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Buyer Be Ready

June 1, 2006
Total cost of operation is what really matters. Here's how some of today's lift-truck buyers get more for their money.

Peter Ulibarri is suffering from the sins of his company's past. Want to help him out? Buy one of his old lift trucks so he doesn't have to sink more money into them. Come on, he'll give you a deal.

Ulibarri is plant manager of Ito Packing, a Reed-ley, Calif.-based company that specializes in preparing fruit like peaches and plums for shipment to stores in his region. That region is one of many that the California Air Resources Board (CARB) wants to cleanse of emissions from internal combustion engines—like the ones on Ulibarri's liquid propane (LP) powered lift trucks. Such emissions are just one of the issues that buyers must consider—along with maintenance costs, ergonomics, productivity enhancing attachments and whether to buy or lease the equip-ment—when purchasing a lift truck today.

Ito Packing has been a fixture in this region's fruit growing community for 50 years. It has 85 lift trucks in its fleet, almost half of which run on LP gas. Some of these date back to the '70s. CARB wants to change that ratio, not only for Ito Packing, but for all owners of gas-powered lift trucks in the state.

"It will cost me $3,000-$4,000 to modify them [to the state's standards], and that's probably what they're worth," Ulibarri says. "In another year the regulations will get tougher and our trucks will have to be inspected and we'll have to get the CARB stamp of approval. If not, then we'll have to see about trading them in or having the government buy them back and using that money to purchase new lift trucks."

In the meantime, Ulibari is finding ways to get the most out of all his current lift trucks, both electric and LP gas models. He works with Toyota Material Handling of Northern California (Hay-ward, Calif.) to maximize his company's return on investment (ROI). Take multiple load handling attachments, for example.

"These transform a lift truck with four sets of forks, so we can pick up twice as many bins," he says. "Those are the kind of new features we're adding on all the time. We're trying to use fewer lift trucks by putting different gadgets on there that can move more fruit and products through the lines."

He makes sure his operators are comfortable too. With employees spending hours at a time on the trucks, ergonomics is key to productivity.

"We make sure the trucks have good cushion," he says. "Most of our LPs are cushion tire because there's a lot of cement. We also try to get the best seats on the lift trucks because the operator is on there from 6-8 hours. Toyota has helped us reconfigure some of our older models to suit the operators ergonomically."

Lease or Buy?
Ulibarri is sold on leasing because he knows exactly what his payments will be and his company can get a better handle on total lift truck costs for the accounting books.

"We save quite a bit of money with our leased lift trucks because when the warranty runs out, the lift truck is gone and we get new ones," Ulibarri says. "Before, with these older ones, it cost $1,200 a year to operate, with maintenance. The newer trucks require less maintenance. On the electrics, with AC drive, there are no brushes to wear out and they have better run times than the older DC trucks. There are fewer components that need to be worked on so there's less downtime."

Ito is able to squeeze extra value from its old LP trucks, and even some of the newer ones it now leases. The company leases 14 LP units—four a year in rotation. The older units spend more time in the dirt of the fields while the newer leased models get trailerloading duty.

"You can't go into the dirt with the electrics," Ulibarri says. "That's why we keep the LP units. They're also a lot faster and we can load up the trucks faster than with the electrics."

Staying Flexible
As senior industrial engineer and project manager for Springs Window Fashions (Middleton, Wis.), Mike Ek-lund likes to stay flexible in his approach to lift truck operations. He uses a mix of Hysters and Mitsubishis for counterbalanced applications in the manufacturing plant. In the warehouse it's primarily Raymond order pickers, sideloaders and swing reach vehicles.

"We make window blinds and handle a lot of long narrow products, whether it's PVC slats for vertical blinds, or a 16-ft. head rail and bottom rail used to fabricate those blinds," he explains. "We also handle a tremendous number of SKUs. Being customer oriented and marketing driven, we have a lot of offerings. We don't have a lot of high volume SKUs of a standard pallet size. That's why our workhorse is the sideloader."

Springs purchases most of its lift trucks and has only a few leased vehicles. But again, Eklund's philosophy is flexibility.

"Every time we make an acquisition we do an analysis to see if leasing makes sense," he says. "The cost of money changes constantly. For the most part it makes more sense for us to purchase vs. lease. The last couple trucks we leased because the cost of money was down. With the cost of money now going up, we may look at purchasing again."

Springs is located in an area with a large manufacturing base, so it has access to a large pool of skilled workers with maintenance expertise.

"We do most of our repairs in-house so it's an advantage to own the trucks," he says. "We also have good dealer support when I'm backlogged or need extra help. As great as the dealer's service is, we can do maintenance cheaper with our in-house expertise."

Elkund's company has a cross-functional purchasing team that reviews every buying decision. It includes engineering (which reviews the design specs), the maintenance group (which looks at the construction of the truck and service history), and the end users in the warehouse (which reviews the equipment functionality). Input from all three groups determines what the company eventually buys.

Like Elkund, many of today's lift-truck buyers have become much more sophisticated than they once were. Mike Gay, sales manager for Abel-Womack Integrated Handling Solutions, a Raymond dealer in Lawrence, Mass., says many technical people in big organizations have been burned in the past by corporate bean counters. If they're refused the kind of equipment they need in the interest of low cost, they should find creative ways to make their point to those who hold the purse strings, he advises.

"One operations manager I know, whose company decided to go with a less productive model due to price, brought a letter into his vice president," Gay recalls. "He said, 'If you are going to make this decision, I would like you to sign this letter releasing me from my obligation to meet the productivity standards you set up.' Being able to get product on shelves quicker adds value, so that was a good move on his part because such decisions really could affect his job."

Customers are also getting smarter about dealing with dealers, shifting from relationship-type buying to more analytical decision making. Mike Yacks, sales director for Sweden-based Atlet Inc., says his company uses the customer's expertise to service them better. Atlet specializes in electric narrow aisle and very narrow aisle trucks. Yacks is based at Atlet's Anaheim, Calif., location.

"We try to involve management and operators in the purchase process," he says. "If you don't involve the operators you'll be making a big mistake because they know where bottlenecks and problem situations arise."

The operator ultimately determines a lift truck's productivity. This is especially true in refrigerated environments. Yacks has provided a customer with heated-cab reach trucks to keep operators comfortable and productive without having to take warm-up breaks.

"Operators need to realize why trucks are being implemented as opposed to management saying here's your new truck and this is how it operates," Yacks adds. "We're big on ergonomics and safety so we want to cover ways to prevent potential back injuries with proper lifting and placement of goods."

Be a Puchasing Hero
Jan-M. Lorenz, general manager at the Cincinnati factory store for German OEM Jungheinrich, adds that the lift-truck purchaser needs to be a hero in the purchasing process. It's an expensive buy, but it can make a tremendous contribution to future productivity.

"In the past you bought a lift truck because you needed it to move pallets," he says. "But with the recent advancements in technology, especially in the field of AC-powered electric lift trucks, this changed. Today, you have to look at the value the equipment adds to your operation. Choosing the most suitable truck for your application can tremendously reduce your maintenance costs. Do I need an LPG truck for going outside of the building, or can the AC-powered electric truck do the same? Total cost of operation is the name of the game. That's why customers are spending more time getting the cost of their fleets under control."

Part of making the buyer a hero is providing easy access to good information. OEMs have invested in training their sales forces and improving their sales tools to help customers educate themselves.

"The easier you make it for the purchasing agent or the decision maker to sink his teeth into your product and your quote, the better," Lorenz says. Dealers need to be "consultants, not salesmen. Give that customer answers to all the potential arguments so he can just take a piece of paper into his boss and say 'Here's the ROI formula and how we calculated it.'"

Tom Andel ([email protected]) has written about and been involved in the material handling industry for more than 26 years.

Peter Ulibarri, plant manager of Ito Packing, Reedley, Calif., has both electric and LP-gas powered lift trucks in his fleet. The LP units give him the speed required to load trailers efficiently while the electrics help lower exhaust emissions.

Ito Packing uses multi-fork attachments to double the loading capability of lift trucks at the dock.

Mike Eklund (left), senior industrial engineer and project manager for Springs Window Fashions, chose Raymond Swing-Reach vehicles to handle long loads in his Middleton, Wis., distribution center. Next to him here are Dave Barsness, warehouse associate, and Jerry Hellenbrand, warehouse group leader.