As the economy improves and capital-spending pursestrings are loosened, course and grounds departments are getting the go-ahead to pursue needed equipment investments that had been put on hold in recent years.
As the economy slowly returns to solid footing, golf course properties that have had to delay or forego capital plans in recent years are finding that they can once again loosen pursestrings to acquire much-needed golf course maintenance equipment.
That’s good news for managers like Mike Rienzi, the Golf Course Superintendent at Kiva Dunes Golf Club in Gulf Shores, Ala. Rienzi has endured first-hand the hardships that accompany an inability to upgrade maintenance equipment on a timely basis—but he also has learned a valuable lesson from the property’s struggles.
“Pay me now, or pay me later,” says Rienzi. “But rest assured, you’re going to pay.”
Pushed to the Limit
Kiva Dunes replaced its entire fleet of maintenance equipment in June 2011. Prior to last year the property bought the occasional piece of equipment, but it had not replaced its full fleet since 2000.
“We pushed it to the limit. We kept putting it off and putting it off,” reports Rienzi.
|SUMMING IT UP
Money was tight at the resort property on the Gulf of Mexico for a variety of reasons in recent years. The overall U.S. economy and several hurricanes created a decline in the number of rounds, and the 2010 Deepwater Horizon oil spill ravaged the Gulf’s fishing and tourism industries.
“There were things I couldn’t do, or we were grossly inefficient because I did not have the proper fleet of equipment,” Rienzi recalls. “We weren’t taking short cuts, but we put off repairs and took equipment out of our fleet because of repair costs.”
His fleet of walking greens mowers dwindled from seven or eight units to four or five machines, which greatly affected maintenance practices.
“Our walking greens mowers fleet was so depleted we had to start triplexing greens,” he says. “That’s not the way we wanted to do it. We couldn’t do vertical mowing on the greens. We also skipped an aerification because of a lack of equipment. There was an overall lack of efficiency, and a lack of quality.”
A New Lease on Life
Kiva Dunes leased its equipment for the first time last year, and Rienzi has seen a number of benefits from the 48-month lease arrangement.
“It keeps us current with the technology curve,” he explains. “We can predict our maintenance costs. We know how much our monthly payments will be, and how much the non-warranty parts will be.”
The fleet is never broken, he continues, and the crew’s production, efficiency, and quality of work have improved tremendously.
“Before, we just hoped the machine was going to make it out of the shop, do the task, and make it back,” Rienzi recalls.
He also prefers leasing to purchasing equipment because of the resale value— or lack thereof—of the machinery.
“The residual value of this equipment after five or six years is zero,” notes Rienzi. “We don’t get anything for it when we unload it.”
Staying With It
The course maintenance department at The Golf Club at Oxford Greens in Oxford, Conn., leases its equipment as well. The property last got new equipment in 2010 when it leased a new fairway mower and sand bunker machine. “We’ve got a pretty good replacement schedule. We try to stay with it,” says Golf Course Superintendent Bryan Barrington.
According to the Golf Course Superintendents Association of America (GCSAA), 54 percent of superintendents took part in lease programs in 2010—up slightly from 52 percent in 2006.
A product marketing manager in the financial division of a leading equipment manufacturer has seen a rise in the incidents of leasing equipment, or at least in looking for financial alternatives such as leasing, in the past couple of years.
“People were a little more deliberate in the last couple of years, but properties can’t delay purchases or equipment-replacement needs forever,” she says. “We also recommend that properties consult with their tax advisors or accountants, to see if leasing could provide tax benefits and improve certain financial ratios.”
Brian Boyer, Golf Course Superintendent at Cinnabar Hills Golf Club in San Jose, Calif., says his club has “been very lucky” that the economy has not affected its capital plans. The golf course, which opened in 1998, got new equipment through buy-out leases in May. The new pieces included a fairway aerator, greens sprayer, bunker rake, walking tee mowers and two utility vehicles.
Boyer put together a 15-year replacement plan after the property bought $750,000 in equipment three years ago. At that time, he reassessed the property’s capital needs, because it still had aging equipment left over from construction.
“We purchased almost an entire new fleet, and we’re staggering future purchases,” Boyer explains. “I don’t want to go back to the ownership again with a $750,000 request for new equipment.”
Under his capital plan, Boyer says the most he’ll spend on new equipment annually is $350,000; new purchases will average $216,000 a year. He’ll base decisions about new purchases on usage and priority levels, starting with equipment for the greens, tees, fairways and rough. He expects to get new greens and tee mowers every four years. Boyer feels that the property, which sells or donates its old machinery, gets better rates by purchasing its equipment.
Washington National Golf Club in Auburn, Wash., also purchases its golf course maintenance equipment, and the property bought a new aerator, rough mower and some greens mowers last year, after buying a new tractor in 2010.
While he has been able to keep pace with capital needs, Certified Golf Course Superintendent Trevor Broersma says he, like many of his professional peers, has had to put more time and thought into every equipment-related decision. “With the recession, a lot of golf courses are asked to think about want versus need,” Broersma says. “We pushed our equipment a little bit further.”
That meant taking a harder look at which pieces were really needed, and justifying the benefits of each piece of machinery.
“Everybody wants new equipment, but we had to communicate to our corporate office what we needed, and supply them with data,” he adds.
Keeping the Motor Running
Broersma also says his repair budget has gone up significantly.
“It hasn’t forced us to change anything, but it forces you to be a better planner,” he explains. “With the recession or without it, you have to have a good mechanic. He can save you thousands of dollars. We’ve been able to get 7,000 hours out of equipment, instead of the 4,000 or 5,000 hours that most are getting out of it.”
Broersma also says his walk mowers have been invaluable to his greens maintenance practices. “We’re double-cutting now with one pass,” he reports. “We can mow every other day, and roll the greens on the opposite days.”
On non-mowing days, Broersma can assign two or three crew members detail work, such as edging heads or bunkers. Being able to tend to such details, he adds, gives the property an advantage over its competition.
Before replacing its golf course maintenance fleet, Kiva Dunes was spending more than $100,000 annually on equipment repair and maintenance.
“I can keep this stuff running until the end of time as long as they keep making parts for it, but it didn’t make sense, once our annual maintenance costs started to approach the cost of new equipment,” reveals Rienzi. “It cost more to try to operate on a shoestring.”
At Cinnabar Hills, a preventive maintenance program with regular oil and filter changes and monthly waxings keeps machines in top condition. The club has 18 utility vehicles, and each crew member is assigned his own cart. Boyer expects to buy nine new utility vehicles in both 2015 and 2016. “Personal pride and ownership keep them clean,” he adds.
Preparing for Tier 4
When making capital plans, superintendents have also had to turn their attention to Tier 4 emissions regulations, which will go into effect Jan. 1, 2013. The regulations, which will affect new turf equipment with a diesel engine of 25 to 74 horsepower, are expected to affect golf course maintenance equipment such as fairway units and multi-deck rotary mowers. To comply with the new standards, the engines must reduce emissions of particulate matter, or soot, and nitrogen oxides, which form smog in the atmosphere, by more than 90 percent of current emissions standards.
However, notes a communications specialist at a leading equipment manufacturer, “There isn’t anything a course must do to comply with Tier 4. The onus is on the manufacturers.”
Tier 4 is one of the final phases of new off-road emissions standards that the Environmental Protection Agency (EPA) has been implementing through a step-by-step process over the last decade. Each tier addresses numerous types of pollutants, and deadlines to comply vary according to an engine’s horsepower range. Implementation will continue through 2015, when Tier 4 final regulations are slated for completion.
“The GCSAA is working with manufacturers to make sure superintendents are aware of the standards and date,” says Chava McKeel, Senior Manager of Information and Public Policy for the superintendents’ organization. “The GCSAA is trying to inform superintendents of the regulations that will affect their jobs through webcasts, print media, e-pushes, and events. Hopefully, one of the ways we’re delivering the message will resonate with them.”
At The Golf Club at Oxford Greens, Bryan Barrington has heard the message and is making plans to get ahead in the game.
Concerned about price increases that will inevitably affect equipment that meets new Tier 4 emissions regulations, he plans to lease some new equipment, including a rough mower, fairway mower and surrounds mower, toward the end of this season, rather than wait. That’s because about $150,000 worth of equipment that Oxford Greens needs to lease will be affected by the new regulations. “There will be a significant increase in price in the same equipment after Tier 4 goes into effect,” Barrington explains.
Barrington has stayed in close contact with equipment representatives about the machinery that will be affected, and the potential price increases. The emissions requirements are a step in the right direction, he believes, but other than higher costs, the regulations will have little effect on his eight-year-old club. “We’ve been using low-sulphur diesel equipment for a few years anyway, and don’t have a lot of big pieces,” he says.
Maintenance equipment at Oxford Greens generally lasts five to seven years, Barrington reports. The fleet includes six greens mowers and six fairway mowers, and “a lot of that is gasoline, not diesel.”
Cinnabar Hills will not get any new diesel equipment for at least two years, so Boyer hasn’t had to worry about Tier 4 compliance. “The current equipment will be grandfathered in,” he reports.
When it comes to Tier 4 compliance, a product manager for a major equipment manufacturer says superintendents should consider two driving factors when making plans for equipment capital spending—timing and price.
|Meeting Tier 4 Emissions Standards
When the EPA’s new Tier 4 final emission standards, which will affect off-road, diesel-powered equipment between 25 and 74 horsepower, go into effect Jan. 1, 2013, golf course properties need to be prepared. Although current equipment will be grandfathered in, education and awareness of the new regulations can help properties avoid the “sticker shock” that will accompany the cost of the new equipment. The product manager of a major equipment manufacturer suggests several options that golf courses can pursue to comply with the new standards:
“The EPA regulates the transition from one tier to the next at the manufacturer level [by] the date the engine is manufactured,” she explains. “As previous-tier engines and equipment containing those engines are depleted from the supply chain, the new-tier product will be released. Equipment currently in use meets the EPA regulation that was in effect the year the engine was manufactured, and is EPA-compliant for the life of the equipment.”
Purchase prices are expected to increase by 10 to 20 percent when Tier 4 Final products go to the marketplace, she believes.
“While the new systems and technologies come with a price, these may also allow improvements to engine noise, sound levels, performance and diagnostic capabilities that may provide a return on the investment,” she notes.
To avoid the inevitable “sticker shock,” however, she stresses that everyone on the management team—not just superintendents—should be aware of the upcoming requirements. “If I could offer one piece of advice for capital planning and spending, it would be to consider all your options,” the product manager says. “Buying ahead to avoid the expected rise in price is certainly a path, but be sure to ask if the manufacturer will be able to sell current products past January 2013. This may allow you to purchase products closer to today’s price levels.”