Rick Royals bought a milling machine almost because he had to. The co-owner of Royals Contracting, a Raleigh, NC, paving, milling, and patching company, had bid a 4-inch-thick patching job in 2002, planning on doing the work with a pavement saw, a backhoe, and a 12-person crew.
Royals' crew began the job and for the first three nights generated $1,235 of income a night—at a cost of $3,240 a night, resulting in a loss of more than $2,000 a night. That was quickly followed by a letter for damages charging them an additional $2,000 a day for slow progress. As Royals says today, "A decision had to me made."
So Royals Contracting did some research and learned what a lot of paving and pavement maintenance contractors are learning: that pavement milling, which until a few years ago might have been out of reach of the small and mid-sized contractor, is now an accessible service option.
Partly that's a result of milling becoming commonplace on large and small paving jobs across the country, but it's also the result of manufacturers producing a broad range of milling equipment. Contractors of virtually any size can enter the milling market at just about any level they choose; the key is determining what that level is and what your market needs.
And there are different ways of getting in the milling business. Royals Contracting and Reid Paving, Gilbertsville, PA, took one route; Fonseca & McElroy Grinding, Santa Clara, CA, took an entirely different approach. The three contractors work in distinctly different areas of the country, and they approach the milling business from completely different aspects. Royals Contracting and Reid Paving are standard paving and pavement maintenance businesses that after subcontracting milling work and renting milling machines decided to buy the equipment and incorporate milling into their own services. FMG, on the other hand, runs a pavement milling business, owns 11 milling machines, and works as a subcontractor to a variety of paving and general contractors.
And both approaches have proved successful. But as with virtually every other piece of pavement maintenance equipment, the key to adding milling to your operation is return on investment: How much does it cost to own and operate a milling machine, and can you keep it busy enough to make a profit.
Royals Contracting recognized quickly that milling could save them money by, at the very least, speeding the work along. To solve their immediate problem Royals rented a 4-foot milling machine at a cost of $2000 a night. Production quickly increased to 120 tons a night (from 13 tons a night) and income rose to more than $11,000 a night. Using the rented milling machine Royals finished the job and ended up with $40,000 in net profit, even after paying the late charges. On another job a year later Royals ran into a similar situation. Instead of renting a milling machine Royals subcontracted for a 4-foot milling machine, completed the job on time, and generated $38,000 net profit on job income of $256,000.
Not surprisingly, milling attracted some serious attention from Rick Royals, and he took stock of the company's situation: Royals Contracting had a backlog of six jobs involving roughly 6,000 tons of asphalt, he had received a number of calls to bid some pavement profiling work on North Carolina Highway 70/50, and word on the street was that contractors in the area were having a tough time getting all their milling work done.
So Royals Contracting bought its first milling machine, a 4-foot-wide Marini unit, in October 2003. And after a brief operator-training period and some learning curve mistakes, Royals Contracting had completed all six patching jobs within two months.
"It was a very profitable November," Royals says.
Initially Royals had the milling machine working six days a week through December 19, 2003, when worked stopped for Christmas. Work started again in January 2004, and Royals says his milling operation was so successful it was down only 16 days in 2004 as a result of weather or gaps in backlog. With all that work Royals leased second Marini machine in October 2004, then purchased the unit in March 2005.