Monday, November 25, 2013

2014 Is Almost Here!

January 1st is the day that my truck is no longer legally allowed to travel in one of the 50 United States of America.

California.

We practically never go to California so it will have zero impact on our business, but it will be annoying.  The idea that I have been paying taxes to the government to go toward the highways in every state in the nation, and then not be permitted to drive on some of the nation's roads because of type of equipment I own, seems wrong to me.  I should be allowed to drive in California despite the dirty air that my engine emits.
I have been considering my options.  Here they are:

1. Stay out of California until my truck needs to be traded in or sold for a new one.  That should take another 2 or 3 years.

2. Buy a new truck.
    A. By trading in my truck for a complete new truck and sleeper.
    B. By buying a new day-cab truck and moving my sleeper and generator to the new truck, then selling my old day cab or converting it into a motor home.

3.  Add a DPF to my existing equipment which will ruin the Series 60 engine under the hood and result in many days of downtime for shop repairs.

4. Or the option that I have spent the most time looking into - selling the engine I have now and getting another engine from a newer, wrecked truck.

That last option I'm going to go into some detail on right now because it is of specific interest to me.

So here goes:

Trucks get wrecked for many reasons.  I don't want to be morbid, but this is the only time the faulty education in trucking works to my benefit.  I'm not saying all trucks are wrecked by students fresh out of school, but I know MANY are.  I also know trucking companies routinely place new students in brand new trucks.  I don't need to tell anyone what happens next.  So skipping ahead...there are new trucks, which have somehow or another ended up wrapped around a pylon or a bridge support, sitting around with new engines in them.  However it happened, the truck is junk, but in many cases the entire contents under the hood are up for grabs.  This includes all the new emissions equipment.

The next challenge is finding a good engine that wasn't involved in a fire, submerged in a lake, or has a cracked block.  So the search begins.  What's beautiful about this option is that all of the major truck manufacturers are making EPA compliant trucks, and as time goes by more and more of them are hitting the roads.  Literally.  And sometimes they hit pylons.  Literally.  So the longer you can wait, the cheaper and more plentiful these engines become.  Fortunately, I can wait a LONG time.  So if I can wait a long time, why do I care about the deadline coming up in January, right?  As a conscientious operator of a truck, I want to be compliant with the laws in all of the states.

Unfortunately, half of our job is trying to keep up with the various laws in each state.  The other half is keeping the truck in good condition, and then the other half is staying in good physical condition, and the other half is finding good loads, and the other half is etc. etc. etc.

When you have found an engine that will fit your needs, chances are the new engine needs new wiring and computers inside the dash.  This is where all the magic happens.  The biggest challenge is the wiring.  The engine will fit under the hood and bolt right up to the transmission you already have.  The DPF and DEF tank will bolt right onto your existing frame.  The mechanical aspect is easy.  Heavy!  But easy.  Once you have the heavy lifting done, you need to mimic the truck the engine came out of.  The trick here is maintenance in the future.  You don't want to be in a situation where the truck has impossible situations to diagnose.  Because you are doing the wiring, you are in control of how easy the wiring access points are.  The truck's dash is still limiting, but most of the gauges and dials in a 2013 truck are the same as in a 2007.  There are a few different additions such as DEF tank level indicator and DPF condition indicator, but for the most part, the HVAC, engine brake, lighting, and other basic dash switch functions are the same.

You're also at an advantage doing this operation because you can video your progress or just take pictures along the way.  Most of the dealerships and mechanics I have spoken with are very against this maneuver for various reasons.  The reputable shops don't want to do this type of engine conversion for warranty reasons, as they don't want to be liable for any repercussions down the line, and the dealerships want you to buy a new truck.  There is no money in this for an operator who can run one truck for 30 years.  There are also shops who are so scared of this type of conversion, they feel you are some kind of sick demented wacko (which I AM) wanting to do something like this, under the guise of "looking out for your best interests", they try to talk you out of what they believe is the most stupid idea they've ever heard of.

Fortunately, California has a number of shops doing these conversions because the millions of people who live in California have to, well, LIVE there.  They don't get to pack up and leave their home or decide to just run a truck outside of the state for as long as they want to.  These shops are charging between $5,000 and $10,000 in labor to perform the conversion.  You just have to supply the parts.  There's even one outlet online that has engines from all over the country.

That website has volumes of information on it, and the people selling the engines will set you up with one of their mechanics and try to get the whole process streamlined into one call and one price.  I've found a few engines on there that range from $15,000 to $30,000.  On top of that price is the cost of shipping the engine to the shop doing the work, that can vary from $1,000 to $3,000.

These engine suppliers will try to supply everything you need to make your old truck into a new one from the dash forward, but  inevitably leave out a few electronic components - either because they were destroyed, or they just aren't there.  In this case, more parts must be found to complete the conversion.  Those parts usually run about $6,000.

So, once you buy an engine, ship it, remove your old engine, and install your new one, you're out somewhere between $25,000 to $40,000.  You'll still have an engine to sell to someone else, which should be worth at least $10,000.  That'll drop your out-of-pocket cost to somewhere between $15,000 to $30,000.  If this conversion means you'll get another 10 years out of your truck once it's done, you've made a wise decision.  There's still a chance that the engine has something wrong with it, though.  So let's say you do this conversion and the engine fails after 100,000 miles for whatever reason.  You can still repair it.  In that 100,000 miles, you should have recouped your investment and now are only doing repairs.  You've lowered your costs.

Even if you have to do an inframe on the engine, as long as the block isn't cracked, you have a good egg to work with.  An inframe will only cost about $10,000 and will buy you another 400K miles or better.  If you're lucky, another million miles.  After all, you're an owner operator and this is your truck.  You take care of it like no one else can, and you can make it last for decades.

This also should increase the resale value of the truck - assuming you have good records and can keep the electronics in such a way that another mechanic won't run screaming from the truck when a sensor fails and they have no electrical schematic for reference.

Regardless of which route you choose, you have to keep in mind the future of your business. Will you lease your truck onto a known carrier, or will you use it elsewhere under your own authority  Can you sell it later?  Will you put another driver in it?  There are many options to consider and you must make a decision.

I am deciding to wait until later this year and keep shopping around.  My current, most attractive option is to buy a new day-cab truck, put my current sleeper on the frame, and sell my old truck day-cab to someone who can use it.  I can do this at any time in the future, at a price I'm comfortable with.  Plus, the day-cab swap route offers more resale value and less mechanical headaches down the road.

Or I could just turn my old truck into this:


This is still legal in California without a DPF.  Oh yeah!

3 comments:

Scott said...

Thanks for the post and running some numbers. Seems to be tough to invest the money unless California is a major part or your operation. Unless those occasional big money loads in/out would justify it.

Ed said...

That's the thing Scott. Over the last 3 or 4 years, we have run into California about 3 or 4 times a year. Most of our business is on the east coast anyway. The ports in CA are really the only reason to go there and they have moved most of their freight to the rail. We don't move produce, so there's not much need to go there on a regular basis.

Ed said...

Grest stuff Ed, luv the #'s, you've really done your homework.. a while back I know you guys were considering the new KW, I know Salena really liked those, any updates on models for future ? And would you ever consider the Volvo 780 ??
Thanks. .