Wednesday, September 12, 2012

GrinderGuy Under Repair




Send your questions via email or Twitter. After years of running and selling Heavy Equipment, the GrinderGuy is heading in for some maintenance. Be off a month or so with some Spinal Fusion Surgery.
Looks like the Laser Spine Institute did a good job,



Hey Grinder Guy, How Much Should I Charge for Contract Grinding?



Great Question.
In a perfect world, you would know your costs, add your margins and submit your price. Knowing your real cost is the dilemma in this industry.
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Several factors weigh into how much you CAN charge for your grinding services:
·         Competition- This is the number one economic factor. Obviously the more competition, the less you are able to charge. For example, back several years ago, clearing and grinding for $3000 per acre was the norm. Then as clearing jobs dried up the price went to $2000 an acre, then $1000 an acre and then finally some companies were grinding for free so they could capture the materials to supply fuel contracts that they were tied to. That put a lot of others out of work……..and nobody ended up making money.
·         What materials need to be ground? Shingles or Pallet Wood? There is a huge difference in wear life of screens and tips. If you haven’t ground shingles before, you sure don’t want to quote a price not knowing what your cost will be.
·         How fine are you grinding the materials? Making a 1” mulch product takes a lot more fuel per yard to make than say a 6” minus fuel product.
·         What equipment is being supplied. Just the grinder? Or is support equipment needed also?
·         Equipment moves and Travel Time- Generally, a per unit price is given to move the equipment to and from the jobsite. A lot of Contractors do not have their own truck to move equipment, so they sub it out and charge their customers a flat fee. Employees travel time to and from sites are sometimes paid. Just depends on your employment. Not always, but in general, company employees that report to an office or shop location daily, are paid to travel to an outside job while in other situations, such as Union Construction for example, employees move from jobsite to jobsite and travel is not paid.

One major issue of travel, with any employee, is travel expenses. What expenses are covered and which are not? This seems to be a moving target with some companies. When things are good, a lot of things are overlooked, but when costs get scrutinized, companies generally go overboard and cause resentment. When a 99 cent draft beer isn’t reimbursed but a $1.50 soda is, that doesn’t make sense. The GSA publishes Per Diem Rates for Hotel and Meals per State, County and even some Cities @ http://www.gsa.gov/portal/category/21287 . You can use these rates as a general guideline or set your own rules, but make them clear and reasonable. Some companies just give their employees a Company Credit Card to pay for Hotels, Meals and Fuel. If you trust an employee to take care of a million dollars worth of equipment, you can probably trust them with a credit card.



            When figuring costs, you can probably use an equation that will conclude your cost is $1 per yard as well as you can find one that will conclude your cost is $10 yard. The best scenario is to figure out what is reasonable income to add to your bottom line. Don’t worry about how much you are making per hour, but rather, this $20,000 will pay two payments on your grinder this year which makes everything you do all year more profitable.

Here are some estimated pricing thoughts and issues, but remember what you are grinding and how you are grinding are different in most cases:
  • Typically large 1000 HP Grinders or Shredders on landclearing type debris would be in the $300-$500 an hour range plus support equipment. These rates are the same for shredders even though your costs are significantly lower with shredders.
  • If you can charge by the ground yard, you know you are getting paid for all that you are grinding and the customer will know his actual cost per yard of material. Then it is easy to price and plan for sale. The customer would then not care if you were grinding 100 yards an hour or 500 yards an hour. But you will need an accurate way of measuring the amount ground, such as hauling off all the material. Just measuring a pile after its ground doesn’t take into account all the compaction and material loss on the ground. These jobs are usually in the $3-$5 range.
  • If you measure and charge for the pile that needs to be ground you know you are getting paid for all that you are grinding and the customer will know his actual cost prior to the grinding being completed. You will need to view the material beforehand to see what type of materials, logs and stumps which cost more to grind, or brush which costs less. Check for compaction in these situations also. These job are more in the $1 -$3 range
  • Charging by the acre is pretty much the going rate of the area,$1000-$2000
  • If you charge by the hour, you must go off an hour meter on the machine or something similar. If your employees take an extra 15 minutes for lunch or show up 5 minutes late, the customer is concerned that they are paying hundreds of dollars an hour and not getting what they paid for. They also get concerned when only 100 yds an hour are being ground instead of 500 yds an hour.
  • Consider trading grinding time for materials or fuel, etc.
  • If the customer supplies support equipment, be sure the equipment is adequate enough to serve your grinding needs or your 1 week job turns into tying up your grinder for 2 weeks.
  • Consider a discounted rate for an extended contract or repeat grinding jobs.

Another issue you may consider is insurance. Be certain your coverage includes offsite work and that your liability coverages are adequate for the areas you are working in. This includes your transportation coverage and your subcontractors coverage. If your subcontractor has an accident with your three quarter of a million dollar grinder, make sure his coverage isn’t for $125,000. The Grinder Guy was in this situation personally and that’s why I am telling you now.


In addition, one provision you may want to put into an onsite grinding contract is that the customer be responsible for any damage to your grinder as the result of contamination in their piles. They may say their pile is clean but you didn’t pile it there, they did. If you run an excavator tooth, that just happened to be in the pile, through your high speed grinder, you don’t want to have to pay the $30,000 repair bill.



So in conclusion,
  • What needs to be ground and to what size?
  • Try and find out the going area rate
  • Cover yourself and your equipment
  • Figure out Expenses- Travel, Per Diem, Mileage, Transport
  • Find an accurate, acceptable measurement for billing


Dave Whitelaw, www.askthegrinderguy.com

Hey Grinder Guy my fuel bills are costing me my profits!



Like every other consumer, those of us in the recycling world are suffering from high fuel prices, times the dozens of pieces of equipment we all have. If your contacts do not have a fuel surcharge option, you are going to keep losing profits.
My calls inquiring about low speed high torque shredders have increased dramatically. When I tell customers they cut 2/3 of their fuel bill out and oh by the way, your shredder tips last a couple months, there is no formula a little less production doesn't save you thousands of dollars in operating cost.
With some 1000+ HP grinders using 40 or 50 gallons of fuel every hour, your fuel bill exceeds $200 an hour. That is painful and unsustainable without raising prices.

I am no engine expert, but I have learned a few things running equipment. Here are some grinder specific and equipment in general ideas on how to conserve fuel. Just a 10% savings will mean thousands of dollars at the end of the year:

Air Cleaner- It doesn't get much simpler than this. Without enough air, your engine will never burn all the fuel being dumped into the engine. If you see black smoke from the exhaust, the first thing to check is the air cleaner.

Fuel system- Fuel system treatments and clean fuel filters keep the correct flow and volumes running through the engine. Some fuel treatments are expensive, but especially for older engines, will help them run much more efficiently. Have a Service Technician from your engine manufacturer test each injector and they will be able to tell you which are operating correctly and which need replaced.

Derate your engine- Have your engine manufacturer derate your engine to a lower horsepower. Each engine has 3 or 4 horsepower ratings, so by lowering your horsepower you can save fuel. Talk with your engine manufacturer about the pros and cons. You will probably not notice a loss of 50-100 horsepower, but your wallet will.

Keep your services up to date- Clean oil will keep an engine cooler and running smoothly. Especially with older engines that operated their fuel systems with oil pressure.

Fuel temperature- Cooler fuel will burn much more efficiently. The hotter the fuel, the more inefficient it becomes. Keep your fuel storage tanks covered and keep your fuel tanks full. Today’s engines return a considerable amount of fuel back to the tank which in turn heats up the fuel. This will be minimized with a full tank.

Clutch/Pumps- Keeping your clutch maintained to proper torque or oils changed as required will create less drag on the engine. Extra pumps used that can be removed will help also. Change a hydraulic conveyor to electric and removed that pump and save the 10-15 horsepower.

New Fuel Systems- With all the new electronics and new common rail fueling systems, some Tier 4 emission engines are getting better fuel economy than the Tier 3 engines.


Speaking with Eric Mathewson and Sam Meeker of Caterpillar at Waste Expo in Las Vegas, they gave a few other options:

RPM Reduction - Something as simple as having the engine computer lower a bulldozer rpm slightly when it is put into reverse can save gallons of fuel per day and not sacrifice productivity.

Tracking software- Common options on equipment these days is some sort of tracking software. Not just some “Find my Bulldozer App.” A product such as Caterpillars Product Link allows you to track many points of operation including idle time. If enabled, a piece of equipment can be shut off after idling a set period of time, thus saving fuel. All these features can be tracked remotely also. Check with your equipment or engine manufacturer for software they may provide.
            Another example is the Ecco mode on the Komptech Shredders. With this mode enabled, the machine monitors the torque on the shredder shafts to determine if there is material in the hopper or not. If there is not, the shredder throttles down to an idle while still turning the rotor shafts very slowly. When material is put into the hopper, the torque on the shaft increases and the machine throttles up to full rpm. So you don’t have to worry about your operator going on break or going to load a truck with the shredder running at full engine rpm. Check with your grinder or shredder manufacturer for similar software.

            On the grinder specific side, eliminating drag on your rotor or hammermill will reduce engine load and result in lower fuel use.
How do we do that?
For example, on a first grind or grinding landclearing debris just for reduction, a precise product size is not necessary. Try using older tips and larger screens. By increasing the distance between the tip and the screen or the tip and the anvil, you will reduce drag which will help you maintain rpm and keeps you productive. This example works best with upturn rotors and woody materials. Downturn rotors and hammermills with stringy wood or palm material, this would not be a good option. For those situations, maintaining a tight tolerance at the anvil and bigger screens and greater tip distance afterward works best. For a finish grind this does not work at all, as you will create more fines in your product and production rates will suffer.
Experiment a little when you have the time and you may be more than pleased with the outcome.

Questions, Comments?
Dave Whitelaw
Grinder Guy 813-421-2757

Hey Finance Guy, the Grinder Guy has a few questions…


            I am always asked about financing and to be honest, as a Salesman, keeping one person as your key go to guy, is difficult to do at best. If they are that on their game, they follow up, get the best product for the customer and are generally a personable person, they usually don’t last long in that position. Their superiors recognize their performance and off they go to greener pastures.
            We found a good company and great guy last year and we’ve been working him hard. They have been a general pleasure to work with and the customers seemed pleased also. So we spent a few minutes with Mark Combs and Gary Bagwill of Snider Leasing of Sacramento, CA and asked them the questions I generally get asked that are never the same with Financial Institutions, but with this information, you can get a jump start on your financing and maybe some ideas to think about.

Q – What should a customer get together prior to calling for financing? Financial statements, tax returns?

A – Requirements for financial information will vary from one lender to another, and is often influenced by the amount of the request to be financed and the credit strength of the Applicant. To use a standard rule of thumb, however, most lenders will be looking for the following:
-           A Credit Application; 2 years Profit & Loss Statements on the business and the principals of the company, (depending on whether or not the company is publicly or privately held); If the year-end of the business is more than 6 months old, an interim Profit & Loss and Balance Sheet will likely be desired; If the business financial statements are unaudited, corresponding Federal Tax Returns for the same 2 year period will likely be required; if the business is closely held, Federal Tax Returns on all principals will also likely be required.

Q – What are good rules of thumb for maximum finance amounts based on income levels?

A – The term of the financing will vary by lender, the type of equipment being financed, the age and useful life of the equipment and the financial and credit strength of the Applicants. Typical terms usually range for 24 months to 60 months. Weaker credits, weaker financial strength, etc. will typically only be considered for the shorter terms. Stronger Applicants can in some scenarios get terms of up to 84 months.

Q – What is an operating lease?

A – There are primarily 2 types of leases. Finance Leases and Operating Leases. There are even often variances of these which are interpreted differently from Lender to Lender but typically an Operating Lease if more oriented toward a structure that is considered “Off Balance Sheet” financing and does not typically lead to ownership of the equipment at the end of the contract. It is also subject to specific accounting and IRS requirements and guidelines and the payments are typically referred to as “Rental Payments” and are tax deductible. The Lender/Lessor takes the depreciation, not the Applicants. An Operating Lease is often more beneficial to Applicants looking for lower payments than traditional financing, unique tax advantages, (such as no Alternative Minimum Tax consequences) and better addresses the obsolescence factor regarding the equipment, since ownership may not be the desired goal at the end of the contract.

Q - Why is leasing better than purchasing or not?

A – There are advantages and disadvantages to both traditional financing and leasing. These will be established by the circumstances of the Applicant as outlined above. In addition to the advantages listed above, typically a lease will offer less initial capital expenditure than traditional financing and, in some cases, more flexible terms and structures. Traditional financing may offer the benefit of a more accelerated write-off under some circumstances, depending upon applicable IRS guidelines and opportunities. A lease may be less impacted by IRS regulations and consequences than traditional financing by virtue of nature/qualifications and a Rental Contract, as referenced above.

            So for your next purchase, or lease, get some options that may benefit your tax position rather than just comparing rates because when it comes down to the end of the year, we don’t care how much interest we paid, we care how much money we made. You can contact Mark Combs at 800-377-8812 or www.sniderleasing.com for more information.

            Also, 2012 is going by quickly. Your accelerated depreciation amount is at 50% this year and you still have your Section 179 Expensing for used equipment. You can get more detailed information at http://www.depreciationbonus.org .

            Questions, Comments, grinderguy@askthegrinderguy.com .

Dave Whitelaw
www.askthegrinderguy.com

Industry loses a Good Man




The Recycling Industry has lost one of its best hydraulic minds in the Country and one good person.
Eric Eskeland, Engineering Manager at Continental Biomass Industries Inc., was tragically killed in a boating accident on Memorial Day weekend.
Mr. Eskeland had been with CBI for the past decade and was one of best hydraulic engineers in the industry for years prior to CBI. Known as "just a great guy" to friends, coworkers and customers alike, his hydraulic knowledge helped advance the automation of grinding and shredding processes that are being used daily by many customers in the Industry today.
He is survived by his wife Debra, daughters Hilary and Heidi and son, Nathan, a Recycling Equipment Salesman at Continental Biomass Industries Inc.


Dave Whitelaw
grinderguy@askthegrinderguy.com

Hey GrinderGuy, my Landfill Costs are killing my C&D Operation!...........



This isn’t really a question, but here’s an answer, STOP GOING THERE!
Obviously if you can avoid it, you certainly would be, but let’s take a look at what you are sending.

First of all most of the C&D systems being sold today are of the same design, whether small, medium or large. Not always, but most of the time they are. Here’s a hint-
FIGURE OUT YOUR MARKETS…before you design your systems.
·         If you are using a float tank to remove the heavies and you are sending your wood and plastic for fuel and the material cannot be above 15% moisture…..Why do you have a float tank?
·         If you are pulling the small lightweight product off of your sort line with air and putting back into you stream later, why are you pulling them in the first place?
·         If your high speed grinder at the end of your system is costing you too much maintenance time and money, why do you have it?

To start with:
·         The number one rule is to keep your materials dry. Rain on your material will cost you thousands at the Landfill. They have cheap fabric buildings these days, which will pay for themselves with the greater production and reduced maintenance time in addition to reducing Landfill fees for the extra weight you are carrying.
·         You need to be pulling every single piece of metal, hard plastic, rock and dirt, shingle, cardboard, drywall. Every piece.
·         If you are able to pile your residue, then operate a second shift to rerun your residue from the first shift and see what you are missing. Dirt stuck to plastic falls off, steel that was buried now gets pulled, all kinds of things happen and rerunning may save you big dollars later.
·         Shredding the residue to reduce the volume and loads outbound will help too
·         Determine where most of your residue is coming from. Is it one type? One customer? Adjust you price structure accordingly.
·         If you purchase a shredder and screener, you can assist in the recycling rate.

In your case, with nowhere to go but the landfill, you must figure out additional markets for the residue.
Most of the residues include mattresses, carpet, light plastics and miscellaneous junk. Find the market for all this material and you will reduce your costs.
·         Mattresses are easily shredded with a low speed shredder and you can recover a substantial amount of steel. The fluff can be sent for fuel.
·         Shingles make up a lot of Landfill weight and have become a problem with disposal lately because of less paving going on. If you can pile them for a while, you can shred and screen them and use those internally making roads and parking lots on your own properties.
·         Drywall shredded and screened is easy to get rid of to a whole lot of farmers
·         One of the best ways to dispose of residue is to shred it for fuel to ship it to some sort of Cofired Plant. Even if the plant is not logistically worth the amount saved, use a web service for transportation options. Many operations use a backhaul from another Carrier to transport their product. The key is to reduce your cost, not necessarily turn a profit. Zero is good here.
·         Carpeting is difficult to recycle, but easy in some parts of the country. Get together with other C&D operators around the country and find out what they are doing with carpet and other materials, get their contacts and other ideas.

Adding more equipment like a shredder and screener does not come cheap. But the multiple operations they become involved with turn you from a mediocre recycling operation into a productive, producer of recycled materials. From the front end reducing mattresses and bulky waste and recovering the steel, to the back end shredding shingles, wood and residue, a shredder pays for itself multiple times over.
A screen will assist you in more applications. Whether it’s screening ground shingles or drywall at 3/8”, dirt at 1 inch or concrete at 2”, you will be able to market several materials that you aren’t currently, with the small investment in a versatile addition.

Join the GrinderGuy and other industry professionals at the C&D World Conference in Nashville, TN March 25-27. For more information call 608-538-3552 or go to http://www.cdrecycling.org .

PROFITABILITY FOLLOW-UP
Following up on our 2011 year end profit increasing ideas, you can find that article here- www.askthegrinderguy.com :
·         Repair and Maintenance- All repairs should be completed, spare parts in stock
·         Equipment Utilization- Rentals should be ordered
·         Products- Production should be inventorying volumes
·         Advertising- Ads, Spots, should be running

Also, for more helpful tips, advice and equipment, visit www.askthegrinderguy.com .
Need us to visit your operation? Have a question?
Drop us a line.

Dave Whitelaw

Slow Down…….smell the Money




One of the best ways to get recycle wood and residue from a C&D recycling line is to grind it to fuel size and ship it to some sort of Cofired Plant or Kiln.“Fuel size” though, is different from plant to plant and State to State.
Generally, wood fired plants can handle a 6” minus product. There are some kilns that use a 3” conveyable material and many others that use a 1” blowable material to mix with their coal. The BTU values of the C&D residue are probably 5,000 to 10,000 depending on the materials being recycled in the systems.
But there is one costly constant that I see continually. There is many times some sort of high speed grinder at the end of these systems. These are probably the most costly parts of the operations.
STOP! Why does the material need to be shredded so fine. The only time you can make a case for it is if you are shipping for a 1” product, but even in these cases the infeed rates are so low there is no need for a big diameter rotor and all its expensive parts and all that wasted horsepower.
A slow speed shredder with a small screen size cannot only make the product you want, but reduce your costs by using less horsepower and limiting the wear to about 1/4 of what a high speed grinder would. The hum of that high speed rotor spinning, whether electric or $4 a gallon diesel driven, is costing you all your profit on the fuel and probably everything else too.
Screens are cheap in comparison to grinders. You really need them to remove the dirt fines from your product and reduce your ash content anyway. So if you have some oversize, scalp it off too and drop out those fines while you are at it. You’ll get more money for your fuel.
Star screens got a tarnished reputation from some of the early years in the industry, but today’s models are nothing like its predecessors. They create less dust than trommels, they don’t plug up like flat decks, you can adjust the sizing in seconds and you can create the multiple products with the same deck.
Review your operations. What if your grinding costs were reduced by over 50% and you were paid more for your fuel?
Got a question? Drop us a line.
Dave Whitelaw