July 18, 2007

Site Security

Construction equipment theft a “low-risk” gamble

KATHY KELLEGER

special to journal of commerce

One Monday morning, an employee from a large construction company returned to the job site in California and discovered that thieves had stolen a 2000 Case backhoe sometime over the weekend.

The theft was immediately reported to police, who activated an equipment tracking and recovery device hidden in the backhoe. Just 15 minutes later, police and members of an auto theft task force received the silent signal emitted from the backhoe and located the equipment in a field on the outskirts of Modesto.

Within an hour of reporting the theft, the $40,000 backhoe was returned to its owners undamaged.

Many pieces of heavy construction equipment wind up at a chop shop after being stolen from a construction site.

Fortunately, there was a happy ending to this all too frequent story of construction equipment theft. All too many times, the ending is not so pleasant. In fact, the National Insurance Crime Bureau in the U.S. estimates that more than $1 billion in construction equipment is stolen each year.

Another study conducted in 2005 reported that a full 72 per cent of construction companies have had equipment stolen in the past five years.

This type of theft is considered a “low risk, high reward” opportunity for a number of reasons. Equipment is often left at unsecured construction sites where thieves can easily get in and do their dirty work.

Additionally, the open cabs of construction equipment provide thieves with easy access. Also, equipment often has a “one key fits all” ignition, making it all too simple to jump into a backhoe and drive off.

Another issue is that construction equipment does not have standardized product identification numbers (PINs) or serial numbers. Title and registration for this type of equipment are also not mandated. The bottom line is there is often inferior record keeping and a lack of paper trails, which makes it hard to trace stolen equipment back to owners.

Other “low risk” factors involve the lack of attention from law enforcement to this type of theft.

Construction theft is often viewed as a “victimless crime” and there are often weak penalties.

And there is a lack of familiarity among law enforcement of the various types of construction equipment, making it more difficult to distinguish a skid steer loader from a backhoe loader from a wheel loader, etc.

The “high reward” piece of this equation comes in because many pieces of heavy equipment carry a hefty price tag, some as high as US$150,000. For example, backhoes can range from $45,000 to $55,000; skid steer loaders from $25,000 to $35,000; generators from $25,000 up to $150,000 for trailer mounts; forklifts from $12,000 to $50,000 (all in U.S. dollars).

What this all adds up to is that construction theft is a big business opportunity for professional thieves.

These thieves typically remove the PINs and ready the item for resale — often to unsuspecting contractors.

Or, the equipment may end up in a chop shop, in which it will be stripped down to components that can then be sold separately on the black market. Some pieces are shipped overseas and sold illegally.

If you think a construction company is out merely the cost of the stolen equipment, think again. There are many hidden costs to construction equipment theft — making the true price of theft simply too high to pay. For example, when equipment is stolen, it creates business downtime that can create costly delays in a construction job — and lost revenue.

There’s also the cost of renting equipment to replace the stolen item.

Then there are insurance deductibles and premium increases if the item is insured. If not, then a company is out the entire value of the equipment.

A contractor may also face penalties due to job delays. Additionally, if there were any valuables in the stolen equipment, those are gone as well.

Finally, there are the “soft costs,” such as diminished client satisfaction due to project delays, etc.

Inferior record keeping is one major issue that makes construction equipment highly vulnerable to theft. This is something owners can control by doing the following:

• Label all equipment with unique identifying numbers, including PINs and Owner Applied Numbers (OANs). Consider marking the PIN or OAN numbers in multiple locations on equipment.

• Keep accurate inventory records. Record manufacturer, model number, year, PIN and purchase date for each piece of equipment. Also, record serial numbers of each major component part.

Lack of physical security is another major issue. Here’s what you can do:

• When possible, fence in your equipment.

• Park equipment close together and in a circle if feasible, with smaller pieces in the centre.

• Chain small equipment to larger equipment.

• Communicate with law enforcement, requesting more frequent patrols, especially in known high-theft areas.

• Use immobilization devices such as wheel locks, fuel shut-offs or ignition locks and consider installing battery-disconnect switches. While these devices can deter some thieves, unfortunately, the professionals can outsmart them all.

• Install an equipment tracking/recovering device.

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