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Issues Archives: Volume 2 - Issue 8

Volume 2 – Issue 8

Why Did Al Capone Go to Jail?

By D.J. Harrington

One of the most famous American gangsters of all times was Al Capone. He was known for many things. Not only was he a notorious killer, but he was known and feared for other reasons, as well.  His nickname was “Scarface.”  He became known as the leader of the Chicago mafia during the Prohibition Era. It was a troubled time in Chicago, as the headlines will recall. We know he killed many people and was behind the St. Valentine’s Day Massacre. Al Capone should have been an escape artist because he was always able to escape arrest due to “lack of evidence.”  Even though a known bootlegger and a corrupt businessman, he wasn’t accountable for anything because there wasn’t enough evidence to arrest him for anything he had done….that is, until October 17, 1931.  On that fateful day, a jury of his peers found Al Capone guilty of several counts of Tax Evasion. The judge sentenced him to 11 years behind bars. Finally, Chicago was free of Al Capone.

I share this story because it reminds me of what happened at the 3rd Annual New Mexico Recycling Summit held in Albuquerque last month. Sandy Blalock, the managing director, invited their newly elected state senator to their meeting. He listened intently to the towers complain about the unlicensed, uninsured towers who take away business from those that did.   The senator had listened and recorded every concern of those in the room on his canary-yellow legal pad.

Knowing this group was comprised of all kinds of folks from the automotive, towing and metal recycling industries, Senator Padilla thanked his constituents for their votes and support. He has listened to the group that put him into office. These industries needed fresh ears. The past senator was voted from office by this same group of people because he never listened to their concerns. With high hopes, the group felt that Senator Padilla was the new set of ears they needed. But was he? Being so new to Congress, what could he do to help them?

After the senator listened to the towers complain about the unlicensed, uninsured towers who have taken away the business with their cheap prices, the senator began to speak. I know these details because I was there. As speaker for the day, I had been trying to get towers and recyclers together for a good cause. (I’ll get to that later in the article.)

As Senator Padilla stood to address the group, the first thing he said was, “What did Al Capone go to jail for?” Okay, someone get the hook! Had the senator lost his mind? Maybe he was writing other constituents a letter instead of listening. Everyone yelled back, “TAX EVASION.” “That’s right!” he said. “I think I need to call my cousin!” The whole room, including me, thought “Call your cousin???” What in the world? He wasn’t trying to be a millionaire asking for a “life-line” or call a friend or family member for the answer to win some cash on the show Cash Cab.

You could have heard a pin drop in the room. The audience looked around the large outdoor tent to see if someone might know what he meant. At that point, the senator validated the legitimacy of his statement. “My cousin is the Secretary of Taxation for the entire state of New Mexico.” The government controlled Al Capone in a way that the judicial system couldn’t.

All of us are mad about this so-called, underground economy. Unlicensed towers and, yes, unlicensed recyclers are making a living in our backyard. It’s not what we want, but they’re here. It’s certainly not what we deserve. We need the state to enforce established laws, but there isn’t any money for hiring compliance officers.

Senator Padilla is a problem-solver. Without assistance in getting evidence to close them down through a department that couldn’t fund the activity anyway, the senator’s cousin was able to shut them down. Just like Al Capone, those businesses are now out of business because of tax evasion!

Towers and Recyclers need to work together.  Do you know this? The past president of the Michigan Recyclers Association, Slaytor Shroyer, is a tower in Lansing, Michigan; everyone knows Bill Giorgis, owner of Mike’s Wrecker Service. Mike is the president of the Michigan Towers Association and just bought a recycling center.

The largest tower in Tampa, Florida, is also one of the oldest towing companies in Florida. I’m referencing Stepp’s Towing. A few years ago, Todd Stepp purchased a recycling center and had me help “hook him up” with another recycler. Did you get that? I got it, too, so I introduced him to other recyclers.

Happening next month in Phoenix, Arizona, is the Auto Recyclers Annual Meeting. Plenty of towers will be walking the convention floor. Since 81% of recyclers own tow trucks, why don’t we invite recyclers to tow shows? Just a thought for those producing tow shows that feel we have enough people attending tow shows. It would be great if we could work together.

Now that we realize we have the power to vote people from office who don’t listen to us, let’s replace them with good people like Senator Padilla. Furthermore, now that we realize we can remove people from our industry that don’t follow the rules, let’s help get them out of business.  Let me help you put the unlicensed, uninsured towers out of business – Just call the Doctor.

See you next time.

D.J. Harrington is an author, journalist, seminar leader, international trainer, and marketing consultant. He works primarily with customer service personnel, and his clients include such world-class companies as General Motors, DuPont, Caterpillar, and Damon Corporation. He can be reached at 800-352-5252 or by e-mail at dj@djsays.com.

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When to Sell Your Company

By Dan Messina

Over 70,000 small businesses are bought and sold each year. Someday, your business may become a part of that number. When I sold my business, I ran into the perfect scenario. I can’t say that I was ready to sell my company, but two buyers came to me, and I had to make a decision. It is important when you are ready to sell your business that you are prepared to sell.

You, as the owner, must be ready, and, more importantly, your company must be ready to sell.

When I thought I was ready to sell my business, I let some people know I wanted to sell, and they came in and took a look at my business. This was a very valuable lesson for me. By the time they were through evaluating my company, they offered me almost nothing to come in and take over. My wife and I were in shock because we thought we were a good company, and we were, but it just wasn’t ready for to be sold.

For the next 18 months, we worked hard to prepare for a sale if that time ever came again. It did, and we were ready for that time; as a result, we received premium dollar for our company. Here are a few things we did to make our company marketable.

The most successful sellers are meticulous about getting pre-sale preparation right. Here are some of the most common mistakes business sellers make during the preparation stage and some helpful tips on how you can avoid them as you move closer to the sale of your company.

1. Going Solo

One of the biggest mistakes business sellers make is trying to do everything themselves. Very few owners have the time or experience to handle selling a company alone. Business brokers, exit planners, accountants, appraisers and other sale professionals streamline the process and ensure that your company is truly ready for prospective buyers. I developed a team to help me.  I wanted to keep the expenses to a minimum, so I did not use a broker because they can become a big expense. I used a business appraiser and a lawyer to help with my plan, and you do want to have a plan when selling your business. Pulling together a talented team of advisers should be one of the first things you do after you decide that it’s time to sell.

2. Starting the Process with Misguided Expectations

First-time business sellers often have unrealistic expectations. For example, many sellers believe their companies are worth more than actual market value and are then disappointed when their (over-priced) business doesn’t sell quickly…or at all. There is a formula used when buying and selling a business, and it revolves around your profit and assets.

During the preparation stage, it’s important to right-size your expectations. By evaluating the recent sales of similar businesses in your area, you can gain more realistic insights about average sale prices and how long it typically takes to sell a business like yours. Through consultations with your advisory team and other experts, you can also identify the types of concessions sellers or buyers have made to close deals. Try to show a good profit margin for several months and lower your debt as much as possible before selling.

3. Getting the Timing Wrong

Your personal feelings aside, it may or may not be the right time to sell your business. While a strengthening economy is certainly helpful, it doesn’t necessarily mean that the business succession market is ripe for every business in every industry. Even if the market looks good, it’s possible that your position could be stronger six months or a year down the road. I waited 18 months before I was ready to sell just to make my numbers better.

Determining the best possible time to sell your business is tricky. But, by consulting with your advisory team, putting yourself in a buyer’s shoes, and identifying the outcomes you want to achieve early in the process, you can uncover insights that impact the timing of your sale. In some cases, it may be better to wait until you have improved the company’s financials or until the market is more likely to deliver your desired sale outcomes.

4. Incorrectly Valuing the Company

Valuation is a tricky process. Although there is a tendency for sellers to inflate the value of their companies, it can be equally dangerous to undervalue your business. If the asking price is too low, you may leave money on the table, or, worse yet, buyers may assume there is a problem and move on to other opportunities.

While your own insight and quick, easy-to-use valuation tools are a good starting point, ultimately, you need the objective valuation provided by a qualified third-party. Commercial appraisers and business brokers who offer valuation services understand the marketplace and have the expertise to provide an accurate measure of your company’s real value. Considering that your business is likely your most valuable asset, it pays to get the price right. I contacted a company that helps appraise businesses and get them ready to sell. It only cost me $500, and this company determined the asking price based on the information I provided him; they provided a nice package to present to the buyer.  It was very professionally presented, which helped me get the price I was looking for.

5. Not Spending Enough Time on Preparation

Many business sellers are surprised by the amount of time and effort it takes to properly prepare a business for the marketplace. From determining value and setting the right asking price to compiling historical financials and other documents, a multitude of tasks need to be performed before you list your business.

At a minimum, you should begin the preparation process six months to a year before you intend to sell the business, and, ideally, preparation starts several years in advance. In addition to allowing you to complete all of the necessary preparations, longer lead time gives you time to increase earnings or improve your company’s competitive position, making your business more appealing to qualified buyers.

There are no guarantees in selling a business, and you can never be completely assured that you will achieve all of your objectives in the sale of your company. But, business owners who approach exit planning systematically and methodically are more likely to maximize their business sale prices and sell on their own terms. To do it right, be sure to start preparing well in advance of actually listing your business for sale.

As I mentioned, it took me 18 months to get my company ready to sell.  Here are some of the things I worked on during that 18 month period.

We wrote down 5 things a buyer gets when they buy a company. I then worked on those 5 things to make them strong.

  • Customers – I made sure all my good customers were happy and would stay with me even if I sold my company. It is important for a buyer to know they will not lose anyone if a new owner comes in. I took my bad customers and made them better, and, in some cases, it was better for me to get rid of them before I sold.
  • Services – I evaluated all my services and made sure I had all the proper equipment to provide these services. I added new services when necessary to improve my financials.
  • People – I made all the necessary promotions before I sold so my good employees were happy they were just promoted, and I took a close look at all my trouble-makers to make sure they would not create problems. I also made sure the buyer was going to take care of my staff because I worked hard to develop a good staff.
  • Reputation – I took a close look at how I was perceived in the market and that my reputation was good in the marketplace.
  • Performance – I made sure that if the buyer talked to my customers that they would all say my performance was great.

Now that you prepared the company for sale, now it is time to prepare yourself for the sale of your business. The first rule of thumb is if someone comes to you and offers more than the company is worth, it is time to sell.

Here are a few signs to look for to help you sell or not sell:

  • “I really like what I am doing so the thought of selling is premature.”
  • “I need to sell because I am nearing retirement.”
  • “There is no longer that fire in my belly, and I worry I am losing interest.”
  • “My bottom line tells me I can finally get my price.”
  • “I have received an unsolicited offer, so maybe now is the time to sell.”
  • “I do not want to abandon the people who stood alongside me over the years.”
  • “I am not ready to turn this business over to the next generation.”
  • “I am eager to write that next chapter in my life.”

Some combination of the above invariably leads to knowing “when the time is right.” You need to be proactive. The precise timing of an exit is driven by a mix of business and personal factors. Simply put, it is a real-time, deep-dive look at the world that surrounds you and your company.

Do your personal assessment.

What matters most in your everyday private life? Does your company still take precedence? Are you alert to how you have changed? Are you honest with yourself? Are you prone to procrastinate or too slow in coming to terms with your present state of mind as it relates to the sale of your company?

The relevant question that should capture your immediate attention is…why now? First, recognize when you are near or at this strategic crossroads.

Second, grasp the meaning and significance of what you are feeling inside. Third, and perhaps most important, initially refrain from sharing with others in your inner circle. Allow time for private thought and try to read your own tea leaves. It’s good therapy. Eventually, you will know whether and how to reach out for guidance.

Trust your advisors.

Selling one’s company deals with a completely different set of circumstances and uncertainties. Successfully navigating across this murky landscape requires a telescopic lens that allows the business owner to see things from a distance. Unfortunately, being too close to the ground also means being prone to poor judgment or overreaction. The analysis must be approached from two very different perspectives as illustrated above [which are frequently in conflict with one another].

Put your professional advisors to the test in (1) helping you reason whether you are personally ready to exit and (2) evaluating whether your company is also ready. The stakes are at their highest and, ironically, taking this intermediate step to reach out to seasoned financial and legal advisors can be the best decision you ever made.

There are two tax considerations for the seller no matter what type of business entity you have:

  1. How is the income from the sale taxed? As ordinary income or capital gains?
  2. When is the income taxable?

The tax part of the sale is the most important part of the sale, and I will let you work this out with your accountant.

This will be the most exciting time of your life. Good luck.

Visit www.danmessina.com for more information.

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Synthetic vs. Petroleum

By Dan Watson

The ongoing march to achieve more technologically advanced engines continues, and certainly the modern turbo-charged diesel engine exemplifies that quest. The race between GM, Ford and Dodge has benefited you and me; the improvement in all aspects of these diesel engines is easily quantifiable in terms of horsepower and torque, as well as fuel efficiency and endurance.

Recognizing how vastly improved these diesels are to their predecessors, it should not surprise anyone that advances in the lubricants for these engines have also facilitated quantum leaps in performance.

Any oil, properly rated for use in a high performance turbo-charged engine, is a remarkable lubricant regardless of the base oil used. In this article, I will compare synthetic diesel engine oil to petroleum diesel engine oil and draw some conclusions and make some recommendations. Previous articles have established fundamentals of lubrication and how oil is made, so if you haven’t read those, a review might be in order. I am writing this article assuming you have read the preceding articles.

To start, we should compare several performance criteria for petroleum oil vs. synthetic oil.

Thermal Stability

How well does the oil hold viscosity as temperature increases? This is reflected in the Viscosity Index (VI) rating, with a higher number indicating greater stability. Petroleum oils rarely exceed 100 on the Viscosity Index, while some synthetics rate higher than 180. Oils that maintain rated viscosity – instead of thinning out at higher temperatures – perform better in your engine. Thin oil will reduce film strength and result in higher wear rates of critical engine parts.

Thermal Stability Advantage: Strong for Synthetic Oil

Viscosity Index

Higher viscosity index (VI) liquids are less responsive to temperature extremes. At 0°F, the VI 95 petroleum oil is thicker (measured in centistokes, a dynamic measure of resistance-to-flow) than the synthetic oil with a VI of 150. On the hot side at 210°F, the VI 150 synthetic maintains viscosity better than the VI 95 petroleum oil that thins out more easily.

Temperature Range

What are the highest and lowest temperatures the oil can tolerate and still provide proper lubrication, during continuous or intermittent duty? This range is established by measuring the pour point (lowest temperature the oil will pour) and the highest temperature at which the oil can hold sufficient viscosity in order to provide lubrication. Chart Two demonstrates the superior performance of synthetic oil vs. petroleum oil. Group III hydro-cracked synthetics are not on the graph, and it is important to note that the Group III synthetics will have similar cold flow performance but significantly less high temperature performance compared to Polyalphaolefins (PAO). PAO and Dibasic Acid Esters are the primary chemicals used in engine and drive line oils. A strong temperature range is paramount to providing proper lubrication, especially in severe duty or extreme temperatures.

Temperature Range Advantage: Very Strong for Synthetic Oil

Oil Temp vs. Synthetics

Oxidation Stability

How well does the oil resist oxidation and sludge formation? As oil oxidizes, it thickens (viscosity increases) and deposits sludge in the engine. Sludge may eventually clog critical oil passages, preventing necessary oil from reaching vital engine parts. This causes excessive wear and, eventually, failure of various engine parts. Synthetics are inert, meaning there are no polar sites (having positive or negative polarity) and simply do not react with oxygen. Petroleum oils are highly polar (mostly positive polarity) and readily react with oxygen. To counter this reactivity, petroleum oils are treated with anti-oxidation additives. When oils are operating in the intermittent range (temporarily outside the normal operating band), they are susceptible to higher rates of oxidation. Unfortunately, today’s engines are forcing oils to operate routinely at 230°F to 250°F. This puts the petroleum oils in a range of temperatures that causes increased use of the anti-oxidants in the additive package and shortens the life of the oil. PAO or Ester based synthetics are in the normal operating band for temperatures in excess of 330°F and suffer little or no oxidation. This is one of the reasons you hear of mechanics reporting how clean engines with synthetics are, even those with high mileage.

Oxidation Stability Advantage: Very Strong for Synthetics

Volatility

How easily does the oil vaporize or boil off? When oils are hot, vaporization can result in significant oil consumption and thickening of the oil. Not only is this a problem for oil consumption, but the oil vapor is sucked into the engine via the Positive Crankcase Ventilation system, contributing to significant hydrocarbons in the exhaust (PCV systems have been used in gasoline engines and are now starting to be used in diesel engines). In petroleum oils, the molecular structure is non-uniform, consisting of various size compounds. Imagine countless footballs, baseballs, hockey sticks and tennis rackets all mixed together, pushing against each other. When the oil gets hot, some of the lightweight items are liberated and fly away while the larger, heavier items remain. As this process continues, only the larger items remain, resulting in much thicker oil. In contrast, the molecular structure of synthetics is like a bunch of identical golf balls, all the same size and tightly packed together, resisting vaporization; as a result, they stay in grade for much longer periods and reduce oil consumption.

Volatility Advantage: Strong for Synthetics

Seals

How does the oil affect the seals? Will it cause them to shrink or to swell? And, is the oil chemically compatible with them? Seals are made of a variety of compounds in order to provide rigid but flexible surfaces that promote good sealing in order to keep liquids in and dirt out. Petroleum oils are fully compatible with the seal materials used in modern engines and will slightly swell the seals. While PAO synthetics tend to shrink seals, Esters tend to swell the seals: both are chemically compatible. In synthetics where PAO is the primary base oil, another synthetic oil, Diester for example, is used to provide the desired seal swell and nourishment for seals. Historically, seal compatibility issues have caused real and imaginary problems for synthetic oils in the market place. Currently, seal issues for properly blended synthetic oils are no longer an issue.

Seals Advantage: Slight for Petroleum

Lubrication/Wear Protection

How well does the oil lubricate and, in turn, prevent wear? Lubrication is a result of both base oil and additive combinations performing in various lubrication regimes in order to prevent metal-to-metal contact and the wear that results. Where fluid film is retained, the base oil will be the dominant factor in lubrication. Where oil film is not always able to separate the moving metal parts, additives become the dominant factor. The uniform molecular structure of synthetics results in a superior lubricating film. Additionally, the thermal stability of synthetic oils maintains an oil film in much more severe conditions – at higher temperatures, for instance – than petroleum. Additives are relatively equal in performance regardless of the base oil – synthetic or petroleum – with which they are combined. Instead, the anti-wear protection they provide – or fail to provide – is more dependent on their own quality and concentration. For normal temperatures, properly additized petroleum oils and synthetic oils will show similar lubricating qualities. Synthetic oils have higher film strengths and require a lower quantity of additives in order to achieve the same level of protection. In standard anti-wear testing such as the Shell four-ball wear test, some synthetics achieve up to four times the wear protection when compared to petroleum oils. When higher temperatures and pressures are used in such tests, the results significantly favor synthetic oils.

Normal Operational Conditions Advantage: Slightly Synthetics

Severe Operational Conditions Advantage: Very Strongly Synthetics

Oil Life / Endurance

How long can the oil provide proper lubrication and perform all required functions? Oil life is a function of time and severity of service and can vary from vehicle to vehicle. Oil is said to be condemned, that is, not fit for continued service, when one or more of the following conditions exist:

  • Viscosity has decreased by one grade or increased by more than one grade
  • Fuel contamination is greater than three percent
  • Soot level exceeds four percent
  • Total dissolved solids are greater than four percent
  • Total Base Number is less than two
  • Critical additives are depleted
  • Oxidation number greater than 50 (30 for petroleum)
  • Nitration number greater than 50 (30 for Petroleum)

As explained above, synthetic oils are less likely to thicken as the result of vaporization or oxidation and they stay in proper viscosity grade for significantly longer periods of service. Several of the other factors for condemnation are the same for either synthetic or petroleum oils and are more dependent on the quality and concentration of chemical additives required to continue to provide service. Soot and total dissolved solids are products of engine combustion and are proportional to fuel air management; turbo charged engines tend to burn cleaner than naturally aspirated engines. Filtration, especially bypass filtration, will have direct effects on soot and dissolved particles and can be effective at increasing oil life. Since lubricating oils are products of base oils mixed with chemical additives, it becomes painfully obvious that either the failure of the base oil or the depletion of additives will result in condemnation of the oil. Simply put, oils are unique when compared to each other; even if two synthetics are compared, the choice of synthetic base oil and the quality and amount of the additives can produce widely varying finished products.

Oil life is best determined utilizing used oil analysis and then evaluating the remaining oil life based upon the results of a given analysis. Some oil companies, like Mobil and Amsoil, have amassed significant data through oil analysis that enables them to make categorical recommendations for longer drain intervals. It is improper to assume that because you are using synthetic oil, it automatically has an extended drain interval. Some major oil companies – Valvoline is one – are on record as saying their synthetic oil has the same additive package as their petroleum; so, the additives in their synthetic oils deplete just as quickly as their petroleum oils.

Oil Life / Endurance Advantage: Synthetics (varies between synthetic manufacturer)

Petroleum Oil vs. Synthetic Oil: Cost

What is the real cost to use synthetic oil compared to petroleum? To correctly assess cost, it is necessary to differentiate between price and cost. What you pay for an item is the price; how the price is distributed with respect to product utilization over time is cost. For example, if you pay $160 for an 80,000-mile radial tire, then that is the price to purchase the tire. To determine the cost, you have to distribute the $160 over the 80,000 miles; this determines the cost per mile to use the tire. This method allows the direct comparison of products that are priced differently yet have variable life expectancy. Calculating cost is a little of a mixed bag when comparing synthetic and petroleum oils. Not all synthetic oils are designed for extended oil drains, and some petroleum oils will perform much better than others. Comparisons are best done on a case-by-case basis. In general, most any synthetic will run longer between oil drains; however, only a select few are designed for very long drain intervals. For the synthetic oil to be equal or less costly, it must have approximately two to three times the drain interval of a given petroleum oil.

There are other, indirect cost benefits to synthetic oils, including improved fuel economy and superior lubrication that results in less maintenance. One unheralded feature of synthetic oil is insurance; by that, I mean protection from unexpected calamities. The blowing of a radiator hose, the loss of oil or a water pump failure, in most cases, may result in engine damage from excessively high temperatures. When PAO or Ester based synthetics are used, engine damage is highly unlikely to result from engine overheating. This insurance can mean saving thousands of dollars on repairs.

Cost Advantage: Synthetic

Comparing the features of synthetic oils vs. petroleum oils is an exercise that all lubrication professionals have fun with, but, for the consumer, what is the bottom line and what action should you take? Clearly, synthetics win in head-to-head features and benefits, and they also provide intangibles, such as insurance, but should every owner switch? The answer is “no.” If you own an older vehicle with more than 100,000 miles, you should not switch unless you have an experienced professional to guide you through the process. If you have a vehicle with leaks that you cannot fix, then it makes no sense to pour the higher priced synthetic oil on the ground. If, for some reason, your engine is consuming oil at an alarming rate, again, it is not cost-effective to use synthetic oil. On the other hand, synthetic oils are superior in performance; the right synthetic is more cost-effective than petroleum, so there is little reason not to switch. The high temperatures (> 600°F) possible in the turbo-charger make synthetic oils (PAO and/or Ester) clearly the best choice; one failed turbo buys a lot of synthetic oil. If you are towing or otherwise involved in severe duty operations, then synthetics offer so many superior benefits and enhanced protection that it is the only right choice. Using petroleum oil vs. synthetic oil is an option analogous to using bias ply tires instead of radial tires. Of course, the bias ply tire can get you from point A to point B. The difference is in the load carrying capacities, heat range, traction, handling and tread life. For simple, casual driving with no severe conditions, the bias ply tire may work fine, but, in the event of something outside normal conditions, the radial is superior; it is simply a matter of the quality of each tire’s construction.

Petroleum Oil vs. Synthetic Oil: Decision Time

The decision of whether to use petroleum oil vs. synthetic oil is dependent on your unique situation; each of us has his own set of circumstances to assess in order to make a decision based on facts. Understanding the benefits and limitations of engine oil will help you make an informed choice. Making sense of the relationships between oil properties and how those properties protect and preserve an engine is the only real way to analyze true cost effectiveness. Sometimes the decision is obvious; severe duty situations call for synthetic oils. Critical components subject to high temperatures like the turbo-charger are best protected by synthetics. I recommend synthetic engine oils in order to provide the most cost-effective method to achieve the best lubrication possible for your engine.

For questions and/or comments, contact me via my website, www.TheLubepage.com, or by email at danwatson@thelubepage.com.

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Tech and Tow: Tomorrow Is Already Here

By Dave Sunkenberg, VP of Network Services, Agero

Today, over 61% of Americans have a smartphone – and that percentage keeps rising. These phones are carried everywhere, especially when people are on the road.

In fact, more and more people can’t imagine being stranded without one. No wonder so many tow professionals are now using this increasingly popular form of mobile technology to enhance and grow their businesses while improving customer experiences.

Technology increasingly makes the job easier and more efficient.

Many organizations are developing new smartphone applications specifically geared towards towing and roadside assistance. These apps are created for both dispatchers and drivers, and can help your business by making it easier than ever to:

  • Receive and dispatch calls
  • Keep track of your fleet
  • Receive real-time updates of tow driver’s location
  • Take on-scene photos and upload them
  • Complete a ticket
  • Take payments
  • Obtain signatures

Benefitting from this new technology is easier than ever.

Now you can have customer and vehicle details, contact information and turn-by-turn navigation at your fingertips.

In fact, much of the technology driving these applications is centered on GPS tracking and fleet management. Providers can improve their estimated time of arrival (ETA) simply by enabling dispatchers to access details of a fleet’s location right on their smartphones.

Companies such as Progressive Platforms and Beacon Software are already helping drivers and dispatchers better their businesses by creating a more seamless towing experience for both customer and driver with their GPS technologies.

“Location-aware technology is becoming very important,” said Todd Althouse, president of Beacon Software. He notes that it is now “as easy as pushing a button to see tow providers near a disablement call. We want to give providers all the tools they need.”

Today, nearly 40% of tow trucks have a hard-wired GPS device in them. Another 35% have drivers that carry a smartphone that could be running a dispatch application or a third-party dispatch system, such as ones offered by Progressive Platforms and Beacon Software. The remaining tow companies and their drivers are not yet connected – and will not be able to compete if they don’t upgrade their technology.

“It’s certainly an advantage to have the technology,” Althouse said. “You can route around problems and navigate your arrival on-scene. It makes for a smooth system.”

Motor clubs are also keeping up with this trend.

Many motor clubs are already creating towing apps for smartphones in order to enable their providers to enjoy the benefits of GPS fleet tracking, accepting dispatch calls, obtaining signatures and more – all from their phones.

For the motor clubs, creating these apps allows them to track and proactively manage the dispatch process. Because the apps allow for a more seamless dispatch process, tow providers are able to work better as a team, save money on fuel costs, retain more customers and grow their revenue opportunities. Plus, motor clubs benefit from more effective providers, as well as from tools that track ETAs and assist with other important factors, such as accident scene management.

“You can run a whole towing operation from your smartphone instead of sitting in an office in front of a PC,” said Mark Fensome of Progressive Platforms. “The technology makes it so much easier to help manage fleets – it’s more cost-effective and fuel-efficient.”

The bottom line is that the benefits of smartphone technology are already here, are growing, and are increasingly practical for service providers, drivers, and motor clubs. Before long, it may be impossible to compete without taking advantage of them.

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Keep Employees Safe During Vehicle Lockout/Tagout

By Mark Stromme

Tow professionals count on their vehicles and equipment to be in top-notch condition. After all, life is good at work when your machines are running smoothly. But, all good things come to an end, and you can count on your equipment needing service, maintenance, and repairs from time to time.

You want to keep downtime to a minimum, however, and workers can be tempted to make a quick fix without making absolutely sure the equipment won’t start up or release stored energy during the repair. If it does start up, there can easily be a serious injury or a death. That’s the reason for having lockout/tagout (LOTO) procedures.

OSHA’s Lockout/Tagout Standard

The Occupational Safety and Health Administration (OSHA) regulates lockout/tagout through the Control of Hazardous Energy standard, found at 29 CFR §1910.147. This standard mandates training, audits, and recordkeeping to ensure that workers will not be unintentionally injured by the unexpected energization, start-up, or release of electrical, mechanical, hydraulic, pneumatic, chemical, thermal, or any other type of energy.

Does It Apply to Vehicle Servicing and Maintenance?

Yes, it does. According to OSHA, accidents have occurred and continue to occur from inadequate hazardous energy control during vehicle servicing and maintenance activities.

In 1991, the U.S. Court of Appeals for the District of Columbia remanded the LOTO standard to OSHA for further consideration of the ways in which the final rule applies to all general industry workplaces. OSHA, in the March 30, 1993 Federal Register (Vol. 58, No. 59), reaffirmed and further explained the reasons for applying the standard to vehicle servicing and maintenance.

The scope and application sections of the preamble to the hazardous energy control standard provide that the LOTO standard applies to all “general industry workplaces.” The standard’s coverage includes vehicles, such as, but not limited to, automobiles, trucks, tractors, refrigeration transport vehicles, and material handling equipment.

What exactly is lockout/tagout and why is it so important?

The Basic Difference Is the Use of Locks

When you hear the term “lockout/tagout,” you might think lockout and tagout is the same thing or that you have to use both methods together. But, these are two different ways to isolate a machine from its energy supplies to keep it “off” during the repair job.

“Lockout” uses locks on the switches and valves that supply energy to a machine. The energy isolating devices can’t be moved from the “off” position because a padlock keeps them off.

“Tagout” uses warning tags on switches and valves. When you use tagout, there’s no lock to keep energy isolating devices in the off position. The tag has a clear warning on it to leave the equipment off, but tagout doesn’t provide the physical restraint that lockout provides.

You have to use tagout if the energy isolating device isn’t capable of being locked out. In this case, you really don’t have any choice — you can’t apply a lock, so you have to apply tagout. This may be the case with older equipment.

But, whenever you replace, or do a major repair, renovation, or modification of the machine, the energy isolating devices have to be upgraded to accept lockout. Also, whenever you install new machines or equipment, they must accept lockout. Basically, OSHA says that when the equipment can be locked out, you’re expected to use lockout procedures.

That being said, OSHA does allow you to still use tagout even if the equipment will accept lockout. To do this, your tagout system must provide “full employee protection,” and OSHA has additional requirements. You must use “additional safety measures such as the removal of an isolating circuit element, blocking of a controlling switch, opening of an extra disconnecting device, or the removal of a valve handle.” Taking these steps reduces the likelihood that the machine will start. Be sure to include these additional steps in your documented tagout procedure for the machine.

Whether you use lockout or tagout, both methods assure the mechanics that the machine won’t start up or release stored energy because someone operated a control to run the equipment or accidently hit a switch.

These are the LOTO basics. But what does OSHA say about the controlling of hazardous energy when working on your tow vehicles?

Controlling Hazardous Energy on Vehicles

The OSHA standard’s coverage includes vehicles, such as, but not limited to, automobiles, trucks, tractors, refrigeration transport vehicles, and material handling equipment.

For purposes of vehicle servicing and maintenance, hazardous energy refers to:

  • Mechanical motion;
  • Potential energy due to pressure, gravity, or springs;
  • Battery-generated electrical energy;
  • Thermal energy, including chemical energy; and
  • Other forms of energy, which can cause injury to employees working in, on, or around machines or equipment.

Any vehicle (e.g., internal combustion engines such as gasoline, natural gas and diesel powered vehicles; electric-powered vehicles; hybrid vehicles) may contain the following types of hazardous energy, such as, but not limited to:

  • Chemical energy due to contact with battery acid, coolant, lubricants;
  • Electric battery shock, arc, and burn hazards;
  • Explosion hazards associated with air bags;
  • Fire and explosion hazards associated with the fuel and fluid systems;
  • Gravitational energy (mechanical) hazards caused by elevated vehicles (e.g., unsafe use of automotive lift equipment) or vehicle components (e.g., unsupported elevated dump truck beds; unsupported elevated forklift carriage assembly);
  • Hot or cryogenic fluid, and surface (thermal) hazards;
  • Hydraulic hazards associated with fluid pressure and fluid loss (e.g., causing a carrier bed to drop);
  • Mechanical hazards associated with disc brake spring and tire components;
  • Mechanical motions due to moving power transmission components;
  • Premise wiring electric hazards associated with battery recharging (which are addressed by the Subpart S – Electrical standards); and
  • Mechanical hazards associated with unexpected start-up or unexpected energization of vehicles or vehicle components.

Energy Control Program

OSHA’s 29 CFR 1910.147 standard requires employers to develop an energy control program:

  • That is tailored to the workplace, and
  • Will protect employees performing servicing and maintenance tasks from the release of hazardous energy.

 

The performance-oriented language allows employers flexibility to design and implement the required energy control procedures, employee training requirements, and inspection requirements to fit the individual conditions present in their workplaces.

The selection of the specific method of control must reflect a thorough evaluation of the:

  • Extent of exposure to the hazard;
  • Risk of injury associated with the particular machine/equipment; and
  • Feasibility of applying a particular method of control.

Removing the Ignition Key

Due to the nature and unique aspects of vehicle maintenance and servicing activities, the control of hazardous energy final rule’s preamble recognizes feasible measures to prevent an engine from being started. OSHA references situations, involving vehicles, such as automobiles, buses, and over-the-road trucks, where the removal of the ignition key ensures that the engine cannot be started.

However, this simple control step of removing the ignition key may not, in all cases, adequately control other types of vehicle hazardous energy, such as is the case with the positioning of the vehicle or its components (e.g., buckets, blades, vehicle body parts). These and other hazards require careful evaluation and selection of additional hazard-specific control measures.

OSHA Says

It should be noted that turning off the engine with and removing the car key is not, strictly speaking, the same as applying a lockout or tagout device to an energy isolating device (EID) because neither the ignition switch, nor the key, are EIDs. See §§ 1910.147(b) and (d)(3) for the energy isolating device definition and application of control provisions. Based upon the above standard’s preamble discussion, OSHA allows such alternative vehicle control measures in these limited circumstances only when the key removal fully ensures employee protection.

Turning off the engine and removing the ignition key may provide a significant degree of protection in many situations in which an employee is performing vehicle repair or maintenance. The authorized employee performing the repair or maintenance would need to retain sole control of the key (assuming the keyed switch is the only means of vehicle start-up). An additional precaution for the employee retaining the key would be to lock the doors.

Although this control practice reasonably protects employees from inadvertent startup of the vehicle’s engine, it may not adequately control other energy sources that are independent of the ignition key subsystem.

One Person Is Performing the Servicing

These exclusive control practices, if incorporated into the energy control program, are feasible measures that significantly reduce the risk of exposure to the hazardous energy associated with the start-up of an internal combustion vehicle engine in situations in which a single individual is performing the servicing and/or maintenance work.

However, although turning off the engine and retaining exclusive control of the ignition key may provide significant protection in some instances, there may be circumstances where there are other keys and/or other employees involved in the work activity. In situations such as these or when the work itself may activate the ignition circuit, additional measures are necessary to protect employees from hazardous energy exposures.

For example, employees have been struck by and even run over by vehicles when the technician “shorted out” the ignition circuit, causing the vehicle to unexpectedly move. In another example, potential unexpected start-up hazards exist with older diesel engines because they could be “jump-started” by putting the vehicle in gear (without setting the brakes) and then simply pushing/rocking (“budging”) the vehicle enough to start it (with or without the ignition on).

That is why it is very important that the selected control measure(s) effectively protect exposed workers from all types of hazardous energy.

Manufacturers’ Servicing and Maintenance Guidelines

It is essential for employers to consult with and incorporate specific vehicle manufacturer servicing and maintenance guidelines (e.g., operating manuals and bulletins) and other relevant materials to establish the hazardous energy control procedures. These manuals and materials often provide specific step-by-step instructions on how to safely perform servicing or maintenance tasks.

For example, the removal of an ignition key is not sufficient to protect employees from devices that may operate or activate independently of the ignition system. That is why it may be necessary to disconnect the battery cable for some repair tasks, such as working on some cooling fans, which automatically start up even after the key has been removed.

Likewise, air bags may inadvertently deploy and cause employee injury if the system is not properly controlled and residual energy dissipated before servicing or maintenance begins.

Employers, who meet manufacturers’ servicing and maintenance guidelines, may be cited for a §1910.147 violation if the manufacturer guidelines inadequately control the vehicle’s energy sources and employee exposure exists to hazardous energy.

Troubleshooting, Testing, and Component Positioning

There are circumstances when it is necessary to re-energize the vehicle or a component to accomplish a particular task (e.g., diagnostic testing; maintenance troubleshooting; vehicle or component positioning). OSHA does allow energization for testing or positioning purposes, as specified in §1910.147(f)(1), but only for the limited time during which it is necessary to test or reposition the vehicle or component.

During these transition periods, employee exposure to hazards is high and a procedure needs to be developed to define the sequence of actions to accomplish the task safely. Under no circumstances is any part of an employee’s body ever permitted to be exposed within a hazardous area, such as the point-of-operation or in-going nip point area, during servicing and/or maintenance activities while the machine is running or energized.

The use of supplemental safeguarding actions, such as personal protective equipment to protect against hot surfaces, use of a tarp to shield a hot surface or in-going nip point, safe work positioning, etc., must be used in conjunction with established procedures to protect your employees

Working Safely

OSHA requires employers to develop LOTO procedures and to have workers follow them. If you cut corners on these procedures, the result is likely to be equipment downtime, accidents, OSHA inspections and citations, and, possibly, employee fatalities.

Copyright 2013 J. J. Keller & Associates, Inc.®
PO Box 368, 3003 Breezewood Lane
Neenah WI  54957-0368

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