D11 hire rate 80% less than it should be

The CEO of the New Zealand Contractors Federation Richard Michael, told the CCFs annual conference in Melbourne (Earthmover, January February 2004/5): As you know contractors are their own worst enemies and we have only got ourselves to blame for tendering too low.

I am now out of this industry as an active contractor and am more an interested observer. But I could not agree more with Richard; the industry has to charge more.

A very simple rule of thumb, given to me many years ago by Jim Paul, one of the most organised machinery reps Ive known, was that owners need a dollar an hour per thousand dollars of a machines capital cost.

To simplify, the owner of a Caterpillar DllR, which I believe costs about $2.3 million, would at this rate charge $2300 an hour. We all know that give or take $300 to $400 an hour is close to the current money for a D11 and obviously that is nothing like as much as it should be.

Last month, the CCF WAs CEO Mike Morris, reported that new life member Alex Wolfe said hire rates for backhoes were the same now as they were 30 years ago. Wolfe told a CCF meeting that a backhoe he had purchased for $18,000 was hired out at $65 an hour in the early 1970s. Today, backhoes cost more than $100,000, but the hire rate is exactly the same (plus GST). Using Jim Pauls formula it should be more than $100 an hour.

Another reader I met at Ag-Quip last winter, told me he had recently bought a new dozer of about 200hp, and was not earning enough money from it. My immediate comment was: Tell me about it; theyre not getting cheaper nor will they.If we had more realistic rates we could work 40-hour weeks and 10-day fortnights and have time for our families and children. I never really saw my three boys grow up and regret this so much; their mother did all the bringing up while I burnt diesel.

So, given low hire rates, we dont need the NSW government saying some wide loads cant be moved for six weeks each year during school holidays, which a reader informs me is the case.

Why doesnt the government just legislate that all contractors have a six-week break during these periods?