Equipment management strategies: how two Alaska contractors boost profits.

• Author: Campbell, Blythe
• Position: SPECIAL SECTION: BUILDING ALASKA

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Alaska contractors rely on equipment to build the $7 billion in projects forecast for Alaska in 2010. Making the right decisions about acquiring, moving and maintaining equipment around Alaska affects contractors' clients, the public--and the companies' profits. Two Alaska companies, STG Inc. and Granite Construction, are among those managing equipment with an eye to the bottom line.

STG INC.

At STG's headquarters in south Anchorage, a 250-ton Kobelco crane towers over the yard. The crane is one of the larger pieces of equipment STG owns, along with a large inventory of other heavy construction equipment, including dozers, loaders, dump trucks, cranes, cement mixers, excavators and pile drivers. STG also has dozens of four-wheelers and hundreds of pieces of smaller equipment.

STG focuses on projects involving utility-scale wind farms, tower construction and pile foundations, along with power generation, distribution and bulk-fuel storage facilities. For the 2009 season, STG had projects in 29 villages from the Aleutians to Barrow.

Owner Jim St. George started STG in Kotzebue in 1991 and bought Alaska Crane in 2001. "That purchase was a great thing for us," said St. George, who had been working out of his house. "It gave us a place to work, access to equipment we needed, and a good line of business on its own."

The Alaska Crane fleet is rubber-tired for road use, while the cranes used by STG are tracked, but there are synergies between the two businesses. St. George says although it's a different business, there's a good interface.

STG prefers to own equipment rather than lease or rent it. "We're working in remote areas, and need to control our own destiny," St. George said.

In 2009, there were significant tax advantages to purchase new equipment as a part of the economic stimulus plan, and STG accelerated some of their equipment purchases to take advantage of that opportunity. "We definitely invested more heavily," St. George said.

St. George works with local dealers for much of his equipment, but the crane market is a world market, with new and used cranes bought and sold by people all over the world. "The Internet has really changed the market," St. George said earlier in the year. "Last week I watched a bidding war between a buyer from South Africa and one from Dubai." The Internet also has made the market more stable, as the value and price of equipment is agreed through trades. With the worldwide recession, new...