The business case for a certified rebuild of Cat equipment is convincing in most cases but for Australian wide, West Australian based rental company, Axis Hire it was compelling.
Taking into account the vagaries of the rental market (not all machines are hired all of the time), being able to tap into a Caterpillar backed rebuild for a high cost capital item, offered the company the equivalent of a new machine at a fraction of the cost.
Rebuilding compared to a new machinepurchase lessens the capital recovery period and allowed Axis to offer plant items that might otherwise not make economic sense on the rental list.
Axis Hire managing director Mark Cates said the company was focused on the mining and civil construction segment with plant in almost every state.
“We operate just short of 800 pieces of equipment Australia wide and that varies from a Hilux to a D10.”
The earthmoving fleet is not particularly diverse in brand with less than a handful of items out of more than 100 that aren’t painted Cat yellow.
Axis Hire plant manager, Mike Brown said the company’s decision to undertake their first Cat Certified Rebuild in late 2019 involved a cooperative arrangement.
“We did a Cat Certified Rebuild on a D10T in our own Bunbury workshop in conjunction with the local Westrac dealer. “It made sense,” Mr Brown commented.
“We happen to share a back fence and have a great relationship so we organised this prior to committing to the process.
Regardless of the location, the CCR process remained true to requirements to ensure full warranty of the machine with a combination of work for the powertrain being shipped to Westrac Guildford and locally WesTrac Bunbury for a full overhaul including dyno testing.
“It was a full machine rebuild – tracks, track frames and we did some of the grunt work ourselves – while Cat did the engine, transmission and differential overhaul,” Mr Brown said.
“We had a fulltime Cat technician applied to the rebuild… and that offered a double advantage as it helped us have the labour to do the rebuild but also meant everything complied with Cat’s Certified Rebuild Program. Setting aside the mechanics, the business case made obvious economic sense.
At the top end of a rental fleet buying a new machine is often not viable, Mr Cates said. “In a rental fleet application we are capital cost restrained because we don’t have the term.
“In this case the tractor was in our fleet, itwas an asset we already owned and it was nearing the end of its service life so it was better to invest the money to make it as good as new,” he said.
“Economically the cost of a rebuild compared to a new machine purchase is not even in the ballpark,” Mr Cates reckoned.
“It’s got nothing to do with capital outlay, it is to do with the hourly return you will get from the machine multiplied by the amount of hours you’ll get out of it and that doesn’t add up to a new machine.
“We can probably never buy a new D10 and have it out on hire – you just can’t do it – there’s not enough margin, so it makes sense to buy a good core used machine and rebuild it and it owe me much less than new.” The D10T had chalked up 18,200 hours with about 3000 of those coming after Axis had purchased the machine used.
“I bought it with 15,500 hours on it as a ‘core’ with view to immediately rebuild it,” Mr Cates said.
“But we did some checks on it and found out the engine was pretty strong and everything was sound, so we spent some money on it to get it right and put it out on a job and the 3000 hours meant it basically paid for itself.
“We then got to point where it was starting to show wear so we pulled it out of the fleet and did the rebuild,” he said. Since then the hours on the CCR have started ticking up pre-stripping for a new iron ore mine in WA’s Pilbara region. With a leading contractor at the controls, the presentation of the machine has been noted.
“He has sent us emails saying it is one of the best rebuilt tractors they’ve ever got,” Mr Brown said.
“We managed to keep our capital cost down and come out with a new tractor – and to us it is new.”
The Cat Certified Rebuild sees machines stripped bare to expose any issues and allow full overhaul or replacement of components using the Cat reusability and salvage guidelines.
“Ground up rebuild’ is literal, Mr Cates said. “It was a bare chassis, crack tested and everything done – it is basically the equivalent of a complete rotisserie rebuild.”
Taking eight weeks all up, and with solid business sums behind the investment, the machine is set for a complete new life.
“We’d like to get 15,000 hours out of the rebuild,” Mr Cates said. “If we can get 15,000 hours without doing anything too major I will be pumped.”
Mr Brown added: “We’ve taken an asset in our fleet and nearly turned it into as good as a new machine. We think it has great value because it has got a full life ahead of it and it also has the Certified Powertrain rebuild plate attached to it.”
“If we need to get out of the tractor it is rebuilt to a standard – it’s not rebuilt by Bob’s mechanical down the road.”
“We got a 10,000 hour powertrain warranty, which we purchased part of, but we were able to do this because it was a fully rebuilt by the OEM and they were involved in the fitting and commissioning of components.”
The process has ticked boxes for Axis Hire. “We’re starting on a Cat 16M grader at the moment and we hope to be able to get that done for under 50 per cent of the purchase price of a new machine,” Mr Brown said.
“The process will prove to be a bargain for us,” Mr Cates added. “Depending on the machine it is borderline for us to buy new in top end equipment like a 16M for rental applications.”
Axis is keen to credit Westrac Bunbury and acknowledge their own team.“We’ve got a reputation for supplying some of the best tractors going out that we want to keep,” Mr Brown said. “No one wants downtime.”