The Buffalo, N.Y., area can be a cold place. Not only do lake-effect snow storms bring large amounts of snow, but also the storms’ cold northwesterly winds, which blow across Lake Erie, create whiteouts. Often, these winter storms make deliveries of concrete in this snow belt region difficult, if not impossible.
“Some years, we have these epic snowstorms that can bury us and keep our drivers idle for days,” said Peter Romano, United Materials corporate president. Case in point - the recent winter storm shortly before Thanksgiving in 2014 that dumped a year’s worth of snowfall in just three days.
With less money coming in during the winter months and long lead times from when its mixer truck chassis are built to when they’re outfitted with mixer bodies, North Tonawanda, N.Y.-based United Materials’ Ready-Mix Concrete Division maintains a two-pronged approach to even out its cash flow throughout the year. It orders mixers for delivery just as the weather starts to clear and it acquires them with a terminal rental adjustment clause (TRAC) lease financed through PACCAR Financial. With short windows to get a lot of concrete moved, United Materials also beefs up by spec’ing its mixer trucks with greater payload capacity to haul more concrete.
“We need mixer trucks with a 69,000-pound GVWR, more than the standard 66,000 pounds you get with a unit with the normal 46,000-pound rear and 20,000-pound steering axle,” Romano said. “Our dealer (Kenworth of Buffalo) was able to provide us mixers with 22,000-pound steering axle ratings and rears rated up to 47,000 pounds to get us to the weight we felt we needed.”
While its business slows during the winter months, United Materials has seen a marked improvement throughout the rest of the year in its ready-mix division as the economy digs out from the recent recession. United Materials ready-mix operation supplies concrete from four manufacturing plants to residential, municipal, and commercial construction sites throughout a seven county-region in western New York. United Materials, which was created in 1990 from the combination of three family-owned companies – Frey Concrete, Stone Concrete, and CB Concrete, also has a building materials and an aggregates division.
Over the last two years, the ready-mix operation has seen a 20 percent increase in the amount of concrete its mixers haul. To help meet the growing demand, the company earlier in 2014 added six new London Machinery standard mixers with 10-cubic yard drums built on Kenworth T800 chassis to its fleet of mixers. The trucks are powered by 380-hp PACCAR MX-13 engines with 1,450 lbs-ft of torque driven through 11-speed Eaton Fuller Roadranger high-reduction manual transmissions. One of the mixers is equipped with a 40-foot truck-mounted conveyor.
“The Kenworths have worked well for our operation,” Romano said. “They are durable and our drivers, who spend a lot of time with the trucks, like the ride, handling and visibility. Plus, they’re great-looking trucks. We get a lot of comments about their appearance.”
To acquire the six trucks, including a special unit dedicated to breast cancer awareness with a custom pink paint job, (see sidebar on United Materials’ special pink Kenworth T800) United Materials financed them with TRAC leases through PACCAR Financial. TRAC leases, which have residuals set by PFC, provide truck fleets and operators three options at the end of the lease. They can refinance the residual, pay it off, or return the truck to be sold for fair-market value. If the truck sells for less than the residual, the truck fleet or operator is responsible for the difference.
Generally, United Materials purchases the trucks at the end of its six-year leases, and holds on to them for another nine to 10 years until they are retired.
TRAC lease financing can offer companies like United Materials several advantages, including lower monthly payments compared to loans and extended payment schedules giving them additional time to make their first payments. This means companies needing to purchase multiple units or to equip the trucks with expensive equipment can conserve their cash flows by stretching out their payments.
“The timing of the first payment was critical to our company in that it allowed us to receive the mixers over a period of time,” Romano said. “This gave us time to get the trucks outfitted and then make our first payments as the trucks were put into service delivering concrete and generating revenue. This helps conserve our cash flow, which is important for medium-size companies like ours.
“By conserving our cash flow, we can use those resources in other areas of need such as building improvements and buying front-end loaders,” he added.
Romano said PACCAR Financial’s knowledgeable sales staff makes financing his Kenworth trucks easier since they understand their resale values and can set residuals to provide his company competitive financing terms.
“Matt Vargo, our PACCAR Financial sales manager, was critical to the process,” Romano said. “He understood our operation and our financing needs and worked with our company’s chief financial officer to meet them. His understanding of the equipment made the application process easier, plus he worked well with our local dealer, Kenworth of Buffalo.”