The current buzzword on Wall Street and from management in the rental industry is fleet age reduction. Companies boast of having the youngest fleet in the industry or in their particular market area.
NES' approach is the opposite. Its stated intention is to age its fleet. But that doesn't mean it plans to rent old, junky equipment at cut-rate discounts.
The centerpiece of NES' strategy is its 40,000-square-foot complete remanufacturing facility in Paducah, Ky., which can entirely rebuild an aerial work platform, crane or forklift. The rebuild center, which has a 30,000-square-foot main plant and about 5,000 square feet each in its blasting and painting buildings, evaluates and tears down the used machines it receives with the capability of completely rebuilding every aspect - hydraulic and electric systems, transmission, the boom, all structural parts, the engine, cylinders and bearings.
With a high-quality paint that plant center manager and designer Steve Seiders calls the best available in the industry, the rebuilt machines look as good as new.
Since about half of its equipment is aerial, NES is still one of the industry's biggest buyers of new aerial work platforms. However, its strategy of rebuilding aerial work platforms, fork trucks and cranes provides what it considers a significant competitive advantage. By placing rebuilt units into its fleet at about half the dealer net cost - including the cost of the purchase of the machine on the used market, plus shipping to and from the rebuild center and the rebuilding cost itself - and then renting the machine at a comparable rate as for new equipment, its margins should only improve.
The rebuild center was developed by Seiders, who also aided in the design and development of a similar facility for JLG Industries. Recruited by Mike Falconite, owner of Paducah-based Falconite Crane & Lift, to build a rebuild center for his company (which he later sold to NES), Seiders came to Paducah in 1997. The facility opened its doors in November of that year. It is about a third larger than JLG's and, Seiders says, he had the benefit of learning from the first facility, with the opportunity to make additions and changes to the second.
The biggest challenge, Seiders says, is not in building and designing the facility itself, but in training people in the production mode. Now at 53 full-time people, with plans for 80 and two complete shifts daily, Seiders' goal is to complete three-and-a-half units per day. The average rebuild time is about 200 hours per unit. He expects to be at close to 85 percent efficiency by August of this year.
Each unit goes through a systematic process. After initial teardown, every component of the equipment goes to a separate inspection area to be tested. Each segment is then rebuilt to original manufacturer's specifications and then painted. The facility even has its own decal shop where it makes new decals at a considerable savings.
Seiders is constantly studying and analyzing the facility's work methods. "For years I traveled in this industry and saw unorganized service areas and, as a result, workers were wasting time," he says. "We focused on everything having a place and being in its place, so I can walk into the shop and know exactly where to go to get a 1/2-inch bolt, and exactly where to go to get electrical parts or an impact wrench." Everything is designed to minimize the amount of time a worker must take to get the tools he or she needs and to limit the amount of time spent in setting up to do a task, Seiders says.
"We want our technicians doing technical work," he says. "In an eight-hour workday, with 30 minutes spent on breaks and cleanup, that leaves seven-and-a-half hours. So what are they doing during that time? Are they trouble-shooting? Are they looking for parts? Are they cleaning parts or moving parts? By measuring those functions, we figured out how to staff the shop. I don't want technicians washing or cleaning parts. We can hire a basic-skill guy to do that for him so he can concentrate on the technical work."
By measuring the time it takes to perform each task, in addition to finding ways to perform them more quickly and efficiently, Seiders can also calculate the costs of each function and of rebuilding each unit. Each worker must log in when he begins working on a particular unit. "I can look on this log and see that, for example, on a boom fork truck, disassembly took 32 hours, assembly took 80, engine 16, paint eight, blast eight and decal four, for a total of 148 hours," he says. "Every worker participates in analyzing how we can improve quality and efficiency. This way we can figure out all our costs for each machine, including labor, the cost of materials, heat and electricity."
Seiders hopes that once the rebuild center reaches maximum efficiency, he'll go on to build other facilities for NES in different regions. He believes that, with the used market overflowing with available machines, the time for rebuilding is propitious.
"In 1995, there were about 39,700 aerials built," he says. "Those units are only 4 years old now. It ramped up to about 67,800 in 1998. So we built this rebuild center at the perfect time because there's a lot of iron available."