Should You Buy New or Used?

In its relatively short lifespan, horizontal directional drilling has gone from boom to bust and is now making its way back up again. The used equipment market for drill rigs has followed this cycle. Although the overseas market is absorbing a large portion, there are still used units available. So, how do you know if purchasing a used drill rig is a good idea for your operation?

"Used units can be a good fit for a contractor who does an occasional bore," says Klane Kirby, Astec Underground. "Typically, the used buyer is someone who does very few bores a year and can't justify a new purchase."

Previously owned drill rigs can also be a good fit for startup contractors with limited funds. "You're able to get in at a lower cost with a used system," notes Richard Levings at The Ditch Witch organization. "But some of that depends on if you have the ability to purchase used support equipment.

"If you need a certain size unit and you don't have the funds to purchase a totally new system, then you will have to look at used components within the system, which include trucks, trailers, vacuum excavators, etc.," he continues. "The piece of equipment that is purchased used depends on which piece is available, and affordable."

By affordable, Levings means you need to evaluate the true costs of the used equipment. "You don't want to have to turn around and spend a large sum of money to repair it or bring it up to working condition," he explains. "You need to evaluate which piece of that system is the least risk. If you have limited funds and spend all your money on that system, you don't have any cash to cash flow the business or make repairs you didn't foresee."

What to watch for when buying used
If you're considering purchasing a used directional drill, evaluate the following areas.

Hours ? The average life of a drill rig is about 5,000 hours before major components will start to wear out. "Don't buy a drill with 4,000 hours and expect it to run like new," says Levings. "Major components will begin to wear out at that level. Usually, contractors are starting to trade in machines at those hours because maintenance costs are beginning to rise. But be aware, you can see some drills at 2,500 hours that are completely worn out."

Drill pipe ? Drill rod is an expensive item to replace. In the case of a mid-size drill, replacement pipe could cost $15,000, says Kirby.

Yet, buying used drill pipe can be risky. It only takes one really bad bore to ruin drill pipe, and the damage isn't always visible. For example, if a new string of drill pipe is severely over bent, it may not show up as a permanent bend, but it will severely weaken the pipe and shorten its life. "Drill pipe is something you need to be leery of buying used, regardless of its age," Levings states.

Look at the thread condition. Measure the outside diameter of the drill pipe and compare it to a new joint. Look for scores and check to see if it's straight.

"You may want to just replace the drill stem and not take a chance on it," says Kirby. "You could lose a lot of money down the hole if you have faulty drill pipe."

Breakout system (hydraulic wrenches/vises) ? Make sure the breakout system isn't worn out or loose. When you activate it, it should provide a firm, tight fit. "You don't want any play in it," says Marv Klein, Vermeer. "If it's loose, it's time to replace it."

Drill rack ? On older designs with a chain drive system, look for chain wear and check the tension. For newer models equipped with a rack and pinion system, look for wear in the rack gear or pinion gear.

Operator station ? Make sure the controls move properly and aren't loose or sloppy. Check to see that the operator gauges are in working order. "If they're broken, you won't have the tools to properly operate the drill," says Klein.

Undercarriage and tracks ? The entire drill rig can be immobilized if the undercarriage system isn't working properly or is in bad condition, says Klein. It's also one of the most expensive components to repair.

Look for wear on sprocket teeth and track rollers and check to ensure they aren't loose. With rubber tracks, check for gouges, cuts, etc. For steel track, check for rust and pitting.

Hydraulic system - Leaks may be difficult to see, since the drill rig will likely have been cleaned prior to sale. So look at the condition of the hoses to see if they're worn and weather beaten. If possible, have the drill evaluated by a dealer to check pressures.

Electrical system - Look for patches and rewiring. Check all functions to make sure they work.

Overall appearance - Drilling fluid is very hard on paint. While some wear is normal, all-over corrosion is an indication that the rig has not been well maintained. In addition, check the condition of the pipe boxes, check for missing covers, etc.

"If the machine is beat up, guards are missing and hoses are worn, you get a general sense that the previous owners didn't take care of it or maintain it," says Levings.

More information is better
It's also important to find out where the unit has been used.

"If it's coming out of an area that has a lot of rocks, that certainly should send up a red flag," says Levings. "That doesn't mean you shouldn't buy it; just be aware it has been running in difficult conditions. Many units are sold on the Internet by a picture and description. Keep in mind people trying to sell them are trying to get rid of them."

It's also important to obtain maintenance records, if possible. "You need to be aware of what you're walking into," says Kirby. "That doesn't mean you can't buy a used unit, go out and do a bore and make money with it. But you do have to know what to look for."

This is where buying from a dealer can be an advantage. "With a dealer, you may get some warranty," says Levings. "We have dealers that rebuild drills, so a lot of the components may have been inspected and replaced.

"Going through a dealer usually costs more," he admits. "But when you're buying from an individual, you're stuck with what you have. Repair costs are the responsibility of the buyer and, in the end, you may pay more than what the dealer is asking."

New units offer more guarantees
Buying a new directional drill will obviously require a more substantial capital investment than buying used. Yet, you need to weigh the benefits against the added cost.

With new drills, most manufacturers offer at least a one-year warranty, typically with the option to buy extended warranties for coverage up to four years. While some used drills purchased through a dealer or large auction house may include a limited warranty, those purchased on the Internet or from an individual are usually sold "as is."

"Many times, there's nothing that guarantees the machine is in proper working order," says Klein. "You don't always know what you're buying. A new piece of equipment off the production line has been inspected and has met the production standards of the manufacturer. You're protected in case a problem exists with the machine after you purchase it."

"You don't always know the conditions the [used] drill has run in or how much it's been stressed," adds Kirby. "You can stress drill rod on one bore and it may not fail. But if you get into a situation where you're stressing it again, it can break."

Although a new unit will cost more, it does give you peace of mind, says Levings. "With used drills, your biggest risk is the drill pipe. Your next biggest risk is worn components that you can't easily see, such as sprockets, bearings, hydraulic components, electrical harnesses, etc.," he points out. "With a new drill, you get a new warranty and peace and comfort that everything is new. You should be able to go out on day one and be productive."

Finance costs are another consideration. "You will probably end up paying a higher interest rate on a used drill," Levings states. "When finance companies finance a new piece of equipment, if they have to repossess the unit, they have something of value. If they're financing a used unit, they're not certain what they're financing."

After-sale support should also be kept in mind. While some dealerships may provide support for used equipment, it's no guarantee. "And it may cost more to do it that way," says Klein. "When you buy new, the warranty covers parts and labor, so it's less costly to the customer than if he has to bring a used drill in to the dealer. In that case, the customer pays for the repair out of his pocket."

Leading horizontal directional drill manufacturers also have extensive dealer organizations to provide support and training.

"Our dealer organization is there to support customers," says Levings, "whether that's operational training on the new drill, training about mud and local ground conditions, knowing what tools to use most effectively, etc. While these machines are simpler to operate than they were 10 years ago, a drill is still a specialized piece of equipment. You can't just take anyone off the street and expect that they will be able to operate it."

Technology improvements
One of the biggest benefits of purchasing new is you get the latest advancements in technology.

Horizontal directional drills have seen quite a few changes in their relatively short history. Rack and pinion designs have replaced chains, increasing reliability, while reducing maintenance and speeding the loading process. Upgraded safety features include anchoring systems that are now more effective and easier to use.

There have been advances in engine technology, as well. "About every two to three years, most manufacturers are required to utilize the most advanced emission-controlled engines for EPA specifications," says Klein. "Typically, the new machines are more fuel efficient and cleaner burning. When you buy used, depending on how old it is, you're buying outdated equipment and you might actually lose productivity."

Newer directional drills also pack more power into the same size package. "In the last five years, manufacturers have put more pullback, more horsepower and more mud pump capacity into a package that isn't any larger," Kirby points out. "Power per pound has increased."

This means you can bore larger diameters for longer distances, while maintaining a relatively small footprint. "That's a benefit, because a lot of times, these units are used in places where space is an issue," Kirby adds.

The operator station has also seen changes. Some models feature cruise control; on the backream of a bore, you can set it and you don't have to hold the joystick the entire time. And partial or fully automatic rod loading on some models speeds the drilling process. "It's more forgiving to the operator," says Kirby. "He doesn't have to work as hard physically, and it cuts down on fatigue."

"From an operational standpoint, new introductions give us the ability to incorporate more electronics that provide better efficiency during the operation phase," says Klein. "The newer models are also more user-friendly. In the older machines, everything was controlled manually. You had to physically run the machine by pulling levers all day long. Now it's done electronically and is more hands-free."

"Over the long haul, it allows the operator to be more comfortable, which means that over time, he will be more productive," says Levings. "The newer machines are also more reliable because they have fewer moving parts. In the end, you're better off buying new because you know what you're buying. You have a level of dealer support and a warranty. That can be especially important if you don't have a lot of cash to pay for hidden costs."

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