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Crushing Equipment Purchase Price Means Less Than You Think

Posted by ELRUS Aggregate Systems on Tue,Jun 18,2013 @ 01:34 PM

red-green-arrows.jpgThe purchase price of crushing equipment or consumables such as screen media vary at least 50% in terms of purchase price. Scan the market and you will find 300 Horsepower Cone Plants range from $300,000 to $600,000. Screen cloth for a carry deck ranges from $1,000 to $7,000. The list of comparisons goes on and on to every nut, bolt, roller and component of a crushing operation.

If purchase price was the determining factor in profitability, why does a difference in price exist? Wouldn’t the operations that spent the least amount of money on equipment, parts and service own the market? One look around tells you that this isn’t the case. If you dig deeper, it’s the operators who understand the two drivers of crushing profitability that are the most successful. Those drivers are:

  • Uptime – the percent of time a crusher is working vs. down for maintenance or repair.
  • Productivity – the in spec tons per hour/day/week that the crusher delivers when running.

Need more proof?

Here’s the math. Let’s take a mid-sized crushing operation and try to quantify these costs.

Assume:
• 250 tons per hour production
• Crushing price of $2.50 per ton
• 3 crew members on shift, average hourly wage $20 per hour
• 60 hours per week operation
• Crushing season 26 weeks or 130 Days – Approximately 6-7 months of operation
• Annual production tonnage of 390,000 ton

You're spending money whether your equipment is crushing or not - your crew is still there, fixing equipment instead of managing quarry production. If they're waiting or working on a piece of broken equipment, they are still getting paid. 

While you’re spending this money, you aren’t getting paid. To add insult to injury, you may now have to pay overtime after the breakdown to get back on track and you may even face penalties if you’re late.

Calculating the cost of downtime:

Cost of Labour (3 people @$20.00 per hour) $60.00 per hour
+
Lost Revenue (250 TPH x $2.50 per Ton) $625.00 per hour
=
$685.00 Per Hour

Based on a 12 hour production day, this translates to a daily cost of downtime of $8,220 if you have no downstream processes the crusher feeds. Do you get better production? Different sell price for your gravel? Plug in your numbers and see what your cost of downtime is.

Productivity
As we saw in the cost of downtime, the impact of productivity improvements are significant. Let’s say you are losing 10% of your potential production due to blinding screens or worn down manganese. Here is the math.

Lost production = 25 Tons per Hour
X
Revenue of $2.50 per Hour
=
$62.50 per Hour

This means that for every day that an operation is not running at peak production it loses out on $750 revenue. Putting off maintenance or not sure if you can afford a screen cloth upgrade? The cost of this spread running at just 10% less production for one week is $3,750.

So imagine what happens when you impact both uptime and productivity? You can move the profitability needle in a big way.

Let’s look spending $300,000 extra on a cone plant. Over five years it takes an additional $5,800 per month in a loan payment to pay for that difference (6% Interest Rate).

At $2.50 per ton it takes 2,320 tons per month. In our earlier scenario, to pay for that extra $300,000 for the crusher takes 9.7 tons per hour! This is a very achievable gain. In fact, getting an additional 25 tons per hour is easily attinable when you include liner performance and crushing chamber automation.

Over 15 years if a cone plant delivered an extra 9.7 tons per hour of production would produce an additional 209,520 tons and at a crush price of $2.50 would generate an additional $523,800 in revenue for an incremental profit of $223,800. If you look at an entire crushing system or spread, spending an additional $500,000 or more may be the best decision.

Additionally, a cone plant that delivers this productivity is worth more on trade or at auction, further improving the profit picture on this more productive piece of equipment.

Let’s look at spending over four fold the dollars on advanced screen media vs. plain wire screen cloth. The best advanced screen media products double the wear life than even the best woven wire screen cloth and in our experience give you at least 10% increase in production

Woven Screen Cloth  Rubber on lead screen, El-Xtra Self-clean type on balance
  • 390,000 tons annual production
  • 40,000 tons per change
  • $3,000 per complete change (6x20 3 Deck)
  • 6 hours per complete change out
  • Lost revenue and wages per change = $3,750
  • 10 Changes per year
  • 60 Hours per year downtime for screen change
  •  Annualized cost of screen media = $30,000
  • Production tons per hour = 250
  •  Annual days of operation to produce 390,000 tons = 130
  • 390,000 tons annual production
  • 80,000 tons per change
  • $13,000 per complete change (6x20 3 Deck)
  • 6 hours per change out
  •  Lost revenue and wages per change = $3,750
  • 5 Changes per year
  • 30 Hours per year downtime for screen change
  • Annualized cost of screen media = $63,375
  • Production tons per hour = 275
  • Annual days of operation to produce 390,000 tons = 118





Doesn’t look like much does it? What if we could sell those 16 days of production? If we could, the gain in revenue is $99,000 and with incremental costs of $33,375. How could you spend another $65,625 per year? To top it off, you have 30 less hours of downtime in a year to change screen media, adding another $20,650 in revenue! A total gain of $86,275 annually.

It’s time to change the thinking about price being the greatest consideration in purchasing decisions in your crushing operation. Price is insignificant in calculating total cost when you look at both uptime and productivity.

What can you do? Share this thinking with your employees and co-workers. If you want what comes with a more successful operation start to think in terms of uptime and productivity in everything you do that surrounds crushing.

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Topics: gravel crushing and screening costs


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