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Equipment theft hits epidemic levels
Kim Phelan
Contributing Editor
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Like the Dark Ages outbreak of bubonic plague, theft of construction equipment has reached epidemic levels, attacking a sometimes too trusting rental industry, as well as equipment owners in all market segments.
Recklessly crossing geographic boundaries throughout the United States, theft is boldly spreading, rather than declining. It’s up 32 percent in California, for example, and it costs owners and insurers around the country about $1 billion a year.
The Black Plague was carried by rat fleas – yet another similarity to this theft problem, in a manner of speaking. Equipment crooks are not necessarily sophisticated, smart or accomplished – they’re just nervy, nasty pests spreading evil where they go and leaving a wake of financial destruction.
What’s missing from this scourge is the public outcry, the alarm, the sense of urgency to report, prevent, train. Perhaps as few as one tenth of actual thefts are ever reported to authorities and recovery-bulletin services are a mere sliver of the whole rancid picture.
Rental dealers may fail to report missing equipment for two reasons. Some simply hoist the burden to insurance, viewing the loss as just part of business – especially if they’ve accrued as much rental revenue from the stolen machine as they hoped to. Others don’t report, at least not in a timely manner, because they don’t know a machine is gone.
Poor counter procedures and inventory auditing sometimes leave rental stores unaware for weeks that a machine has disappeared. This problem also occurs among other types of equipment owners with large fleets, whose managers may assume a particular machine is at one of many job sites. By the time everything’s counted and something’s discovered stolen, the trail to its recovery is cold.
What thieves take most often, according to a study by Lojack, are backhoes/front-end loaders, compressors, skid steers loaders and generators, representing about 70 percent of thefts and recoveries. But don’t underestimate the size of equipment a determined crook will steal – a half-million-dollar monster cone crusher was stolen in Southern California last May and still hasn’t been found.
The states where thieves prey with greatest vigor are Florida, California, Georgia, Texas and Arizona. A crisis of skid steer loader thefts is raging in the San Antonio, Texas, area. And in the Dallas/Fort Worth metro area alone, an estimated $100,000-worth of equipment is lost every week.
A dismal paradox, equipment values remain high but security precautions often are minimal. As costly as iron is, universal keys are easy to obtain, especially when they’re “cleverly hidden” under the operator’s floor mat. And equipment is just plain accessible. Left on unsecured job sites like sitting ducks, machines, both small and large, are always in demand and are pinched because they convert into fast, easy money.
End users who think no one will notice equipment parked for the weekend, or just overnight, don’t suspect that “shoppers” are roaming the streets every day, scouting out machinery left in the wrong place at the wrong time, which they either take on the spot or return for later. Stolen equipment then is distributed through a broker, who has a wish list of contractor equipment needs in hand. Plenty of morally bankrupt buyers aren’t troubled about where their cheap new machine has come from.
And where does equipment go once it’s ripped off? Quite often it’s not going very far.
Ninety percent of equipment stolen today is found within 65 miles of where it was taken, according to Dianna Rummel, executive director of the Crime Prevention Program of Southern California. The Crime Prevention Program is a non-profit, prevention and recovery agency supported by a membership of equipment dealers, rental operations and end users.
This, of course, contradicts the Mexico myth, which plays a large role in the widespread apathy for reporting stolen equipment. Many in the construction industry still operate under the misconception that most equipment stolen in the southern U.S. is taken across the Mexican border and isn’t worth the bother of reporting, much less looking for. Experts concur that those borders are far too tight, with inspections and three-day waiting periods for goods heading south. Security personnel at the three California border crossings have benefited from direct training by Rummel or from training materials produced by her organization.
Gone to Mexico? It just ain’t so. Too many eyes are watching, checking.
The sad truth in many cases, according to Rummel, is that equipment is peddled to contractors in nearby towns. Sometimes it’s even driven down the street to every job site in the area and sold to anyone willing to pay cash and not ask questions. Nobody ever questions why that backhoe is chugging along down Main St.
Stolen equipment clusters around the areas of immediate need, as well, such as the fires in Arizona this summer and in California early this fall.
“These conditions inspire a lot of people who don’t have very much to be first in line to get their hand into some of the [demolition and rebuilding] work,” says Rummel. “If they don’t have what they need, they take it. And it’s much easier to hide something in plain sight, which would be side by side with a whole bunch of equipment just like it.”
Crooks also take their ill-gotten goods to swap meets and flea markets, weekend stores on deserted gas station lots. They hock it on eBay (a mammoth problem, according to Rummel) and brazenly advertise it in trade magazines without giving too many identifying details.
They’ve been known to attempt consigning hot equipment at auction houses, as well, and sometimes get away with it. Ritchie Bros. (RB), based in Richmond, British Columbia, conducts 60-70 equipment auctions at its own permanent facilities throughout the United States, and deals with thousands of machines arriving from myriad owners. To protect its buyers from unknowingly acquiring stolen equipment, the company uses its unique stolen equipment computer program that cross-references every model and serial number in RB’s entire bought/sold database against the numbers of every stolen machine reported to the company.
The system successfully thwarted a bogus “owner” from consigning a machine with RB recently in Texas – the company discovered it was stolen, alerted authorities and provided the thief’s name, address and phone number to police from the contract he had signed.
“Unfortunately, the only shortcoming [to RB’s system] is that we need to have the equipment reported as being stolen,” says vice president of national accounts Denis Prevost. “And, when we search for clear title in the U.S., we can only search by company name – there is no central-reporting mechanism in the U.S. that allows for a search for ownership, or for stolen equipment for that matter, by serial number.”
Canada and England are two examples of countries where nationwide serial number searches can readily be performed.
There are plenty of electronic reporting bulletin boards – maybe too many, and no one machine gets posted on every system. Adding to the confusion, law enforcement agencies categorize construction equipment differently from state to state – sometimes it’s plunked into vehicle theft, sometimes into property theft, mowers are pigeonholed as “articles” and attachments might wind up in the category of “parts.” All this also makes it nearly impossible to get an accurate read on just how big the equipment theft problem really is.Crime does pay, if they get away
Confusion is one point on the crooks’ scorecard. Another point is their immunity to fluctuating economic conditions. In the world of an equipment thief, good times are good, but bad times are good, too.
In times of economic prosperity, thieves steal because equipment is newer and more valuable, and they can make a good profit, according to Rummel. But in bad times, some end users will gladly avoid rental fees and the high cost of buying new machinery by turning to hot equipment brokers, keeping demand for theft high. Even older equipment becomes as good as gold.
If it sounds like the bad guys have a lot in their favor, they do. In Texas, as well as some other states, they even have the law on their side. A piece of Texas legislation shackles equipment rental operations to a policy intended for video-rental stores. It mandates that when a rented item is not returned, be it backhoe or “Bambi,” the rental store must send the delinquent renter a letter demanding return of the property, then wait 10 days before filing a police report.
“That’s great if it’s a video, but when you’re talking about a $50,000 piece of dirt-moving equipment, in 10 hours it’s gone, let alone 10 days,” says Al Eagle, owner of Barnsco Rental & Sales in Dallas. He’s also a 25-year veteran cop and an officer with the Tarrent County Auto Theft Task Force, one of the only agencies in the nation that focuses heavily on rental equipment theft.
“Our hands are tied as investigators,” he admits.
Cuffing the crooks is a challenge, but Eagle, along with Leon Kothmann, (pronounced Coatman) executive director of the Texas Rental Association and a field membership rep for ARA, have identified six actions that rental companies need to implement to put a lid on theft. They’re hoping that a byproduct of these actions will be a lid on skyrocketing insurance rates, too. A proposal unofficially is underway whereby insurance rates would improve – if only by curbing increases – for rental stores fulfilling the six pre-qualifiers. They boil down to:- Every machine above a certain value (say $20,000) must have a tracking device.
- A photocopy of a photo i.d., such as a driver’s license, must be attached to every rental contract.
- No equipment is rented without a thumbprint of the renter stamped on the back of the rental contract. No print, no machine.
- The rental store agrees to 16 hours annually of training/continuing education for its owners and managers.
- Rental stores must audit their equipment semiannually and file a signed list of their inventory with their insurance company, to eliminate false claims.
- Rental stores must have a written procedure for reporting theft – a procedure understood by all counter and office employees.
Other common-sense precautions include videotape surveillance, both indoors at the rental counter and outdoors in the equipment yard. Positive identification of conversion-theft crooks is a rarity, but when it happens the rewards are bountiful. Eagle says that because one store got a miscreant on tape, 18 cases were cleared up in a five-county region of Dallas/Fort Worth.
Rummel recommends focusing on whom a company leaves in charge of locking up at the day’s end. Is it the lowest employee on the totem pole? Is it the newest, least experienced, lowest paid, and least vested person in the company? She says, more often than not, this is the individual who is left with the responsibility of securing hundreds of thousands of dollars worth of equipment each night – she sees this scenario played out repeatedly in one theft after another.
Eagle and his task force work the grassroots, urging rental stores to weld identification numbers on the frames of their equipment as well. This method allows authorities to raise the number with an acid process, even if it’s been scraped off or covered with construction material such as cement.
And what else does a policeman do to protect his own rental fleet? Eagle has a color photocopy of every piece of equipment in his inventory filed away and ready to produce if something goes missing. Most law enforcement officers aren’t construction equipment experts, so giving them a clear picture of what they’re looking for never hurts.
Giving these individual efforts a bit of global construction industry punch, a new 17-digit, Product Identification Number (PIN), identification system was approved and implemented this summer. The four-year collaboration among John Deere, Caterpillar and Case, as well as a cast of high-power vehicle, crime, safety, and insurance organizations, resulted in a consistent, universal method exclusive to construction equipment.
This year, manufacturers are inaugurating the system, but only the largest, newest earthmoving machines are sporting the new i.d. numbers. No equipment currently in existence will be renumbered, which means, of course, that a great many identifiers will go on digging and smoothing the planet for a good many decades to come.
“It’s just a long process, and it’s a little confusing now,” Rummel reflects. “It will be effective as the educational part of it builds up. But meanwhile, it will take 20-30 years before everything out there has the same identification system. And, unfortunately, the largest, newest earthmoving equipment is generally big enough that it tends not to be stolen as much.” |
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