Sometimes, however, a technician can under-order. For example, if he comes to the parts window with an order of five or six parts for a dump truck, but Sharpe’s team already knows what the job is, they will look at the order and say, “You may also need these additional parts, so they will call the supervisor over and suggest the additional parts be ordered at the same time.”
Sharpe says she has very good business relationships with many vendors through having worked with them for many years. “They know, for instance, we have a fleet of
Chevrolets or John Deeres that may use the same type of parts,” she says. “If we ask them, they will stock the parts for us. If we have a project going on, they may pre-order repair items for us in order to have them on hand when the equipment comes in for repair. With heavy equipment, they will work with us to keep some parts on hand so we don’t have to put money into them.”
OEMs are good partners as well in parts management, says Brennan. “They know what’s going on and will call us if they spot an issue with an item. We also work with man-ufacturers of components, such as drivelines. We work with literally hundreds of vendors.”
Both Brennan and Sharpe strongly believe in using multiple sources for parts, he says.
“I don’t believe in single source. I don’t believe it works,” Brennan says. “An advantage of using several vendors: You can buy any one of them. We don’t have a lot of spare assets, so if we need something, we need it now and we just can’t wait. If I relied on a single vendor, I would be putting all my eggs in one basket, and I don’t believe that works.”
When Brennan has to buy parts for highly specialized equipment, however, he generally uses the OEM as a sin-gle source. For instance, his pothole patchers come only from a single-source OEM in Kansas. “But they know that, and they will ship second-day-air at a reasonable price so we don’t have to stock a lot of occassional used parts for them.”
One thing Brennan and Sharpe keep in mind: There is a cost to inventory, and you have to manage that inventory to make sure there is no waste on the shelf. Since Manatee County is a government operation, it often has to contact several sources for bids and get the best price it can.
“We generally will not issue a purchase order to a single vendor, so if Vendor A is currently out of stock, we auto-matically go to Vendor B. We will not let a single vendor bottleneck our operations.”
As Leigh Dennis, CEM, at Carolina Sunrock says, effective parts management may not be glorious, but it is necessary for survival, whether it’s an army or an equip-ment fleet. EM
“If we ask them, [vendors] will
stock the parts for us. With heavy
equipment, they will work with us to
keep some parts on hand so we don’t
have to put money into them.” — ANGIE SHARPE,
MANATEE COUNTY FLEET SERVICES
Equipment Manager
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24
Telematics: Worth Another Look
The telematics system on a Caterpillar motor graderhas an alert called “coasting into park.” What thatmeans, says Juan Ramirez, Jr., CEM, equipment
manager with Bechtel OG&C, is that the machine opera-tor is “cruising into a stop” rather than bringing the machine to a complete halt and shifting it into park.
“We can go to the operator and stop him,” Ramirez says. That is the kind of data he needs to manage his par-ticular heavy fleet applications. At the moment, his equip-ment is on a liquefication plant project in Gregory, Texas, about 12 miles from Corpus Christi.
Ramirez’s involvement with heavy equipment came at the early age of 16, eventually leading into a career that included combination mechanic for a company in Santa Ana, Calif., where he was promoted to various projects across the state as well as Texas and South America. Heeventually became equipment superintendent for all of Latin America for Bechtel. As such, Ramirez was responsi-ble for overseeing five major mine construction projects:two in Peru, two in northern Chile, and one in centralChile that included mining process plants.
The combined fleet of 2,500 units varied from 35-tonrough-terrain cranes, up to 400-ton crawler cranes, earth-moving machines, large trenchers, trucks, and small equip-ment. The fleet is mostly owned, with about a third of the units being third-party rentals, he says.
As equipment manager for Bechtel, a company he’s been with for six and a half years, his duties include writ-ing specifications of heavy equipment and “helping the procurement team technically accept the equipment.”
“We inspect the units before we even buy them if used,” he says. “We maintain them on site. We do the fueling. We do the tracking of hours and PMs and recon-
BY G. C. SKIPPER, CONTRIBUTING EDITOR
Equipment Manager
winter 2016
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figuration of cranes.” When telematics came on the industry stage stronger
than ever in 2000, Ramirez says there were growing pains. “I started working with the telematics at that time, and by 2002 we had a good system functioning that gave us what we needed. Maybe not everything other fleet managers wanted, but it was enough for my needs at the time. It took me two years to get a good product that worked,” Ramirez says.
After that, telematics really took off, he says. A lot of ven-dors surfaced and “OEMs like John Deere and Caterpillar had their own telematics, but they weren’t used all that
much back then,” he says. “Today, it’s an everyday tool.”
Measuring his individual comfort level, Ramirez says, “On a scale of 1 to 10 I am comfortable on number 8 simply because there is more room for improvement on cer-tain brands. There are still some issues that go on. You also have to have good connectiv-ity and good cell coverage—some kind of cell signal or Wi-Fi for them to work.”
Outstanding changes in the technology as they now stand have made a significant dif-ference for him.
“Everybody has really gone their own way to kind of please their customers,” he says, “and even OEMs wanted telematics to tell them certain things that not all end users needed or wanted.”
Because of the new technology, a lot of the issues in the past have gone away.
One of the major developments that is going to continue to help out tremendously, says Ramirez, came last year when AEMP acted as the tip of the spear in driving efforts to create industry telematics standards.
“Now we have the same standards going forward. Now we are on track. This is one of the key changes and key benefits that have occurred. Going forward should be easier,” Ramirez says.
When OEMs came to the table, “it made it easier for us. As an equipment manager, I
count on telematics and the technology behind it to manage my fleet, to make sure it is functioning properly, and to do my job properly. These are great tools to get your job as a manager done,” Ramirez says.
His partnership with dealers has worked well, he says, because of constant back-and-forth communication. Dealer feedback produces critical information, Ramirez says, explaining that dealers “are at the forefront in moni-toring their equipment, receiving the alerts, and notifying us that something is wrong.”
The real benefit to the partnership is that the informa-tion received is real-time data.
“By having real-time data, you can become a real-time preventive maintenance department rather than a reactive one,” he says. “Another proactive approach is creating scheduled-ahead preventive maintenance intervals.”
The look-ahead approach lets you become a proactive PM team, not just putting out fires, he says. You know what’s coming, and you can prepare your people and the consumables that are going to be needed.
“Out here it is a rat race, and having a dealer partner makes it a lot easier in the management of heavy equip-ment,” Ramirez says.
Despite the improvements made in telematics and the real-time data that it produces, despite its significant leap forward in strengthening and refining even further the Equipment Triangle partnership, Ramirez says, a reluctance to use the technology still lingers among some fleet managers.
“Hopefully, I won’t offend anybody, but it is the older gentlemen who don’t care about it. I think the younger gentlemen in this business really embrace it,” says Ramirez. “It is the old-school type of guys who don’t want it. They get frustrated because of the connectivity and all the things it can’t do, the installation, and all that causes them to push back. But the partnering with an actual vendor that has this technology means telematics comes installed, it comes ready to go, and if you do have a problem the ven-dor will fix it for you.
“There are a lot of things that have changed since we first tried using the earlier versions of telematics, so I would encourage everyone still reluctant to telematics to take another look at it. It’s a very good equipment manage-ment tool.” EM
25
“There are a lot of things that have changed since
we fi rst tried using the earlier versions of telematics,
so I would encourage everyone still reluctant to
telematics to take another look at it.” — JUAN RAMIREZ, JR., CEM
aemp.org
BY G. C. SKIPPER, CONTRIBUTING EDITOR
Tomorrow’s workforce requires developing strategies today
Chasing changes in technology in recent years has become a successful fleet manager’s way of life. But while many professionals have been tightly focused,
for instance, on the progress of telematics, another more subtle development continues to take place. The growing diversity in industry demographics is a game changer.
“It shows us what tomorrow looks like, and we under-stand what that means down the road,” says Craig Pintoff,
senior VP, general counsel and head of human resources for United Rentals. “We are trying to get everybody involved, and this is not just a certain race in any shape or form.” Pintoff cites the Brookings Institution, which projected that traditional minority groups will become the majority by 2030.
Pintoff, who serves on AEMP’s diversity committee, says, “AEMP finally has such a committee. You might say
winter 2016
COURTING DIVERSITY
26
Equipment Manager
27aemp.org
“From an ethnic diversity snapshot, we probably have about 25 percent representation, so there is a significant opportunity there for improvement. From within our organization, that is more of a struggle. We have less than 1 percent representation of women at management and non-management levels. I wish I could say we had a pipe-line of 25 candidates and that a third of those candidates were women and persons of color, but that is not always the case. We have to go out and proactively find the talent and really sell them on why Waste Management is a great place for them to work. There is not a great deal of female interest in these jobs,” McDuffie says.
One organization that is trying to leverage the principles of diversity and inclusion to attract top talent into the con-struction industry, industrial construction, material suppli-ers, and industry support services is the Associated Builders & Contractors (ABC), says President/CEO Mike Bellaman.
As an association, ABC operates a diversity inclusion framework and has a national diversity committee com-prised of volunteers from across the country. The commit-tee created a strategy that includes the formation of diver-sity resource groups made up of associates with common interests—race, gender, goals, ethnicity, etc.; holds an Annual Diversity Summit; and recognizes diversity and inclusion with its Diversity and Inclusion Excellence Awards. The association is in the process of deploying diversity resource groups, something that is transferable, that apply to member companies.
Bellaman says ABC has six such groups: women-owned businesses, veteran-owned businesses, Hispanic-owned businesses, Asian-owned business, business owned by peo-ple with disabilities, and businesses owned by African-Americans. These groups, he says, “perform a vital role articulating and supporting the needs and goals of these various constituents, as well as helping to develop a culture of diversity within ABC.”
Essentially, what the groups do for ABC is help it under-stand if there is a need to alter, enhance or change its “value proposition to the various constituents,” says Bellaman. It’s obviously best to have people from those groups giving you direct feedback, suggestions, and ideas, he says.
“That provides content for our annual Diversity Summit held in Washington,” Bellaman says. “The Summit is tied into our legislative conference, and what we like to do is tap into these groups to understand what kind of content would be of interest.”
The diversity resource groups also yield suggestions on good speakers for the Summit, and the Summit reveals potential business opportunities from clients that value using minority business enterprises.
Bellaman says a speaker last year discussed a master plan at Hartsfield-Jackson Atlanta International Airport that represented about $5 million worth of work. “That was a very attractive piece of content that was born out of the interest of these groups,” he says.
there was Diversity 101 and, at present, there is Diversity 102. Now, what do we do with that in the industry? What do we do for technicians?”
Melkeya McDuffie, VP of talent acquisition for Waste Management, describes herself as a woman and a person of color. “When you look at demographics of the labor work-force in general, you take notice of the fact that women represent about 57 percent of the labor force in the United States. We at Waste Management want to make sure we have a fair chance of competing for that talent.
>> United Rentals has a forward-looking strategy to not only ensure its workforce has input on corporate strategies, but also to develop managers that can create cohesive teams and be strong leaders.
28 winter 2016
Bellaman says the Summit has created additional dia-logue with minority business enterprises.
“They want to have access to the opportunity to win work and want to be awarded work on the basis of the value proposition they bring to the table,” Bellaman says. “They don’t want handouts. They’re interested in being successful. Our members in our industry care about what they bring to the table, the quality of the work prod-uct, and what ethic product you bring to the table.
“We want to put the best team on the field. It doesn’t matter about your background, your heritage, or what you look like. It’s all about the talent you bring to the table,” he says.
Training is part of the Summit as well. Not only does ABC want to be attractive to minority-owned businesses, “we also are trying to educate others on how to best work with minority-owned busi-nesses,” he says. “We have a lot of chapters who do a lot of local networking.”
By and large, non-minority enterprises are
looking for strategic partners. They are meeting with minority-owned suppliers to see how they can fit into their supply chains. There is supply and demand on both sides.
The employee diversity resource group strategy is also used at United Rentals, says Pintoff.
“They are field-led with executive sponsors, and their mission is to provide a forum for our employees to discuss
topics of importance to them, from career develop-ment to customer service to company policy,” he says.
Pintoff says he has attended numerous Women United forums across the country. In turn, “hundreds of women in our company have attended to talk about how we can get better at attracting and retaining women by giving them meaningful careers.”
The sessions explore topics that are important or unique to that particu-lar group. What type of training should the com-pany install as a result of these meetings?
“It has led to parental leave policy extensions, to training, and to charitable
>> Waste Management has had success partnering with the military, and also works with community colleges and technical schools. Its in-house apprentice program trains technicians.
Equipment Manager
>> Panel members at ABC’s Annual Diversity and Inclusion Summit include ABC President/CEO Michael Bellaman; Michael Russell, HJ Russell; Eric Krueger, Balfour Beatty; Chrystal Stowe, Smoot Construction Co.; Linda Graves, Gilbane Building Co.; Amber Peebles, Athena Corp.; Brad Lewis, Hensel Phelps.
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efforts,” he says. “We want our managers to be strong lead-ers, including managing a more inclusive workforce. With the workforce changing from what it used to be and with the company accelerating that change, how do we train managers to create inclusive teams that recognize differences and recognize that their own behavior may have unintended consequence that they don’t know are happening?
“This goes beyond the legal foundation,” Pintoff says. “That’s not what this is about. The training is about how our managers can develop into stronger leaders who can build cohesive teams.”
One such program, called Lead Start, is for new manag-ers. Another program, Foundations of Management, is designed for leaders in the field, such as branch managers.
“Both programs cover not only their leadership style, but also how they address leading a diverse team,” says Pintoff. “It is awareness, it is exercises. It is case studies for our new leaders and our experienced leaders.”
United Rentals also has other ways to monitor diversity. Among them, frequent town hall meetings and engage-ment studies “tell us if there are challenges in different branches or if there are organizational internal themes that
could be convening for us,” Pintoff says.Surveys are conducted to provide insights that result in
a better understanding of geographical differences. “To me, I don’t think any of these things are individually unique, but when you package them all together and have focus, they tend to drive outcomes that are positive,” Pintoff says.
At Waste Management, McDuffie says her company has strong ties to the military, especially since the U.S. mil-itary is quite diverse in and of itself.
“As an organization, we have received numerous recog-nitions and accolades with respect to our partnership with recruiting from the military, and for our success in hiring, for the most part, large numbers of veterans over the last six years,” she says. “We increase the number of military hires year by year, which also equates to diversity.”
In fact, Waste Management’s Technician Apprentice Program has been beneficial in building up a pipeline for
entry-level fleet positions. “As you know, there are fewer people in general who
are pursuing skilled trades as a career path,” McDuffie says. “As such, we want to encourage people to recon-sider this line of work and come build a career path with Waste Management.
“To accomplish this, we work to foster relationships with local community organizations as well as community colleges and technical schools that have a diesel tech pro-gram in order to find apprentice-level technician talent. And when you look at the demographics of these schools, while they don’t generally have a high number of female enrollees, we do find quite a bit of ethnic diversity in these programs.”
She says Waste Management partners with those educa-tional institutions to develop apprentice programs where the company provides part-time work to students while they are attending school full-time.
“Once they have successfully completed our apprentice program, we hire them full-time into a technician role. That’s how we start to build our diverse talent pipeline,” she says.
The company has also maintained a strong focus on cultivating relationships with community and pro-fessional organizations to attract both female and minority employees.
“If we are recruiting talent here in Houston, we want to make sure that we are identifying organizations that have rich female and minority representation,” she says. “We have cultivated relationships with the Chamber of Commerce, community organizations and many local pro-fessional groups, as well as on social media platforms.”
In an increasingly competitive economy where talent is critical to improving the bottom line, she says, “solutions from the largest and most diverse pool of candidates are increasingly necessary to succeed and grow as a business.
“When you have an environment where diversity is val-ued and appreciated, then you have a tendency for high engagement and greater discretionary effort.” EM
“We want to put the best team
on the fi eld. It doesn’t matter
about your background, your
heritage, or what you look like.
It’s all about the talent you
bring to the table.” — MIKE BELLAMAN, ABC
30 winter 2016
Stage Set to Discuss Results of Fleet Replacement Study
In the spirit of ensuring the sustainability of partner-ships within the Equipment Triangle of OEMs, deal-ers and end users, Komatsu America approached
AEMP to conduct a survey of its members. The survey asked several questions, but focused on
Tier compliance and fleet replacement policies. More than 100 fleet managers responded.
The implications of the survey results will be discussed extensively at AEMP’s 35th Annual Meeting, set for March 5-6, 2017 in Las Vegas, in conjunction with ConExpo. Komatsu, other OEMs and equipment manag-ers will discuss the results in an interactive session with attendees of the conference. More information on the Annual Meeting is available at www.AEMP.org.
Among other things, the brief survey sought the opin-ions of fleet managers regarding fleet replacement policies based on a machine’s emissions level (Un-tiered, Tier 1, Tier 2, Tier 3, Tier 4 Interim, Tier 4 Final). These answers sometimes raised more questions about under-standing the influence of emissions regulations and Tiers on machine replacement schedules and life-cycle costing. What seems obvious with a cursory look at the data can be a bit misleading.
The survey collected information that benefits OEMs and dealers, and provides heavy equipment fleet manag-ers an understanding of what other professional fleet managers are experiencing. According to Komatsu, the feedback could inform manufacturing decisions, replace-ment parts production and distribution, and how an OEM might better understand and support an equip-ment manager’s organization.
Komatsu America’s Ken Calvert, Director of Business Solutions, and Matt Beinlich, the Deputy Director of Business Solutions, analyzed the survey data along with AEMP, and some of the observations are reported here.
The presentation in March will tackle some provoca-tive topics: Why do some companies have replacement policies, while others do not? And what kind of profes-sionals answered the survey? The material in this article only touches on some of these issues.
“One of the things that prompted the survey was that the marketplace was just not supplying enough informa-tion about our customers, and a survey can provide the extra insight you can’t get from market data alone. The results showed me that people with significant industry knowledge and experience answered the survey; all these opinions count,” Calvert said.
Beinlich’s perspective comes from a professional life built around the knowledge that “every five years there will be new technology and it will probably change a lot about how we do things.” He spends his time with dis-tributors and customers as a liaison between sales and Komatsu’s manufacturing function. His job is to meet customers face to face and hear from them about techni-cal issues, functionality, downtime and the longevity of Komatsu machines.
“We give customers the information they need to feel better about adopting more advanced technology,” Beinlich said.
As we will see, some fleet managers are much less likely to have replacement policies, some have a higher percentage of Tier 3 machines than you might have sup-posed, and AEMP members want their association to offer more education on these important issues.
Together, the survey questions and the material gleaned from the answers provides the information that each side of the Equipment Triangle can use for the bet-terment of the industry as a whole.
What follows is a partial look at the survey questions and what the respondents told us:
BY RICHARD K. JEFFERSON
Equipment Manager
aemp.org
ExperienceGraph 1 shows about 50 percent of the respondents
have 16 or more years in the industry, as fleet managers or in a related capacity.
This could mean there is some evidence here that sea-soned professional fleet managers are somewhat less likely to have replacement policies. But, as with any survey, a cautious approach to the apparent results is vital.
Another way to parse Graph 1 is to say that 10 percent entered the profession after Tier 4 Interim went into effect in 2011; 30 percent entered after Tier 3 went into effect in 2006; 46 per-cent after Tier 2 in 2001; and more than half the fleet managers who responded—55 percent—started their life in the industry after Tier 1 in 1996.
That means less than half of the profession remember a time before emissions regulations were part of the everyday job, and emissions regulations have constantly become more stringent for the other half.
“Today, for those who entered the industry when I did, 15 to 20 years ago, emissions requirements and new technologies for regulatory compliance, such as selective catalytic reduction (SCR), diesel exhaust fluid (DEF), and diesel particulate filters (DPF), are just a matter of course. We take for granted the necessity of electronic controls, high-pressure fuel injection, exhaust gas recirculation, low sulfur fuel, and extended oil drain inter-vals,” Beinlich said.
Average fleet sizeFrom a bird’s eye view,
Graph 2 tells us that 70
percent of respondents have 100 or more machines in their fleet, and 30 percent have larger fleets of 500 or more assets.
“A fleet that is 100 assets or more is probably a slow-growth asset that has increased during many years of pur-chases, including mergers and acquisitions combined with new and used purchases. This creates rainbow fleets, not just from a brand perspective, but also from an age of the machine/Tier perspective” said Beinlich.
31
32 winter 2016
Tier makeupGraph 3 illustrates that the largest percentage of
respondents—30 percent—are retaining their Tier 3-compliant machines. There are several possible expla-nations for this Tier 3 bubble.
“It’s hard to say what drove the acquisition of so many Tier 3 machines, but one thing that has to be taken into account is the feeling of a boom around 2006. With the sense that there was plenty of money in the bank and good cash flow, a lot of contractors bought equipment in those years. And that meant that a lot of machines were manufactured during those years,” said Beinlich.
“The survey tells us that customers are holding on lon-ger to machines with Tier 3-compliant engines that we might have expected. Tier 4 machines are not as easily exportable, and there are exogenous economic factors, such as oil and fuel quality/costs. Customers feel forced to keep Tier 3 a little longer than we guessed,” Beinlich said.
As with other manufacturing companies, Komatsu can still sell Tier 3 machines in Canada and Latin America, but not in the United States.
Calvert explained that a greater degree of certainty is also at play. “Fleet managers don’t want to be inconvenienced because of what is perceived by some as unnecessary com-plexity. Some of the new Tier 4 Interim and Final machines haven’t been around long enough for fleet managers to feel that they have the same comfort with newer models as they do with the older, simpler machines,” Calvert said.
Replacement policiesSurprisingly, only 60 percent of heavy equipment fleet
managers have replacement policies. This probably seems like a low number, but, as discussed above, the differences within the industry in thinking about fleet management may offer some insight.
“Given the respondents’ experience and fleet sizes, it appears likely that there are, generally, two schools of thought about replacing fleet assets. Under com-mand and control, the rules for equipment decisions are written ahead of time to determine future behavior; this method uses thinking fixed at a certain time. Then there is systems-based thinking that acknowledges
that equipment decisions are very complex and should be made based on prevailing conditions,” Beinlich said.
However, there is often a strong intuitive element in deciding to spend big dollars on new machinery. Sometimes an experienced fleet manager believes they “just know” when a machine should be kept on the job with repairs, or that it’s time to send it to auction.
Beinlich, who spends substantial time interacting with dealers and end users, said that data on key categories is a good way for fleet managers to make buying decisions. When you combine information about all aspects of equipment—hours run, age, use, costs, budgets, back-logs, machine type, market value at the moment, regula-tory compliance, etc.—you can establish protocols for maintaining and selling machines.
Replacement factorsHow problematic does a machine have to be to dis-
pose of it earlier than originally planned? The answer may seem counterintuitive, but generally, respondents to this survey said they replace later Tier machines more fre-quently than earlier Tier machines. The exception to this rule is Tier 4 Final, which respondents apparently replace less frequently than Tier 4 Interim, as seen in Graph 4 on the following page.
Deserved or not, “Tier 4 Interim may have a reputa-tion for less durability than other Tiers; the earliest Tier machines may be in backup roles or otherwise forgotten about relative to later Tier machines; and since there is no ‘Tier 5’ on the books at this time, respondents may consider Tier 4 Final to be their last buying decision
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influenced by emissions regulations,” Beinlich explained. The economic conditions since 2008 have been a fac-
tor across the industry, but another part of the explana-tion is the way fleet managers have to ferret out every possible advantage. Uncertainty is a disadvantage. As Calvert said earlier, fleet managers prefer as much certi-tude as they can get, and that sense can be obtained with a machine you’ve known for a while.
Keeping equipment longerThe results for this question may seem to say that
every fleet manager has their reasons, and those reasons may be hard to clarify.
Generally, today’s machines are well-manufactured, so long-term repairs can be managed, and that makes it attractive to keep machines longer than usual, according to survey results. And again, the sense of equipment having been dependable can contribute to longer-term ownership.
Survey results show that current workloads, project extensions, the price of new machinery, parts, and technical support all play a role in keeping machinery longer than usual. Fleet managers also tell us that specialty machines can be hard to replace. “If it makes financial sense to repair old iron, folks will pay to do it,” Beinlich said.
Data seems to be having an increasing role in purchas-ing decisions, as “emotion does not trump economics, from what we can see,” Beinlich said.
Disposing of equipment earlier“Most prominently, respondents answered that mainte-
nance costs were the top concern here, followed by
production loss. When rebuilding older machines, customers are sensitive to overhaul costs and demand reliability after the repair,” Beinlich said. Perhaps sur-prisingly, operator prefer-ence and green initiatives did not appear to have sig-nificant influence on whether a fleet manager elected to dispose of equip-ment earlier than usual.
Replacing technology As indicated above in
the Tier 3 bubble, roughly 25 percent of respondents will keep Tier 3 machines longer than earlier or later Tier machines. The effect was slightly exaggerated for
Tier 4 Interim and Final.“While this may not quite qualify as a paradigm shift,
there will be industry repercussions as one in four end users change their buying and management practices,” Beinlich said.
New machine sales could be slower, and OEMs may feel pressure to keep parts inventories high.
SummaryTo summarize, the survey results show: • More experienced fleet managers seem less likely to
have replacement policies.• Fleet managers who do not have replacement poli-
cies are more likely to want AEMP to offer education on replacement and other life-cycle decisions based on equipment tiers.
• Smaller fleets had the largest percentage of non-Tiered machines.
• Large fleets had the largest percentage of Tier 3 machines.
AEMP has heard what fleet managers want and will soon be offering additional education covering how Tier regulations affects fleet management.
For a complete, detailed look that survey data, you can join AEMP at its 35th Management Conference & Annual Meeting in Las Vegas, March 4-6, 2017. Check it out at www.AEMP.org. EM
Rich Jefferson is a Contributing Editor to Equipment Manager, and a content provider for AEMP.
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