Maintenance Saves Money

VEHICLE MAINTENANCE HAS long been viewed as a necessary evil in terms of the time, labor and money needed to keep waste trucks up and running, and safe to operate. However, maintenance also is being used by a growing number of public and private refuse fleets to raise productivity, lower operation costs and reduce the fiscal impact to companies as a whole.

Waste Management Inc. (WM), Houston, offers perhaps the most dramatic example of how vehicle maintenance affects more than fleet operations. The company lost more than $2 billion between 1997 and 1999 due to accounting mismanagement and its decentralized structure, which caused, among other things, huge disparities in the costs of running its then fleet of 26,000 refuse trucks.

That all changed, however, when A. Maurice Myers became WM's chairman and CEO in 1999. Formerly chairman and CEO of Overland Park, Kan.-based trucking company Yellow Corp. (now Yellow Roadway), Myers understood that fleet management was a critical component of his ambitious three- to five-year turnaround plan aimed at cutting down costs improving service.

Myers hired Thomas Derieg as vice president of fleet services and logistics in early 2001 to change to company's fleet management practices. Derieg focused on three areas: setting better vehicle specifications at the outset; being more demanding about the vehicle quality from truck and body manufacturers; and — most importantly — focusing on preventive maintenance to improve the quality of the maintenance operation.

“We were trying to make the fleet run better — we weren't happy with what the fleet was costing us in terms of the quality of trucks we had, their durability and the number of spares we had to maintain,” Derieg says. “We had a lot of this going before I got there — I really just helped refine and focus on improving those areas of our fleet operations.”

By 2002, WM's fleet management had scored major successes, cutting maintenance costs by $85 million in one year. The company also improved vehicle availability so that it could reduce the number of spare trucks needed, slimming the fleet's size by 5,000 units.

“To grow in the waste business today, you have to increase your share of market, and to increase market share you have to be cost competitive,” Derieg says. “Because truck maintenance is an issue that never goes away, you have to focus on it every day. The minute you take your eye off it, costs go out of control.”

Value of Maintenance

Derieg's maintenance philosophy at WM continues today under Mary Kay Runyan, who replaced Derieg in May 2004 after he retired. Formerly director of procurement operations for WM, Runyan has an extensive background in maintenance, culled from her experience as director of fleet operations for Denver-based telecommunications firm U.S. West and as a flight line division officer in San Diego during her career as a U.S. Navy officer.

“Preventive maintenance is absolutely the cornerstone of WM's fleet philosophy going forward,” Runyan says. “In many areas, maintenance is going to drive bottom line value. It will allow us to provide better customer service, as our trucks are up operating more of the time. Preventive maintenance helps us identify problems before a part fails and leads to a truck breakdown that drives the wrong type of cost in a fleet operation.”

Preventive maintenance, she says, is much lower in cost than reactive maintenance, which deals with handling vehicles after they break down. “You have to eliminate the risk of a broken down vehicle, which is two-fold: the inability to serve the customer and the safety risk posed to the maintenance technician that has to work on that vehicle on the side of road instead of within the safer environment of the shop,” Runyan explains.

The value of a good maintenance strategy is shared by many others inside and outside the refuse industry. “Maintenance is about either paying me now or paying me later,” says Michael Jacobs, president of Crawford, Texas-based etruckleasing LLC, a truck leasing and maintenance brokerage firm. “Not conducting proper preventive maintenance has a huge impact because it is very cheap, relatively, to fix something in the maintenance garage. If you break down on the road, it will usually triple the repair cost.”

Jim Claudill, fleet manager for the city of San Antonio, Texas, agrees. “Preventive maintenance is absolutely the main thrust of our operation,” he says. Claudill, who is responsible for all of the city's equipment — including lawn mowers, bulldozers and 130 refuse trucks — says he relies on an aggressive maintenance schedule to keep everything running and available to serve San Antonio's populace. “Proper maintenance translates into more vehicle productivity, and that's critical as city residents expect their trash to be picked up on time, every time.”

Kevin Downey, director of hauling for Rumpke Waste Services, Cincinnati, notes that maintenance provides a range of value to its 1,600 vehicle fleet. “First, proper maintenance reduces vehicle downtime, and that increases our fleet productivity and thus our ability to serve the customer,” he says. “It also allows us to reduce the number of spare vehicles we need, and that lowers our fleet cost. The key for us, simply, is to fix it before it breaks down. That ultimately keeps our trucks up and running more, thus serving the customer better and generating more revenue for us.”

Focus on Fundamentals

However, fleet managers caution not to go overboard on maintenance. The key is to make fleet maintenance work for the refuse operation's bottom line, instead of against it.

“You will spend money on maintenance — that's a given,” says Darry Stuart, president of Boston-based DWS Fleet Management, a firm specializing in fleet maintenance issues. Stuart spent five years of his 35-year career as a fleet manager for BFI, prior to its purchase by Allied Waste Industries in 1999. “The focus for the refuse fleet manager is where and where not to spend maintenance money. Because you can go broke by over-maintaining your equipment, you have to determine the key areas on the vehicle you need to maintain.”

Stuart says on refuse trucks, fleet managers should pay attention to brakes, followed by tires, axle alignment, air and fluid filtration, the cooling system, batteries, transmission linkages, and all chassis and body fasteners [See “Darry's Details” on page 30]. “In the trash business, you have higher brake and tire wear from the stop-and-go operating requirements of most industrial and residential refuse collection vehicles,” Stuart explains. “From a vehicle safety and uptime standpoint, you have to keep a close watch on all the brake components. For example, brake ‘glazing’ can occur from the heat generated by frequent stops and starts — meaning that while you may have enough brake pad life, the heat glazes the brakes, making it more difficult to stop the vehicle. A good preventive maintenance program and attention to driver reports can help you catch that.”

Refuse truck tires also can take a beating, especially on the sidewalls where they get scuffed pulling up to curbs to pick up trash or when dumping refuse at a landfill. Consequently, Stuart suggests keeping tires properly inflated and inspecting them frequently for damage and tread wear. “One of the most expensive areas in any fleet operation is tires, so it pays a very good dividend to watch them closely,” he says.

WM's Runyan adds that focusing on maintenance fundamentals such as brakes and tires is critical from the outset. It is almost impossible to correct problems caused by maintenance inattention down the road, she says. “If you don't perform your preventive maintenance on schedule right from the start, you can't catch up. You can't go back and make it up. You must do the maintenance to get the life cycle you expect from the vehicle, because the ripple effect from missed maintenance is huge — not only to the vehicle but to the operation as a whole,” she says.

Changing the Cycle

Maintenance is critical for refuse fleets that want to get the maximum life cycle value. According to New York-based Inform Inc., an environmental research firm, the waste industry operates about 136,000 refuse collection trucks, 12,000 transfer vehicles and 31,000 dedicated recycling vehicles, with more than 40 percent of those trucks more than 10 years old.

At an average cost of $170,000 per diesel-powered refuse truck, according to Inform, most waste haulers try to keep their vehicles as long as possible to maximize the return on that investment, says Ray Paradis, vocational marketing manager for Denton, Texas-based truck manufacturer Peterbilt Motors Co. “The cost of the equipment makes refuse truck buyers very price-sensitive, especially city, county and state fleets. Generally speaking, that's why they keep them forever, and why they maintain their own shops to take care of them,” he says.

Rumpke's Downey agrees that good maintenance helps extend the life of a refuse truck, thus helping the fleet to reduce capital expenditures for new trucks. “We have our own maintenance center for that reason,” he says. “It enables us to keep a truck 10 years, about two years past our eight-year life cycle goal.”

“Good maintenance can help you get one or two extra years out of a truck,” confirms etruckleasing's Jacobs. “Say you plan to keep a truck seven years, but through good maintenance you can keep it nine years. You've depreciated it down based on seven years, so those extra two years are basically ‘free’ to you, outside of the fuel, insurance and maintenance. The maintenance cost may be slightly higher than a younger truck, but it'll be far less compared to the monthly payment the fleet used to pay.”

Nevertheless, the city of San Diego is trying to change that life cycle calculation. It is bucking industry trends to substantially shorten the ownership period for its refuse trucks and reduce maintenance expenses in the process. “We're doing a cost-benefit analysis to see if we can save money by keeping our vehicles for five years instead of our current seven years,” says Chuck Woolever, who is in charge of the city's 180 refuse vehicles as deputy director of the Refuse Collection Division for the Environmental Services Department. “For the first five years, you expect a certain level of maintenance, but in year six and seven, those costs rise significantly,” he says. “By reducing the age of our equipment, we expect less downtime, which will allow us to reduce our spare vehicles by four or five units.”

The maintenance San Diego's shop performs would change, too, shifting to less expensive fluid changes and component replacements, instead of more expensive and longer downtime repair items such as transmissions and engine work. “Any heavy repairs would most likely be covered under warranty up to five years, saving us more in maintenance dollars,” Woolever adds.

So at a current cost of roughly $200,000 per unit, Woolever expects more resale value could be returned to the fleet by cycling equipment out at five years versus the current seven-year mark. “That also means someone else — not us — takes on the risk as maintenance costs begin to rise outside of the warranty period,” he says.

Finally, Woolever says the shorter life cycle will allow the city to access new technology quicker. “Seven years is a long time, and truck technology changes rapidly in that period,” he says. “At a five-year cycle, we could get an opportunity to bring the latest and possibly more cost-effective technology into the fleet. There could be a maintenance cost advantage to that.”

In the end, the shift in the vehicle ownership cycle could pay big dividends to San Diego's refuse operation, not in the least in terms of how it structures maintenance costs. “By going to five years, we need more service technicians and fewer heavy mechanics, so our maintenance labor costs should drop simply based on the kind of maintenance we are doing,” Woolever says. “Newer vehicles equal fewer maintenance problems, theoretically. We will see if that strategy will get the job done.”

Sean Kilcarr is senior Editor for Waste Age's sister publication, Fleet Owner.

DARRY'S DETAILS

Preventive maintenance intervals vary depending on the type of truck being used and its application and operating environment. So truck manufacturers will require different maintenance intervals calculated in miles or hours of service. Nevertheless, there are two things to understand when talking to Darry Stuart about maintenance. First, as a former fleet manager with 37 years of experience handling refuse trucks to long-haul tractor-trailers, Stuart stresses that the key to maintenance is pretty much the same for almost all commercial vehicles.

“You use the same basic maintenance management philosophy, altering it slightly depending on the needs of a particular application,” says Stuart, president of Boston-based DWS Fleet Management. “Using a truck to haul trash is really no different than using a truck to haul freight or whatever. All trucks have batteries, tires, engines and other components that need to be maintained. The use-pattern of a truck's particular application just dictates what components you look at first and how often.”

Consequently, Stuart suggests a few rules of thumb for major components a fleet needs to keep on top of day in and day out. In no particular order, they are:

Batteries: If the battery charge is low, the truck may not start and won't even get out of the gate. Stuart says that battery cables should be disconnected, cleaned and load-tested at each preventive maintenance interval, and make sure a full charge is getting through. Of particular concern are low voltage batteries. Although they may get a truck started, they put more pressure on the truck's alternator and starter, leading to a shorter life cycle.

Cooling Systems: Truck engines generate a lot of heat, and that goes double for refuse trucks because they have extra systems, such as hydraulic lift arms and trash compactors, that put extra loads on the engine. Consequently, the cooling system has to be in top shape. Corrosion over time can lead to internal engine issues and leaks in the cooling hoses. High temperatures generated by the engine and other systems can evaporate any traces of coolant leaks, making a repetitive problem difficult to find. So, regular pressure testing of the cooling system is a must.

Tires: Tires are one of the most expensive areas for truck maintenance on refuse vehicles. Stuart says the key is to keep tires properly inflated and ensure that the front axle is aligned properly to minimize abnormal tire wear. “Check the front axle toe at every preventive maintenance because it takes just 5 minutes to check,” Stuart says. “If the toe is out of alignment, you have to adjust it because that is what accelerates and wears tires out the most.”

U-Bolts/Fasteners: Chassis and axle u-bolts and wheel/rim fasteners should be tightened at every preventive maintenance because “refuse trucks endure a lot of vibration from all the maneuvering, turning, heavy loading and unloading they do every day. Those bolts are holding your truck together so you have to watch them,” Stuart says.

Oil and Grease: Stuart is a big believer in buying the best engine oil and component grease available, because they can add life to your equipment. “Front ends, clutch linkages and especially u-joints need the best grease you can buy. Know what you are buying — buy quality not price,” he says. “If you don't grease a u-joint regularly, it's going to blow out on you, and when that happens, you have to tow the vehicle in, which is expensive. Paying attention to the small details helps you avoid the big problems in the long run.”

Finally, Stuart says to consider hiring “limited time fleet executives,” which is how he describes himself. “I'm not a consultant because a consultant tells you what the problems are, collects his check and then leaves,” he says. “I stick around to help the fleet in whatever the vocation, develop solutions and put them in place. Most companies know what their problems are — they are just not sure how to get started or don't have the patience to tutor their fleet managers, develop processes and see it through.”
— Sean Kilcarr