The logic of leasing

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VARENNES, Que. — Just-in-time is more than a buzzword at Eaglebrook Inc. of Canada. It’s a way of life. The Varennes, Que.-based company plays a pivotal role in the successful operation of several industries in Canada where timing is crucial.

Eaglebrook is a manufacturer and distributor of iron- and aluminum-based chemicals used to treat drinking water and wastewater. The company also transports hydrochloric acid to steel mills and collects ferrous chloride from the mills. It then delivers the byproduct to the water treatment facilities, along with its own chemical products.

Eaglebrook’s pick ups and deliveries are carefully choreographed to keep the mills operating. “We’re a complete just-in-time operation,” says Lloyd Moore, terminal manager at Eaglebrook’s facility in Concord, Ont. “For example, if a steel mill is pickling steel and doesn’t have enough hydrochloric acid, it might have to shut down. The steel mills are linked to the auto industry, and if they don’t have steel, they can’t operate. It creates a domino effect.”

The company’s customers at municipal treatment plants place a similar emphasis on timeliness. Water treatment facilities have an ongoing need for Eaglebrook’s chemicals. Since their storage capacity is limited, regular and timely deliveries are vital. “The word ‘can’t’ isn’t in our vocabulary,” Moore says.

Eaglebrook manufactures its products at three facilities in Ontario and several in the United States. It is a subsidiary of Kemiron Companies Inc. Kemiron, which is a wholly owned subsidiary of Kemira Oyj of Helsinki, Finland, acquired Eaglebrook in 2004.

About 70 per cent of Eaglebrook’s business comes from municipal potable and wastewater facilities, while the rest involves mining and industrial accounts, such as steel mills. The water treatment facilities range from a rural pond 1,100 kilometres north of Montreal to plants in Toronto and Montreal. The company services steel mills in Ontario, Quebec and a couple in the U.S.

Eaglebrook’s fleet includes about a dozen leased tractors each in Quebec and Ontario – the majority of which are leased through PacLease – and about 16 owned trailers outfitted with fiberglass tanks in each location. The company also owns and leases about 700 rail cars.

Eaglebrook trucks usually run seven days a week. Kilometres per truck range from about 140,000 to 180,000 per year.

A customer’s location will determine whether it’s served by rail or truck in most cases. Rail service isn’t always available, especially in the more remote towns. The company follows a set schedule for picking up and delivering to its customers that ranges from daily to a couple of times a week. By having its own fleet of trucks, the company is able to dispatch trucks to cover an emergency when rail service isn’t timely or a customer doesn’t have enough storage capacity. For example, the company’s tractor-trailers will deliver five to 10 loads of Eaglebrook products a year to Saskatoon to customers or distributors.

To meet its schedules and maintain its high standards of on-time deliveries, Eaglebrook relies on its fleet of leased trucks. The company has chosen leasing for the past 11 years because it doesn’t want any surprises. The company formerly owned its trucks but management decided that it wanted to focus on its core business and not have to worry about maintaining its fleet, according to Serge Hudon, Eaglebrook terminal manager in Varennes. “Our private fleet works to serve our manufacturing capability,” Hudon says.

Moore says that by leasing, the company knows what its fixed costs will be for the length of the contract. And by choosing a full-service lease, the company receives reliable, scheduled maintenance that keeps its trucks up and running. “Leasing gives us peace of mind,” Moore says.

Eaglebrook began changing its leasing program in 2004 by leasing several Kenworth T800 tractors at its Toronto-area and Montreal locations through PACCAR Leasing Company (PacLease). Moore says the company wanted a more responsive maintenance program.

“Following a just-in-time operation program, we need immediate maintenance or a substitute truck if repairs are required,” Moore explains. “We also need precise maintenance schedules that can keep our trucks in top condition. We’re getting both with PacLease.”

PacLease worked closely with Moore and Hudon on spec’ing the T800s. As an added service, Kenworth Ontario PacLease, the PacLease location in Toronto, applied the same specs to an extra vehicle that Eaglebrook rents monthly to meet business conditions. Also, PacLease reviews engine computer reports with Moore and Hudon to see where improvements can be made in operating efficiency.

“What impresses me is how PacLease manages its business at the street level,” Moore says. “We get personalized service at the local level where decisions are made. Technicians pay attention to driver concerns about the trucks no matter what the comment is, which makes a strong impression with the drivers. They provide outstanding customer communication.”

Eaglebrook leases space at the Kenworth Ontario PacLease facility in Concord where it performs maintenance on its 16 trailers. The close proximity pays off because PacLease can easily do maintenance on Eaglebrook’s trucks and occasional work on the trailers when Eaglebrook’s technicians aren’t available. “This enhances our efficiency because we essentially have one-stop servicing for our equipment,” Moore says. “We also have our trailers covered through PacCentral, PacLease’s emergency roadside service.”

In Varennes, tractor maintenance is handled through Location de Camions Eureka, the local PacLease franchise. Since Eaglebrook runs a 24-hour business, maintenance is usually handled through a weekend valet service.

Custom spec’ing plays an important role in Eaglebrook’s efforts to enhance efficiency and productivity. The company spec’d 13,200-pound front axles to accommodate maximum weight on the front end of its tractors and 46,000-pound rear axles to handle heavy loads off-road and the drag weight of its trailer “trains,” according to Moore. “We have off-road applications where we service lagoon water treatment plants in rural areas,” he says.

Hudon adds that the spec’ing had to take into account that the trucks would have to operate in both Canada and in the U.S. where load limits are lighter. Eaglebrook chose the T800 with 72-inch sleeper for its aerodynamic shape to reduce wind drag and improve fuel economy when carrying heavy loads, according to Moore. “Since ours is a high-volume, low-margin business, we try to arrange for maximum loads as much as possible.”

The T800 is also designed to appeal to Eaglebrook drivers. Moore says that because the trucks look good and are equipped with a top-notch interior, drivers take “ownership” of the trucks and help keep up the appearance and mechanical condition. “That presents a positive image to our customers and improves the truck’s value when the lease is over,” Moore says.

Adds Hudon: “Although our driver turnover is almost zero, providing Kenworth trucks obviously helps in keeping them.”

The trucks are equipped with a Cummins ISX engine with 475 horsepower for pulling power on hills. Moore says the EGR engine is also appealing because its emphasis on reducing emissions fits with Eaglebrook’s own policies of protecting the environment.

In addition to smart spec’ing, Eaglebrook does operational checks to ensure it’s getting the most out of its trucks. Idling time is compared among drivers to find ways to reduce idling, both when loading and unloading and during driver off-hours. Tires are monitored regularly by PacLease to maintain proper air pressure and to maximize performance. Performance and traction is important, especially in inclement weather, because the liquid loads shift when a truck is climbing a grade, according to Moore.

All of these tactics help Eaglebrook maintain peak efficiency and stay responsive to its time-sensitive customers. “We’re open for business 2
4/7,” Moore says. “We have to be ready when our customers are.”

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