Whether you know it or not, all of our grinder engines must be Tier 4 emission compliant by the start of January, 2018. For the past few years the State of California and some Cities around the Country have been specifying Tier 4 engines. These new engines will emit less unburned fuel and overall emissions reducing the pollutants being put into our air. But all this emission control is not free.
Grinder and Chipper Companies have been spending hundreds of engineering hours making these new engines fit into their current models. While these engines and their horsepower are the same as previous models, their footprint can be nearly twice the size of the previous models because of all the emission control equipment added onto them.
So what does this mean to you?
This means the cost of Grinders and Chippers are going up substantially.
Grinder chassis and engine compartments need to be extended and expanded to accommodate these engines. In addition, the price of a 1000 horsepower engine can increase as much as $75,000. What do you get for that extra $75,000? As far as I am concerned nothing but more cost and more maintenance.
All these emission filters and recirculators will need changing, cleaning and replacing. Add to it the addition of the DEF Fluid needed to run with the diesel fuel, maintenance costs are increasing.
So at $75,000 for a 1000 horsepower engine, that would be nearly $1,500 a month at a five-year term loan. $1,500 a month pays for a decent wheel loader purchase amongst 100 other things.
So what do you do?
Get with your Accountant soon. See if you can use an additional write off this year.
If you were planning on getting another year out of your grinder and purchase new in 2018, make the move to purchase in 2017.
While we have until the start of 2018, Manufacturers do not want to get stuck with Tier 2 or 3 engines come 2018, so their previous generation engines inventory may deplete prior to 2018 and they will only have Tier 4 engines available. So do not delay your purchase until later in 2017.
With increase in engine price and potential increase in machine chassis costs, some grinders may increase $100,000 over the previous pricing. This could potentially make a customer unable to be financially approved for a Grinder Loan based on the increased cost over previous models.
I am assuming as all engines being manufactured are Tier 4 and production numbers increases the price should start reducing, but that’s no guarantee. Start looking hard at the condition of your grinder and at your bottom line to date and make a decision to see if it is worth pursuing a purchase this year.
As always, good luck!
Questions? Dave Whitelaw, GrinderGuy email@example.com