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CAT backhoes problems

Caterpillar Inc. (CAT), a global vendor of heavy land based equipment from Peoria, Illinois, is well known as the largest manufacturer of construction and mining equipment in the world. One of the machines that do this is the backhoe / loader, commonly used in small ditches and work for companies of public services. The machine is not without problems.

CAT History

Caterpillar has started since the last decades of the 1800s, and is known for its excavators (conducted on the tracks), and the largest mining truck, the CAT 797E. CAT has earned a reputation for producing machines seen as the “gold standard” of heavy equipment in the industry.

Backhoe functions

The CAT backhoe works as any other brand. Its main component is a tractor powered by a diesel engine, and has massive hydraulic systems for front and rear attachments. The front of the machine is a loader bucket-shaped, usually with a capacity of one cubic yard, which is used to move large amounts of land to establish degrees and loading trucks. The back hoe has a digging tool consisting of a main arm, a secondary arm (rocker) and a small toothed hub assembly designed to rip through compacted soil and cement. The end of “hoe” tractor is commonly used for ditches residential utility companies, such as energy, telephone and cable television, and is small compared to most other CAT machines.

Case against CAT backhoe

The CAT backhoe is considered by the operators of construction as the fastest backhoe in terms of daily production of trenches and the most reliable by the number of hours between breakdowns. In the 1980s, CAT decided to start making its own backhoe. One might assume that a company that can successfully produce one of the world largest lands moving equipment could be equally adept at making the smallest backhoe; however, this was not the case. The first models had more common problems, including a slow hydraulic and excess gross weight.

CAT backhoes problems

Cat, however, operates at a much slower rate than CASE. The speed boom for a Cat, the rate at which the operator can rule out a bucket of dirt aside, and after further digging, is slow and has never equaled the speed of the CASE. The CAT backhoe brakes have also been a problem, not because they are inefficient, but because they are always loud and irritating for anyone in a nearby area.

Cost of a CAT

Typically, a CASE backhoe, basic and stripped cost about US $ 45,000, while a similar model from CAT cost about US $ 10,000 or US $ 15,000 more, probably because it carries the name Caterpillar (prices as they were in November 2009). Regardless of the problems that have a CAT backhoe when compared with other popular brands, it remains a powerful and reliable, with a reputation worthy of the CAT name.

Calculating rates of heavy equipment

The rental of machinery includes bulldozers, backhoes, dump large engines diesel, loaders and other large buildings and equipment business. When a rental business operates heavy equipment, rates are determined based on the owner’s desire and benefit over two to four years. To determine what types of benefits are provided, the costs of equipment maintenance must be considered, taking into account the depreciation of the equipment over time. The value amount of equipment depreciates over time so the rate should be calculated in business plan as an expense (also called “responsibility”).

Instructions :

  1. Visit the local government office in the county. Each piece of heavy equipment has its own registration taxes and questions about the acquisition or purchase, a list showing the three years of the depreciation. Since literally thousands of different county governments are around the United States (and the provincial governments of Canada), the depreciation rates are highly dependent on how the local government determine the valuation of such machines.
  2. Visit several auctions of heavy equipment where equipment similar to yours is sold after three to five years of use and record the final selling prices. Between step 1 and this step, you have two numbers value for each machine type: a depreciation schedule by the government and a price based on auction after three to five years of use.
  3. Sum the government depreciation and the final auction price after five years for each machine and then divide the sum by two. Suppose the machine is sold for $ 100,000 in new sales, If the depreciation of the government after five years showed a loss in value of $ 40,000 after five years and the machine is sold in auctions by an average of $ 70,000, then we have two numbers: US $ 60,000 value according to the government and US $ 70,000 according to the current auction rates. Add the two amounts together and divide by two for a final average value of US $ 65,000.
  4. Calculate rates for hours of use, so the machine price will be amortized over five years. The new total cost of the machine was $ 100,000 and the average total depreciation over five years was about US $ 35,000. Adjust the start speed per hour so after five years, the machine will generate US $ 135,000.The responsibility of depreciation became income. When the machine is sold after five years, the final sale prices will also be income, because the responsibility of depreciation has been refused.
  5. Determine the total cost of employees and expenses of the business operations and then include costs for business. These expenses should be planned as “go to the customer” if the depreciation-denial strategy described in this guide is used; this will prevent your rental prices to be competitive; instead, use the receipts for purchases and maintenance, tax deductions at the end of each year to reduce the amount of taxes you must pay.
  6. Establish a preliminary rental price based on the machine price you have to pay in five years, plus the impairment loss. In this example, $ 135,000 is the desired amount of more than five years, and then adds an income of 60 percent extra on top of this to have a cash flow to purchase parts for the repair and the payment of wages for employees. In this example, there is an additional US $ 81,000. In five years, the total to be collected at this point is US $ 216,000, which is US $ 116,000 more than the cost of a new machine at the dealership at the time of purchase. This percentage should be changed based on the number of employees and the agreed salary per year.
  7. Set personal costs of living wages for a period of five years for you and your family and add them to the figure of five years, the US $ 216,000. This is where rental prices must be balanced to be competitive with other rental companies. In a way, this will determine what you’re going to have to live in this kind of business. A good percentage of the cost of living, however, should be about 20 percent of total annual five done before. Thus, 20 percent of US $ 216,000 is US $ 43,200 of annual income. In five years, that an additional US $ 216,000 is added for a total of $ 432,000 over five years.
  8. Set the hourly rental which brings the final amount in five years. A good estimate is to keep the machine rented 200 hours per week, or 800 hours per month with weekends excluded. For five years, this will be around 48,000 hours. If the machine is rented for US $ 10.00 per hour, if successful, will generate US $ 480,000 during a period of five years. Adjusts to US $ 20.00 per hour if the machines you try to rent will work half of the required hours.

Tips & Warnings :

  • The estimates here are very conservative and somewhat rigid. A rental company of heavy equipment may have a great number of employees or fewer employees. In addition, maintenance costs can vary in different areas and these differences have to be considered in a way that the business still generates the desired level of revenue. In the real world, to pay all costs while still making the desired benefit may require an hourly rate of rent between US $ 50.00 and US $ 100.00 per hour in some cases. Serve your business interests to establish your closing prices (as long as competitive) to what others are renting similar machines in a given area.
  • This article and the final breakdown of the rental cost per hour is a conservative business that makes a living by renting more than one machine at a time. However, this breakdown for example must scale to your desires, regardless of the number of machines in the fleet.
  • Know your costs of doing business and discover all the big and little things in your final hours. Add the insurance costs of the machine, office equipment and computers, fuel costs, workers’ insurance, compensation for the employee (s), taxes in accordance with state and federal codes for your desired income taxes, etc. Every business is unique and all things must be taken into account. Consider hiring an accountant to help you make your business profitable.
  • The annual gain is, in its most basic form, the operator desired gain added on top of total costs, liabilities and taxes.