If your heavy machinery is starting to break down or has stopped working completely, it’s time to take action. Generally, you have three choices — repair, replace, or rebuild.
Repairing a machine fixes only the damaged or worn components, and replacement involves buying a new or used machine to replace the damaged one. Heavy equipment refurbishment restores components or machines to like-new condition.
The decision to repair or replace equipment depends on many factors.
How to Know if You Should Repair or Replace Equipment
Certain signs indicate that your machine may need repair or replacement. Reduced output leading to increased downtime indicates a problem. Rising or recurring maintenance costs add to the total cost of ownership and impact the return on investment.
You should address any equipment malfunctions that impact the safety of operators or staff. Additionally, a machine with obsolete or outdated technology may benefit from refurbishment.
When Should You Repair Equipment?
Repair tends to be the best for minor issues when the equipment’s value outweighs repair costs. A dealer can offer expert repair services, such as total maintenance or field service.
Here’s when repair is the best course of action:
- Minor fixes: Repair can be a better choice for minor issues or noncritical components.
- Equipment condition: Repair a newer machine that is in good condition. Well-maintained equipment with current service records may justify repair over replacement.
- Within service life: Equipment that’s within its expected life span benefits from repair. If the machine is still under warranty, you’re covered for repair.
- Minimal downtime: When uptime is crucial, repairs provide a quicker alternative to replacement. Extended downtime can lead to delays and financial losses. In this case, repair ensures projects stay on schedule.
- Budget considerations: Routine or smaller repairs are often more cost-effective. Repairing minor issues before they escalate optimizes your machine’s performance.
- Expert recommendations: A qualified technician can advise you if repairs will restore functionality.
When repair costs exceed operational benefits, consider replacement or rebuilding.
The Pros and Considerations of Repairing Equipment
Repair comes with advantages and disadvantages that should influence your decision. The pros of repairing heavy machinery include the following:
- It is the quickest and easiest short-term fix.
- Repair is more economical than replacing or rebuilding.
- Downtime is minimal compared to other options.
- You can upgrade components for added power or efficiency.
- Keeping machines in operation avoids operator retraining.
- Repairs restore functionality and can prolong the life of your machine.
There are some considerations with equipment repair, such as:
- Repairs only extend the life span for a limited time.
- The cost can add up in cases of expensive or recurring maintenance.
- Manufacturers may not have parts available.
- The repair process may reveal other hidden issues.
- There is a risk of recurring issues.
When Should You Replace Equipment?
If equipment is unrepairable or too costly to maintain, replacement is preferable. Here’s when replacing a machine is the smarter choice:
- Repair costs: Replacement is more cost-effective if repair costs exceed the equipment’s value. The cost of frequent or ongoing repairs adds up over time.
- End of life span: A heavy machine’s life span depends on its type, usage, and maintenance. For example, a wheel loader’s life span is about 7,000 to 12,000 hours, while a forklift’s is around 10,000 working hours. Reliability diminishes as equipment ages. Consider replacing equipment nearing or exceeding its service life.
- Decreased performance: Inefficient performance can affect operations. A machine that fails to meet operational demands may need replacing.
- Outdated technology: Consider replacing machines if newer technology will enhance your business operations.
- Operating costs: Rising maintenance and repair costs may signal a need for replacement. Fuel inefficiency is another reason to contemplate replacing your current machine.
- Operational impact: Replacements can improve efficiency if repairs and unreliability cause extensive downtime.
- Low resale value: Replace machinery with significant depreciation and low value.
Consulting with a mechanic or industry expert can help inform your decision.
The Pros and Considerations of Replacing Equipment
Investing in a new piece of equipment has certain benefits:
- Later models feature advanced technology that can enhance operations.
- New machines have the longest life expectancy compared to the other methods.
- Maintenance costs are lower on new vs. older machines.
- Equipment comes with warranties and manufacturer support.
- New models can improve efficiency and lower operating costs.
The potential drawbacks of replacement include:
- A new machine is a significant investment.
- Replacing equipment can disrupt operations.
- Operators may need training on the new equipment.
- The machine starts depreciating once it leaves the dealer.
When Should You Consider Refurbishing Equipment?
If an older machine is not running as efficiently, consider a rebuild instead of complete replacement. This option restores components or rebuilds machines to like-new condition.
The following factors may make equipment rebuilding the best choice:
- Significant wear and tear: A rebuild can replace worn components to restore functionality.
- High service hours: Rebuilding can revitalize machines at the end of their service life.
- Budget considerations: While pricier than repair, rebuilding is cheaper than purchasing new equipment.
- Upgrade needs: Refurbishing can customize the machine with technology or features for operations.
- Meets requirements: If the equipment still functions, consider rebuilding to improve performance.
- Warranty options available: If the equipment is rebuilt to certified rebuild standards, there are warranty options that can apply to your equipment.
The Pros and Considerations of Replacing Equipment
Rebuilding equipment gives a machine a second lease on life. These are some of the pros of refurbishing equipment:
- A rebuild can update essential components like hydraulics, powertrain, engines, or entire systems.
- Refurbished heavy machinery typically has a higher resale value.
- A Cat® Certified Rebuild extends a machine’s life cycle using genuine Cat parts.
- New models can improve efficiency and lower operating costs.
Heavy equipment refurbishment may have a few disadvantages:
- Reconditioning equipment is more cost-effective than total replacement but higher than repair.
- Rebuilding provides as-new performance, but the used machine will have a shorter life span.
- Some older heavy equipment is ineligible for refurbishment.
A rebuild is budget-friendly for upgrading machinery and delaying new equipment purchases.
Cost Analysis: Repairing vs. Replacing Equipment
Before deciding, analyze the costs of repairing, replacing, or rebuilding equipment.
1. Consider the 50/50 Rule
The construction industry follows a 50/50 rule for equipment replacement. The rule recommends replacing equipment when repair costs exceed 50% of the total replacement cost. Be sure to include labor and parts costs in this calculation.
2. Conduct a Life Cycle Cost Analysis
It helps to conduct a life cycle cost analysis (LCCA) on the machine. An LCCA assesses a product’s lifetime costs, including purchase, ownership, and disposal. Conducting an LCCA on equipment considers ownership and operation costs.
Some costs may vary, such as fuel or market conditions. Conducting this analysis can help decide the best route — repair, replacement, or refurbishment.
3. Evaluate the Costs of Each Option
Repair is usually the most economical, followed by refurbishment, then replacement. Ask yourself the following questions to gain insight into your specific situation:
- Repair: What are the costs of labor and spare parts? Are parts easy to get? Is the cost of repair more than rebuilding or replacing?
- Replacement: Will I need modifications or accessories to increase the purchase price? What are the tax implications? How much will the monthly installments be?
- Rebuilding: Is the cost of refurbishing the machine more than replacing it? Will rebuilding the machine increase its efficiency? What is the price of parts and labor?
Rebuild, Repair, or Replace Equipment With Thompson Tractor
At Thompson Tractor, we offer a full suite of services for Cat equipment. Our Total Maintenance and Repair agreement covers all maintenance and repairs. Do you need repairs out in the field? We’ll dispatch our Field Service team to keep your productivity high and costs low.
If it’s time to replace your equipment, we have an extensive range of new and used heavy machinery for sale or rent. To revive older equipment, our Cat Certified Rebuild program restores machines to like-new.
Contact us today to learn more about how we can enhance your operations!
