Replacing vs. Rebuilding Heavy Equipment

Does your company rely on heavy equipment like excavators, skid steer loaders, wheel loaders or asphalt pavers? As these machines reach the end of their life spans, you’ll need to decide whether replacing or rebuilding them is the better option for your business.

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What to Consider When Deciding Whether to Rebuild or Replace

Whether replacing or rebuilding heavy equipment is better depends on your company’s situation.

When to Rebuild

Rebuilding a machine gives it a second life by restoring it as closely as possible to its original condition. It often provides a more cost-effective long-term alternative than performing multiple repairs. The process involves upgrading all major systems and components, including the engine and hydraulics. It also entails replacing less essential parts when necessary.

Rebuilding makes sense in several scenarios:

  • Prohibitive repair expenses: The “50/50 rule” states that rebuilding is more cost-effective if the cost to repair a machine is more than half its value.
  • Meets your requirements: If your equipment still does what you need, giving it a second life by rebuilding it can deliver better results than replacing it.
  • Upgrades are necessary: Perhaps you’re happy with the equipment, but you’d like it to do a bit more. A rebuild allows you to integrate advanced features and technologies that improve performance.
  • No budget for new equipment: Rebuilding a machine is typically less expensive than buying a new or used model. The process may provide the best financial solution if your business is attempting to maximize limited funds. Many companies that provide equipment rebuild services also offer custom financing options that make it easy for you to afford.

When to Replace

In some cases, a replacement may be the best — or only — option for your company’s equipment:

  • Beyond repair: If your machine is old or has multiple mechanical issues, it could cost nearly as much to repair than replace it. Purchasing a high-quality used product may offer a minimal price difference, and you could experience better long-term results.
  • Time constraints: Rebuilding a piece of heavy equipment isn’t an overnight process, especially for more extensive jobs. If your business can’t afford lengthy downtime, you may need to replace the machine with a purchase or a long-term rental.
  • No access to parts: Finding suitable parts and components can be difficult or impossible if you own an older, obsolete model. Even if you’re able to locate them, their scarcity can result in a higher price than your company can afford or is willing to pay.
  • Lower operating costs: While a refurbished machine should provide significant performance, efficiency and safety improvements, these enhancements may not match what a new or late-model used product can deliver. Although the initial costs will be higher, a replacement could have a more meaningful impact on your company’s bottom line.

The Equipment Rebuild Process Explained

As an authorized Cat® dealer, H.O. Penn Machinery can perform a Cat Certified Rebuild to restore your machinery and give it a second life. This comprehensive process consists of these steps:

  • Inspection: Our expert service technicians will evaluate your equipment and review its maintenance records — if available — to gain more insight into its condition.
  • Disassembly: We’ll take the machine apart, stripping the parts and components down to the frame.
  • Reconditioning: This extensive step includes straightening and reinforcing the frame, replacing worn or damaged parts and bringing the engine, hydraulics and other essential systems up to the stringent standards set by Caterpillar.
  • Update installations: We’ll ensure the machine receives the latest engineering updates and improvements that have been developed since the model’s introduction.
  • Testing: Our team will test every part and component before installing them to ensure they comply with Cat Certified Rebuild guidelines.
  • Reassembly: We’ll carefully reassemble your machine using the updated parts.
  • Performance evaluation: The tech will assess the newly reconditioned equipment to verify its performance capabilities.
  • Finishing touches: The final steps include painting the new machine and giving it an updated serial number.

What Are the Pros of Rebuilding Heavy Equipment?

An equipment rebuild offers several benefits:

  • Better performance: The installation of new parts and components throughout the machine will result in substantial operational upgrades.
  • Extended life: Your equipment should last much longer, extending the time until you need a replacement.
  • Increased value: You should get a higher return if you eventually sell or trade in the equipment.
  • Warranties: A Cat Certified Rebuild comes with a warranty, giving you extra protection and more peace of mind.

What Are the Cons of Rebuilding Heavy Equipment?

While a heavy equipment rebuild can deliver excellent results in the right situations, it does come with some disadvantages:

  • Cost: Although it’s usually less expensive to recondition your equipment than replace it, the price can be higher than an extensive repair job. Since the average cost of a rebuild is approximately 60% of a comparable new model, you’ll need to decide whether it’s worth it in the long run.
  • Not new: While a reconditioned machine can provide like-new performance, it’s still a used product. Even with regular service, the life span for a rebuild is shorter. While many technology upgrades are available, you may not be able to get everything that a brand-new or late-model used product can offer.
  • Lack of availability: It may not be possible to recondition every heavy equipment model. The right parts may not be accessible, especially for older products.

The Equipment Replacement Process Explained

If you decide to replace your machine instead of refurbishing or repairing it, you’ll have to determine the most appropriate process for your business.

Do you want to make a significant upgrade by acquiring the latest model on the market? You could trade in your machine for a brand-new product. You’ll need to do your homework to determine your equipment’s accurate market value. You’ll also need to review the manufacturers’ lineups and explore all the available options.

You can also sell your machine on the used equipment market and apply the value to a purchase or long-term rental. Determine whether owning your heavy equipment or leasing it provides a better return on investment for your business.

What Are the Pros of Replacing Heavy Equipment?

Replacing instead of refurbishing offers several advantages:

  • Longer life expectancy: Unless you decide to replace your machine with a used model to save costs, a new piece of equipment should provide a better long-term solution.
  • Better performance: A rebuilt machine — especially a Cat Certified Rebuild model — should meet most of your job site productivity and efficiency expectations. However, the process can have limitations for some equipment types. A replacement can often provide the best results, especially for companies looking to maximize performance.
  • Lower operating costs: One of the reasons you’re thinking of refurbishing equipment may be to reduce the repair frequency. A new or late-model replacement could bring these expenses down even more due to its excellent condition and minimal service hours.

What Are the Cons of Replacing Heavy Equipment

An equipment replacement can have drawbacks:

  • Higher price tag: A brand-new or late-model machine could cost thousands of dollars more than a refurbishment project. This option may not fit your business if you’re on a tight budget.
  • Potential long-term commitment: The high cost of a replacement may mean you’ll have to finance the purchase. It will create another financial obligation that adds a hefty debt to your company’s balance sheet and make it harder to access capital in the future.
  • Extensive learning curve: It could take time for your operators to adjust to a new machine. Project deadlines may become tighter, and your accident risk may increase until your crews become comfortable with the unfamiliar equipment.

Rebuild vs. Replace Equipment: We’ll Help You Decide

H.O. Penn can rebuild Cat equipment to like-new condition. We also carry an extensive inventory of new and used Cat machinery if a replacement makes more sense for your business. Contact us to explore your options and receive expert advice to help you make an informed decision.

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