Used Asphalt Equipment Market “Feeling” EPA’s Tier 4 Mandates
New equipment sales have slumped the last couple years as a result of the EPA’s Tier 4 final emission regulations, resulting in stronger demand for quality, low-hour Tier 3 or older machines — inventory that’s getting harder to find.
“Large asphalt pavers aren’t a commodity item so paving contractors often hang onto their machines longer than in other construction segments,” said Mark Pentz, IEDA member and owner of Calvin Group, Inc. (Windsor, Colo.), which specializes in buying and selling used asphalt equipment. “A lot of paving contractors are choosing to fix what they have instead of trading it in or selling the machines. In turn, this has driven up the price on used asphalt pavers.”
Conversely, on smaller ticket items like asphalt rollers, Pentz says the price of used units has stayed relatively flat. “Several manufacturers have introduced very competitive leasing rates to get some of these new machines in the field,” he explains. “The used equipment market for rollers is pretty saturated.”
Forced phased out
Currently, the EPA’s Tier 4 final emission regulations only apply to new equipment being sold in the United States. Older equipment bought and sold in the U.S. only needs to meet the emissions standards in effect at the time the machine was built, a policy that was designed to phase out pre-emission equipment gradually.
“For a few states, the gradual phase-out of older equipment isn’t fast enough, though,” said Pentz. “In California and New York, most government projects limit what tier of equipment can be used to perform the work. Contractors who don’t comply will face fines. This, of course, affects asphalt contractors the most since that’s where a large chunk of state and city budgets are spent.”
Furthering the phasing out process of older equipment, some states have also adopted their own regulations to reduce diesel particulate matter (DPM) and nitrogen oxide (NOx) emissions. In 2007, California set up the California Air Resource Board to implement its own policy. The next major milestone of its regulations hits in January 2018, when diesel equipment fleets classified as large and medium will be prohibited from adding any Tier 2 engine vehicles — a policy that will affect the used equipment market for the state.
“Asphalt contractors who operate in California, New York and downtown Chicago are among the most impacted by state and state policies,” said Pentz. “We’ve been working with those contractors to ensure they get the best value for their pre-emissions asphalt pavers and then reselling them to contractors in other states, primarily Midwestern, that do not have strict regulations in place yet. There’s a lot of life left in these machines, but the previous owners don’t have a choice about hanging on to them.”
Concerns over Tier 4 mandate
Pentz and his team work with asphalt contractors worldwide. He says many of the contractors he’s spoken with are worried about reliability, maintenance costs and the EPA’s Tier 4 mandate itself. “Asphalt contractors are working with hot asphalt and oil every day — a little less exhaust from the machine itself doesn’t really change the working situation much.”
Also, asphalt contractors, along with many other contractors, are concerned about keeping these machines running. “A few contractors have told me that they’ve had issues with their trucks tripping error codes while hauling hot material,” Pentz shared. “There isn’t anything wrong with the truck, but they still have to get someone who is certified to work on that engine to come out and reset the code. That chews into a lot of the day — something they can’t afford when they are trying to lay pavement.”
When to sell used equipment
“For contractors who are considering selling their pre-emission equipment and updating to Tier 4 machines, there isn’t really an ideal time to do it,” said Pentz. “Right now, quality used asphalt equipment is selling for more, but contractors will also pay more for buying new. If they wait too long to sell older machines, however, there may not be as much of a demand for it because of state and city regulations. There’s a lot to consider.”
Pentz adds that IEDA members have a good pulse on the used equipment market, and any one of them can help contractors evaluate their options.
For a list of IEDA members in your area, go to the member’s page.