Wednesday, October 22, 2014

Brooke N. Bates

The author is a freelance writer based in Cleveland

Features

Go the distance

Smart Fuel

Contractors use a number of strategies to manage fuel costs.

September 9, 2014

When gas prices suddenly spiked several years ago, many lawn care companies offset costs with temporary surcharges on customers’ bills. Since then, LCOs have switched fuel sources, upgraded equipment and installed software to more sustainably manage fluctuating fuel costs.
 

Beyond gas prices.

At A Cut Above Landscape Management, however, owner Brad Terrell is less concerned about the price at the pump – and more concerned about how much time his crews spend there.

“You know how it works when four laborers stop at the gas station,” he says. “About the time the tank is full, one of the guys realizes he wants a doughnut and a Coke. Then about the time he comes out, one of them realizes he has to go to the bathroom. We figured we were losing an hour a day, and we challenged ourselves to capture that hour.”

Actually, estimating 200 work days, times 70 employees at about $15 an hour, Terrell figured he was wasting 14,000 hours of labor at the pump – totaling more than $200,000 a year. More focused on managing labor costs than fuel, Terrell installed tanks at his company in Fortson, Ga., about 10 years ago.

Terrell doesn’t schedule regular maintenance specifically for fuel efficiency – although oil changes and other routine work can optimize engine performance. Generally, he just wants to keep equipment operational so crews can keep working. “A broken-down truck costs money,” he says, “but the labor that’s down because of a broken-down truck costs even more.”

Maintenance is a must, but the investment varies from gas to diesel equipment. “Across the board, when you get a diesel truck, everything is more expensive,” says Tom Grosh, owner of Grosh's Lawn Service in Clear Spring, Md. “With diesel, we had to change the fuel filter every oil change, which cost around $400 total. Now, we have electronic fuel injection, so it’s less than $100 for an oil change on a gas truck. That’s a tremendous difference.”
 

Sourcing savings.

Grosh’s began phasing out diesel trucks for gas equipment three years ago. As prices rise, the savings add up.

“When we purchased our first diesel trucks, diesel fuel was $1.10 a gallon,” says owner Tom Grosh. “Now it’s $4-plus a gallon, and gas is 40 to 50 cents cheaper. We’ve started to cut back on diesel and switch to gasoline, and the trucks still have the same power and mileage – about 10 miles to the gallon pulling a trailer.”

Using dealers as a resource

Tom Grosh, owner of Grosh’s Lawn Service in Clear Spring Md., routinely ran edgers and other equipment entirely out of fuel to keep the carburetors clean. If he didn’t, ethanol could take down a mower mid-season.

“We shut off the fuel tank flowing to the carburetor, and let the carburetor and the fuel bowl completely run out of fuel,” Grosh says. “That way, ethanol isn’t sitting in the carburetor for weeks on end.”

Grosh didn’t give it a second thought – until he went in to purchase a new mower two years ago. His long-time local dealer recommended switching to fuel injection. “That got us away from the carburetor issue with ethanol, which has been a wonderful asset to us,” Grosh says.

Over 15 years, Grosh has built a relationship with his local lawn equipment dealer, trusting its expertise for new equipment and ongoing maintenance alike. The quick, accommodating service he gets in return, he says, is priceless.

“Listen and move on the dealers’ recommendations. They really do have your best interests at heart,” he says. “If you treat your servicing dealer as you’d want to be treated, you both will win in the end.”

Grosh replaced his on-site diesel tank with a second gas tank – scoring better bulk gas prices to save three cents more per gallon. In June, Grosh paid $3.55 while nearby stations in Hagerstown, Md., charged $3.79. Had he still been using diesel, he would have paid $3.95.

To ensure low prices, Grosh requests fuel delivery via text or email for written quotes – which he matches against nearby service stations. “If the bulk price is above the pump price, we’ll wait till the price comes down,” he says, noting that bulk prices often peak on Monday and drop throughout the week.

Meanwhile, in 2011, Lemak Landscape in Slatington, Pa., made the opposite switch from gas to diesel – nearly tripling fuel efficiency.

“We had a ’94 Dodge Ram 250 that was getting about 6 miles to the gallon pulling a trailer,” says owner George Lemak. “We went to a ’93 Dodge Cummins diesel that got 17 miles to the gallon, so it was a big change in our fuel savings. You spend a little more for the diesel machine, but it’s better in the long run for fuel consumption.”

After changing trucks, Lemak switched mowers, too. Instead of filling two saddle tanks a day for a gas-powered riding mower, now he fills them on site every other day with diesel. One day, Lemak’s fuel delivery representative recommended off-road diesel. Exclusively for non-taxed, commercial equipment that doesn’t operate on public roads, off-road diesel is consequently cheaper, because road taxes aren’t built into the price.

“In the winter, we were paying $4.19 a gallon for the trucks at the pump, and off-road was $3.49 a gallon, so there’s a big difference there,” Lemak says. “Our backhoes and skid-loaders were burning through 16-28 gallons in a 12-hour period moving snow. If diesel is $4.19 a gallon, that adds up.” Before 2011, Lemak paid $2,200 a week to gas trucks and equipment. Now, he still fills trucks at the pump, but $1,100 a month fills his on-site diesel tank for off-road equipment.
 

Staying on route.

Whether trying to save on fuel or labor, efficient routing can trim both miles and minutes. That’s why when prospects request estimates, Grosh first maps addresses against his existing customers.

“When fuel cost $1 a gallon, we didn’t care where you were,” he says. “But especially in the mowing operation, if you're more than 10 minutes away from the closest lawn we mow, it’s not economical to drive out of our way. Because of the price of fuel and labor to get there, we have to keep a tight rein on our travel area so we’re not losing what we’re trying to make.”

Terrell schedules geographically concentrated routes as well. With GPS tracking in every crew’s truck, he can map their locations down to a particular spot in a parking lot.

“We have GPS to validate that they’re taking the most efficient routes and not wasting time,” Terrell says. “Obviously, if they drive extra miles, that’s costing me on gas, too, but it’s costing way more on labor. By managing labor, we wind up saving fuel.”

In addition to tracking mileage, Grosh uses his trucks’ capabilities to electronically track engine hours, too, helping measure how long equipment runs idle. Armed with that data, he communicates regular reminders to his crew about shutting off equipment instead of letting it run.

Whether the bottom line is reducing fuel costs or simply saving money and man-hours, you can control expenses with systems that keep crews on route. “We have all kinds of verification techniques to make sure we’re not getting burned overpaying for fuel,” Terrell says. “It’s more about saving money than saving fuel.”

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