GPS / Telematics

Pinpointing Solutions to Off-Road Equipment Management

June 2010, Government Fleet - Feature

by Staff

Leasing Equipment Can Extend Tight Budgets

Many government fleets have seen acquisition budgets cut sharply in this economy, and some even have had equipment procurement spending eliminated entirely, at least for the time being, as local governments struggle to manage with dwindling revenues.

In situations where purchasing new or used equipment isn't an option, leasing off-road equipment can provide an attractive opportunity for public sector fleets.

Leasing could be a pragmatic move, especially for a short period perhaps for the duration of one or two projects. The overall expense of leasing for a limited time is substantially less than the outright purchase of equipment, of course, and once the work is done and the equipment returned, no continuing cost remains.

The City of Oxnard, Calif., pressed by economic factors, made adjustments in securing construction equipment. The Oxnard fleet numbers about 950 pieces and includes police sedans, a range of trucks including light-duty pickups and refuse trucks, and construction equipment.

"Typically we don't lease, we purchase," said Dan Berlenbach, fleet services manager for Oxnard. But these are atypical times, he noted.

"Essentially, the City is cash-poor," ­Berlenbach said. "This fiscal year and the last fiscal year, because of the economic situation and the lack of revenue for the City, we're doing lease-purchase."  The leased equipment, with an option to purchase, includes "some of the more critical vehicles and equipment," he said.

Leasing has pros and cons, Berlenbach noted. "It is less expensive at the outset for sure," he said, "but obviously, long-term, it's not less expensive. ­Money's not free."

That cost of money the interest on a lease is something to avoid long-term. However, short-term, "it is a good way to cut your maintenance costs and renew some of those unreliable [pieces] in your fleet. In our case, we did it mostly for regular fleet vehicles light and heavy trucks. We had a couple of pieces of [construction] equipment in there," said Berlenbach.

Oxnard was not in dire need of new or replacement construction equipment, Berlenbach said. "We just basically kept what we had and sunk more money into it," he explained. By making repairs and replacing parts as needed, the fleet has been able to make do, he said. The fleet continued work on planned projects.

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