Rod Sutton talks with Mike Vorster and Jon Kaye about the effects of inflation on asset management. Vorster is author of “Construction Equipment Economics” and a contributing editor to our Equipment Executive column.
Kaye is VP of equipment and information technology for Miller Bros. Construction and a member of our 2023 Class of Under 40 in Construction Equipment.
The price of construction equipment has risen 30% since the month prior to the pandemic. Although the rate of increase has started to level off, those higher costs continue to strain fleet budgets for acquisition and maintenance.
We recently asked fleet managers how they are responding, and 41% said that they are increasing their maintenance budgets and 23% are increasing their acquisition budgets for 2025.
Vorster and Kaye discuss with Sutton how to manage assets in a time of growing costs.
Sutton: Mike, how would you advise a fleet to respond to these inflationary pressure?
Vorster: The most important thing to realize is you're maintaining assets which are now more expensive and more valuable than they've ever been. Therefore the last thing to do is to cut down on your maintenance budgets.
Sutton: Jon, what are some things Miller Bros. has done over the past couple of years and in preparation for next?
Kaye: One of the most important things is to know our cost. It was hard to know in the beginning, during the pandemic, how much of it was a blip on the radar. It is extended, it's extending, and it's not going down.
2:12 Planning for tariffs
3:03 The relation between inflation and equipment rates
4:04 How Miller Bros. is controlling costs
4:56 Communicating costs with an organization's executives
7:33 Using technologies to increase efficiencies
9:35 The role of dealer partnerships in controlling costs
10:22 Infaltion's effect on capital investment
