Story written for ForConstructionPros.com and first appeared in December 2021
Do you remember the first time you used GPS in your car? Or the first time you saw grade control demonstrated on a motor grader? What about that first “ah, ha!” moment when you realized the impact technology could have on the way we manage and operate equipment?
No one leaves their house without their smartphone – heck, I don’t even go into another room at my house without bringing my phone. Likewise, it’s tough to find a jobsite that hasn’t incorporated at least some form of technology. And those investments have started to pay dividends in terms of increased efficiency and performance.
First remember, construction technology is nothing without support. See all the ways to get technology support from RDO Equipment Co.
There are compelling reasons to continue to focus on using technology, even with current challenges, for both short- and long-term gains.
1. Supply Chain Challenges May Mean New Upgrade Strategies
When the first quarter of 2021 began, everyone knew there were supply chain issues. By the second quarter, the problem persisted but there was hope it would improve. By the third quarter, it was a painful realization just how serious the issue is. Now in quarter four, it is time to prepare for this challenge to dominate most of next year.
Adding machines, new or used, to a fleet is going to continue to be a challenge. But that does not mean companies cannot still invest in equipment – it just may mean investing in existing equipment. One of the best ways to do this is with technology.
Investing in technology adds more value to a machine but the real payback comes in production increases. My colleague, Scott Schumacher, offered one common example, saying, “an automatic excavator system has shown to deliver a 30 percent increase in production.” Scott is general manager with RDO Equipment Co.’s Topcon technology division and regularly sees technology’s impact realized by customers.
Many pieces of new technology from equipment manufacturers can be retrofitted back to previous year’s equipment. When looking to add technology on an existing machine, consider prioritizing quality-houred machines and those that have high utilization in the fleet.
I realize that all technology, including retrofitted options, are not immune to supply chain constraints. However, there is hope on the horizon. Speaking with the team at Topcon, they are seeing the supply chain issues improving and lead times are looking much better here on out.
2. Year-End Deadline Favors Technology Investments
Section 179 and bonus depreciation are valuable tax incentives that many companies use to deduct the full cost on the purchase of a machine. One of the requirements is that machines must be in service by December 31 to qualify for the incentives.
Related article: What you need to know about Section 179 and Bonus Depreciation
In years past, this was not much of an issue. However, the idea of buying something off the lot at the local equipment dealership or finding a gem at an auction is no longer likely. Companies that are just now looking to add machines before year-end might find themselves unable to take advantage of Section 179 – or so they might think.
Technology is eligible for Section 179 and bonus depreciation. It is often overlooked or, in some cases, people simply do not realize that technology qualifies for both opportunities. Equipment shortages combined with the tax incentives create a great opportunity to move ahead with a technology purchase.
3. Technology Investments Today May Help Manage Our Ongoing Workforce Shortage Issues
While supply chain issues are a new challenge facing the industry, the workforce shortage is anything but. This is something we have been dealing with for years.
I have talked about it before and I will continue to share this message: I believe technology plays a major role in addressing the workforce shortage. Technology is not the only solution to the labor shortage but it is most certainly part of the solution.
Technology allows new operators to train faster and easier. When technology is used properly, operators of every skill level perform better, often with less rework and time wasted. Scott shares that this ability for younger and less-skilled operators to perform at a very skilled level is where you’ll see technology’s greatest value.
“You’re talking 50 to 60 percent more productivity from a system like excavator automation,” Scott said.
Related article: 5 FAQs covering the basics of automation for excavators
Technology to Watch in 2022
Now that I have sold you on the advantages of investing in technology for a successful 2022, you might be thinking “where should I start?” While every company will be different, the biggest and most widespread opportunity I see is one I mentioned a couple times already: excavator automation.
Auto excavator systems take the guesswork out of achieving proper depth, distance and slope. After loading a grade or design into the system, the machine is ready to take over. Upon the operator engaging control, the boom and the bucket react, either driving down to grade or coming up to grade.
Watch to learn more about the Topcon X-53x auto-excavator system.
This type of technology is not new but it has come a long way since it was first introduced. According to Jay Mercer, general manager of technology support for RDO, the adoption rate has grown within the past few years because of improvements to software and hardware. “Those improvements allow the systems to function and calibrate much easier,” he said.
Beyond how well the systems work, excavator automation is one technology from which virtually every company can benefit because of excavators’ wide use and popularity. Excavators are a major segment of the construction industry and growing. According to Fortune Business Insights’ report, “Excavators Market, 2019-2026” global excavator market size is expected to increase steadily until 2026, with a 43 percent growth predicted from 2018 to 2026.
At RDO, we have seen significant growth in auto-excavator technology adoption. From the later part of 2019 when new systems came out to 2020, our sales of new excavators with automation technology increased significantly. Halfway through 2021, we were on pace to increase sales by more than 70 percent over the previous year.
Bottom line, automatic excavator systems improve performance and production. The systems help get new operators up to speed faster, making them comfortable and productive, while operators who are not new benefit from the system helping to reduce over-digging and rework. Companies of all sizes can benefit from these opportunities. Continued Technology Growth in 2022
Based on equipment availability, year-end tax incentives and a continued labor crunch, technology might present the smartest business opportunity heading into 2022. But the real reasoning to invest in technology can be summed up in much simpler terms: Technology is about performance. Construction technology began with dozers and motor graders and has made its way to excavators and even smaller machines, with John Deere compact track loaders now having grade control technology integrated into the machine. These systems are here to stay because working more efficiently and effectively benefits the bottom line. Even if you do remember the days of blue top stakes on the jobsite and your trusty road atlas guiding your way to a new city, it probably doesn’t feel like it was “just yesterday.” We’ve been living in a technology world now for a long time and the construction industry is no exception. Companies that up their game and embrace technology as a significant part of the business will continue to be in position to outperform those that do not.
Dennis Howard
Dennis Howard has more than 25 years of experience with RDO Equipment Co. As a Senior Vice President of the Construction Equipment division, he focuses on all aspects of the company’s fleet management efforts. Used construction equipment values and heavy equipment sales are two of his key areas of expertise. Dennis is a member of the Association of Equipment Management Professionals (AEMP), a regular contributor to ForConstructionPros.com and host of The Track, a web series from RDO. Subscribe to The Track on YouTube or connect with Dennis personally on LinkedIn.
