Business and Finance, Electric Wheel Loaders, Yellowgate

Yellowgate: Less risk, more reward

 

Yellowgate Group’s rent-to-buy solution has helped a leading brick manufacturer trial an innovative electric wheel loader – the first of its type to reach Australia.


Owned by BGC Group and with a 70-year-old history, Midland Brick has established itself as one of the most recognisable brands in Western Australia, producing and selling bricks, roof tiles and pavers.

When the time came to replace one of its old wheel loaders, the business’ strategy to become more energy-efficient was a top priority.

For many years, Midland Brick’s fleet had consisted of machines that all burned diesel, so when looking at a new wheel loader, the company wanted a machine that was emission- free.

Midland Brick procurement manager Kristian Walter said the business spoke to all the big brands in the construction and mining equipment industry, but none of them [at the time] had anything available as an alternative to diesel engines.

Eventually, Midland Brick found what it was looking for in the XC968-EV electric wheel loader, made by XCMG.

“When XCMG introduced this particular loader, it stood out for us,” Kristian said.

“It instantly triggered our interest to investigate it further, look into the cost and see if it would make sense for us.”

However, with no previous experience with the XCMG brand or the model in question, the company was hesitant to buy the machine. This is where equipment rental specialist Yellowgate’s expertise and capabilities in the rent-to-buy market came into play.

Rent now, buy later

With Yellowgate’s Rent Now, Buy Later solution, its customers can quickly access the heavy machinery they need to fulfil contracts while reducing the financial risk involved.

There could be a variety of reasons that make renting machinery a better solution for a contractor compared to buying. For example, the business could be experiencing a period of high growth or recovery, it could still be setting up, or the business owners don’t currently have access to the funds required for outright purchase.

With the rent-to-buy model offered by Yellowgate, a business can quickly access the heavy machinery required to fulfil a contract at a more manageable cost to the business and in a way that provides a more economical pathway to ownership of the machine down the line if the business decides to purchase it.

It is this flexibility and speed of access to machinery that was a key draw for Midland Brick.

“Other business models usually don’t allow you to purchase an asset within a short timeframe,” Kristian said.

“In this instance, we agreed on the rent-to- buy solution, because it allows us to try the equipment and then make an informed decision based on that trial period.”

The solution offered Midland Brick a rental product in the form of an off-book operational expense (OPEX), allowing the business to make manageable ongoing rental payments and get its new XCMG wheel loader earning money on site faster than if it purchased the machine as a capital expenditure (CAPEX), which would have required a far larger financial commitment up front.

Yellowgate managing director Chris McRae said businesses usually have CAPEX budgets and, if the business goes over this, spending will stop. In this situation, Yellowgate can continue to supply the equipment to a business, so it can reap the benefits of the asset immediately and capitalise on it later.

If Midland Brick subsequently decides that it doesn’t want to buy the XCMG electric wheel loader, Yellowgate will take it back and either rent it out again or sell it on – giving Midland Brick the opportunity to try out an electric machine and see if it works for the business.

Another key aspect of Yellowgate’s business is its support for customers.

“We’ve got the ability to grow with other businesses,” Chris said.

“People may be looking at uncertain futures, but our product only goes for 12 months, which can help businesses focus on one commitment.

“If businesses are looking for something that’s 12 months into the future, we can help them get the type of asset that they need.”

Buying the electric wheel loader was the first transaction between XCMG and Yellowgate, with the potential for an ongoing partnership in the future.

The loader is now a permanent part of Midland Brick’s fleet.

The XC968-EV

The XCMG XC968-EV has an operating mass of 18.8 tonnes and rated power up to 280kW (375 horsepower). The electric wheel loader also has a 3.2-cubic metre bucket capacity with a rated load of 5.8 tonnes.

“Without an engine or transmission, the electric wheel loader provides lower maintenance costs for Midland Brick, with this proving to be just one advantage out of many that he says it has over traditional loaders running on diesel,” Kristian said.

“After we crunched the numbers, we came to the conclusion using an electric loader would be cheaper for us to run than diesel.

“The loader is also quiet and there’s no pollution or fumes for the driver, operator and any people close by.”

Despite lacking an engine, Walter says the loader doesn’t lack power and the charging is even easier than refuelling a diesel loader.

After a successful procurement, Midland Brick has Yellowgate as its first point of contact for any future procuring and renting solutions.

“If there are other more innovative solutions or capital expenses coming up, we will be more than happy to engage with Yellowgate and explore that solution,” Kristian said.

For more information on Yellowgate’s Rent Now, Buy Later strategy head to yellowgategroup.com.au

To find out more about the XCMG XC968-EV, contact Steve Lihou on 0459 824 951 or stevelihou@xcmg.net.au

 

 

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