The Cat Rental Store Business Tip of the Month: Repair Or Replace?
Whether to repair or replace equipment is a difficult question to answer.
An unreliable machine with slow cycle times hinders productivity on the jobsite and may be operating at a deficit, due to high repair bills and limited working hours. New machines, or rented machines (usually the latest models), can improve efficiency with faster cycle times, more speed, power, and greater load retention. Improvements in operator comfort also reduce fatigue and may contribute to greater productivity in workers who spend long periods of time in the cab.
Several factors can help you determine whether to make repairs to the older, paid-for machine or bring in some newer iron.
- Resale value. Start the evaluation process by obtaining a quote to trade in the machine.
- Repair costs. Next, seek a quote for the repair including labor and replacement parts. The machine's age may affect the cost of labor. Maintenance to older machines can be more involved and may require more work because the key components may not be as easily accessible as with newer models.
- Estimated downtime. Ask how long the repairs will take. The availability of replacement parts will determine how quickly the shop can repair and return the machine. Lengthy delays for parts can put schedules behind. Manufacturers such as Caterpillar make it a point to have many parts readily available for older equipment - even parts for 30-year-old machines can often be delivered within 48 hours.
After gathering information and running the numbers, examine your situation critically. Be realistic about the life expectancy of your equipment. A significant repair is an investment. You may decide that once repaired, the machine will continue to provide value to your business. Or you may decide not to invest in a machine that yields diminishing returns, but rather put the repair money toward a newer, more efficient piece of equipment.
If you opt for replacement, consider the following:
- Current financial climate. Discuss your situation with your financial advisor or accountant, as there may be a purchase incentive that is dependent on timing such as securing favorable interest rates or tax-related deadlines.
- Other options. There are options besides purchasing, if you choose to replace the machine. Rental providers like The Cat Rental Stores can arrange long-term rentals, or rent-to-own agreements. Some may sell used equipment retired from the rental fleet. Used equipment from an authorized dealer comes with warranties similar to that of a new machine and often a detailed maintenance history, which is vital to knowing how the equipment has been cared for.
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