FEATURES
Minimize Your Losses from Theft

by Marcia Passos Duffy
Protect your equipment, protect your business

Jim Hovey, a landscape contractor based in Mt. Pleasant, Mich., was an entrepreneur with a thriving business who had landed a contract in Florida for the winter months.

Then, while his machines were temporarily parked at a job site, $425,000 worth of drilling equipment was stolen.

Two and a half years later, the equipment still hasn’t been recovered. While the machines were insured, complications with the policy, which did not list the equipment properly under a new business name, led his business into a downward spiral.

“The very fact that the equipment was stolen put my company out of business,” says Hovey, who was forced to declare bankruptcy. While he will eventually be paid by the insurance company for the loss, it will come too late.

While Hovey’s story is an extreme case of what could happen when your equipment is stolen, a loss of any type of equipment can cause setbacks in your business.

To prevent disruption to your business and loss of revenue, you should understand how theft happens, how you can prevent it, and what to do if your equipment is stolen.

A widespread problem

Construction equipment theft, including landscaping equipment, is a widespread problem, according to the National Equipment Register (www.nerusa.com), which estimates that the total cost of equipment stolen is upwards of $1 billion per year.

The theft of loaders, trailers and skid steers can add up to significant financial loss and an interruption of your business.

Smaller tools that are prevalent on a job site, such as power tools and compressors, are also targets for thieves who know these items are untraceable, notes Andy Hughes, product manager for DeWalt (www.dewalt.com).

Theft doesn’t necessarily come from a rogue thief; it can come from inside your company. Lori Frank, president of Boise, Idaho-based Avalon Landscapes, Inc., found that out the hard way.

“We even found two [now former] employees [using our equipment and computers] to run their own landscape company from within our company,” says Frank, whose company has seen its share of thievery from the outside as well, with a snowplow stolen and trailers broken into.

“There is always a market for thieves for this type of equipment,” says Ryan Shepherd, operations manager for the National Equipment Register (NER), which endeavors to increase the recovery rate of stolen equipment and reduce the costs associated with theft for owners and insurers. The majority of equipment (80 percent) is stolen right off the job site and listed on online auction sites or other types of auctions, fetching prices near commercial value, he explains.

Easy to steal

The problem with equipment left on job sites is that it is easy to steal, even if the keys are removed.

Unlocked, unsupervised equipment on the job site is like a “take me” sign for thieves. Business owners sometimes leave equipment unattended for several days. If equipment is left on a site over a holiday weekend, it is often a target for thieves, who know they’ll have a three to four-day head start in stealing and selling the equipment undetected.

“Even if a thief drives away with equipment and is pulled over by the police, there is no title, no VIN number ... if the equipment has not been reported stolen for a few days, it is unlikely the officer will catch it,” says Shepherd.

Poor record keeping of equipment is often a culprit in the lack of recovery of stolen machines, but part of the problem lies within the construction equipment industry itself, which does not have a consistent numbering system as automobiles do.

While each car has a unique 17-digit VIN (vehicle identification number), construction equipment numbers are all over the map, from three digits up to 17 digits. “There is no law or standard. Often, the entries in the computer cut off some of the digits, which makes it even more difficult to search,” says Shepherd. Compounding the problem is that the numbers on a dealer invoice may not match up to the machine, with zeros missing or other quirks.

Prevention

There are some steps you can take to make your equipment a less desirable target to thieves.

Put identifying marks on equipment
Create unique identifying marks that make it easy for you to recognize, but make it difficult for thieves to conceal. Some contractors paint their equipment a unique color rather than the usual yellow that 90 percent of contractors use. You can also protect your equipment with DataDots, identification technology that are traceable under a black light, (www.microdotprotection.com/home.html).

Install theft-prevention devices
Physical or mechanical deterrents, such as those sold by LoJack (www.lojack.com) or The Equipment Lock Company (www.equipmentlock.com), prevent thieves from actually operating or moving the machinery. You can also try securing machinery with a thick cable or chain to a foundation or other large vehicle.

Register equipment with the NER
This organization provides a database of stolen construction equipment that is searchable by law enforcement. The organization ensures that the serial numbers are correct and sets up the database so that it is as easy as possible to search for lost equipment, and the cost to register is minimal, according to Shepherd. For example, six to 10 pieces of equipment can be registered for $100 a year. Registering your equipment also allows you to waive up to $10,000 of your insurance deductible if any equipment is stolen. For more information, visit www.stopequipmenttheft.com.

Install GPS tracking devices on equipment
Don’t just install a GPS tracking device, but advertise it prominently on your equipment. This will not only make equipment recovery much simpler in the event of a theft, but it will deter most thefts from happening in the first place.

Use machinery to block theft
Cluster equipment together, putting more expensive equipment in the center, and surrounding it with other equipment. “A thief is looking for an easy heist, so the more obstacles you can create, the better chance you have of keeping your equipment,” says Bryan Witchey, vice president of sales and marketing for The Equipment Lock Company.

Use lighting and fencing
Most thefts happen at night. Keep your equipment stored in a secure area with enough lighting and even fencing. If possible, block the main entrance to the job site each evening with a piece of equipment or a barricade. Avoid storing equipment in an area surrounded by open space. Do not give thieves space to “work” or park their own vehicles to conceal their activities or aid in a quick getaway. Remove hitches from trailers. Develop a neighborhood watch with nearby businesses.

Install security cameras or hire on-site security
This is particularly critical for large jobs that require machinery to be left on-site for an extended period of time.

Get employee input
Employees know the equipment and often have good ideas on how to protect it. Make equipment theft a weekly topic at your company’s safety meetings. Also, restrict access to keys and combination locks at sites and the main office to as few people as possible, suggests Tyler Onorato, operations coordinator for Kirkland, Wash.-based SRC Private Security LLC (www.srcprivatesecurity.net). “Disgruntled former employees are often the perpetrator, and their access is made easy because they have extra keys or combinations,” he says.

Make sure you are properly insured
Review your insurance coverage with your agent or broker yearly. Make sure that everything you want insured is listed, that all serial numbers are listed, and that you understand the coverage.

If he had to do it over again, Hovey says he would have installed a GPS system on his equipment and would have opted for a replacement cost policy or a rental policy on critical pieces of equipment.

“Review your policy. Then, review it again,” says Hovey.

The author is a freelance writer from Keene, N.H.