Protecting your business and equipment
02/01/2013

How to be smarter than today’s clever thieves

Although the rental construction equipment business has rebounded nicely since the recession, changing market dynamics have created the perfect storm for construction equipment theft. This form of theft is a costly problem that can significantly impact a rental company’s bottom line.

One factor at play is that when the economy and the industry began to recover, an increasing number of construction business owners opted to rent versus buy construction equipment, as this option is far less capital intensive. While this created a “boom” in the rental business, it actually put more equipment at risk for theft. The reason is that most renters simply don’t take precautions to protect equipment that does not belong to them.

Another issue is that it’s difficult for rental companies to closely track rented equipment while on the job, particularly on weekends and holidays when most thefts occur. Whenever equipment is not closely managed and tracked, it becomes an increasingly vulnerable target for an opportunistic thief.

Contractors also now often collaborate on a single job site, which is yet another shift in the market that is putting equipment at risk. While this process can benefit the contractors, it also can create a nightmare when it comes to managing and tracking construction equipment assets. Once again, equipment that is not tracked is simply an easy target for thieves.

Most often equipment is stolen by organized crime rings. They often know which piece of equipment they want and just how to get it.

Clever tactics are being used to steal what essentially a professional thief has already “sold” on the black market. For example, the thief will rent a targeted piece of equipment to determine if it has a location-based device installed. If it does, the thief will either disengage the system or devise a plan on how to disable it when the time is right. Before returning the equipment, the thief will install his own device. This enables the thief to track the equipment’s whereabouts over the weekend to find and steal it. Some location-based devices, like those from LoJack, are covert and self-powered, so all other devices act as decoys in situations like this and the main system remains a layer of protection.

Another popular theft tactic is switching PIN plates. Unfortunately, the industry does not have standardization identifiers, so police cannot run a license plate check as they do on over-the-road vehicles. Thieves often take advantage of this and alter identifiers, such as PINs, so that they can sell re-labeled machines to unsuspecting buyers at auctions or on the Internet. Parts also are stolen
in the rental process and used to fix owners’ machines. They then return the rented equipment with a faulty, broken or end-of-life part.

According to the National Insurance Crime Bureau, annual losses from heavy equipment theft are as high as $1 billion. Too many rental companies learn the hard way that theft insurance is not the complete solution to protecting their bottom line because of the many costs of theft, including:

  • Vehicle and equipment replacement costs.
  • Vehicle content replacement costs.
  • Lost cargo and onboard equipment.
  • Premium increases and insurance deductibles.
  • Equipment/vehicle downtime.
  • Lost revenue.

ARA Insurance, Kansas City, Mo., has recognized the hidden costs of theft by offering replacement cost coverage and flexible inventory replacement on rental equipment, and coverage for business personal property or rental equipment that is in an on-road vehicle when stolen.

In addition, ARA Insurance’s policies include deductible waivers for machines equipped with tracking devices and its loss of profit coverage offsets some of the impact of lost revenue on equipment unavailable to rent.

The best-case scenario, however, is to prevent theft. So how do rental companies protect their equipment — and their business — from this costly problem? ARA Insurance offers several risk management resources, theft prevention tips, case studies and research on various theft prevention and recovery products. There also are a number of things that can be done to help prevent theft:

  • Be wary of fraud. Thieves often use false identification and credit lines to rent equipment. Check IDs and signatures, and look for security features, such as holograms, on credit cards. Check that the address, ZIP code and telephone number you are given matches the cardholder’s account information. Other procedures include taking fingerprints — mostly on cash rentals — and bank verification calls.
  • Keep good records. Label all equipment with unique identifying numbers, including PINs and owner-applied numbers (OANs). Consider marking above numbers in multiple locations on equipment. In addition, rental companies should keep accurate inventory records. Record manufacturer, model number, year, PIN and purchase date for each piece of equipment. Also, record serial numbers of each major component part.
  • Prevention devices. Use immobilization devices such as wheel locks, fuel shut-offs or ignition locks and consider installing battery-disconnect switches. While these devices can deter some thieves, professionals can outsmart them all.
  • Protection/recovery systems. Since thieves can get around just about any theft deterrent, it makes a strong case for installing an equipment tracking/recovering device. LoJack’s system, for example, leverages radio frequency technology, which is proven to be optimal for tracking stolen assets, and is directly integrated with police departments. LoJack’s police tracking computers are installed in police vehicles and aircraft, and used to track down stolen assets. Since entering the construction market in 2000, the LoJack system has helped law enforcement recover LoJack-equipped stolen construction assets worth more than $130.5 million and bust nearly 80 chop shops and theft rings.
  • Educate your customers. Since equipment is most often stolen when it is in the hands of renters, rental companies should educate their customers on how to keep equipment safe from theft. The first thing renters need to understand is that even though they don’t own this piece of equipment, there will be a cost ramification for them if it is stolen on their “watch.” The cost could range from business downtime and insurance deductibles to having to replace the piece of equipment — something that could actually put smaller contractors out of business.

Some good reminders to pass along include:

  • Focus on physical security measures and take extra precautions on weekends and particularly holiday weekends when construction theft rates are highest.
    • Fence in equipment when possible.
    • Park equipment close together and in a circle if feasible, with smaller pieces in the center.
    • Chain small equipment to larger equipment.
    • Tell contractors to request more frequent patrols from law enforcement, especially if the job site is in known high-theft areas.
    • Consider running background checks on their operators to make sure there is no history of theft.
    • Keep track of all equipment — even rented out equipment — so you know where everything is or where it should be located at all times.

By using common sense measures and the right products, renters can breathe a little easier, knowing that their equipment and business is protected from the costly issue of theft.

Courtney DeMilio is senior director of national commercial sales, LoJack Corp., Canton, Mass. For more information on construction equipment theft, visit http://www.lojack.com/fleet/pages/fleet-commercial.aspx to download a copy of Site Smarts and LoJack’s Theft Study. LoJack’s “How it Works” video is available online at youtube.com by searching for “LoJack how it works.”
 


LoJack’s top five construction equipment recoveries of 2012

 

Each year, the LoJack Corp., Canton, Mass., puts together a list of its top five construction equipment theft recoveries. The 2012 list includes stolen equipment bound for exportation overseas to those that were concealed in the deep woods.

  • Three is a charm. After having two utility trailers that were equipped with multiple locks and a wheel boot stolen, an electrical contractor in Raleigh, N.C., decided to protect his third utility trailer with a LoJack® Stolen Vehicle Recovery System. While he was the victim once again of theft, after he reported the crime to police, they found the trailer within two hours of activation and arrested the criminal.
  • A skip loader leads to weapons, bullets and grenades. Only three minutes after the owners of a John Deere skip loader reported it stolen, flight deputies with the San Bernardino, Calif., sheriff’s department picked up the silent LoJack signal and tracked down the location of the loader. Responding ground units were quickly on the scene and verified that it was indeed the stolen skip loader. While there, deputies found a large cache of weapons and called in the San Bernardino sheriff’s bomb squad to take over the investigation. The recovery not only included the skip loader, it also netted illegal weapons, a large amount of ammunition, live hand grenades and body armor.
  • Bound for trouble. A stolen Caterpillar skip loader was about to take a long trip overseas when the California Highway Patrol began tracking down the stolen skip loader less than 20 minutes after the owners reported it stolen. The signal from the LoJack System led the officers to a shipping warehouse in the city of Carson, Calif. There, thieves had removed the company names from the loader and planned to ship it out of the U.S., along with multiple other pieces of stolen construction equipment. All were recovered and returned back to their owners.
  • What’s stolen in Vegas, stays in Vegas. The owner of an Ingersoll-Rand skid-steer contacted the Las Vegas Metropolitan Police Department to report that his equipment had been stolen from a job site in northwest Las Vegas. A few minutes later, officers with the North Las Vegas Police Department picked up the LoJack System’s signal coming from the stolen equipment. The officer’s tracked the stolen skid-steer to a large warehouse in North Las Vegas. Police quickly located the stolen skid-steer inside, along with an air compressor that had been reported stolen from a job site in downtown Las Vegas. The suspect is facing multiple felony charges as the investigation continues with police still identifying more victims.
  • You can run, but you can’t hide. When employees at a local paving company returned to a job site in New Britain, Conn., after a long weekend, they found the company’s John Deere mini-excavator was missing. The owner didn’t realize his equipment had a LoJack device when he reported the theft to local police. Minutes later, K-9 officers from three different towns who were training in the area received the silent LoJack signal coming from the stolen excavator. Using a handheld LoJack police tracking unit, officers discovered the excavator deep in a wooded area. The investigation revealed that the thieves had entered the area through a gate in the highway sound barrier. The barrier and surrounding trees prevented the excavator from being observed from any direction, but did not block the signal and the $25,000 excavator was returned to the owner.

 

Tracking down thieves

The story below highlights how a rental company helped protect its equipment from professional thieves and enabled police to not only recover it, but also discover a chop shop with more than $500,000 in stolen commercial vehicles and equipment.

When workers arrived at their job site in the Phoenix area, they discovered that a semi-truck and flatbed trailer loaded with two excavators — all from a local rental company — were stolen. The victims immediately contacted police to report the crimes and police entered the stolen equipment information into National Crime Information Center computer, which automatically activated the LoJack transponder concealed in the equipment.

A short time later, a California Highway Patrol plane outside of Arizona in Blythe, Calif., began picking up the silent LoJack homing signal from the stolen excavators with its LoJack police tracking computer. The aircraft tracked the LoJack signal about 20 miles into a remote mining location in Arizona.

The RATTLER auto theft task force was alerted and observed the stolen excavators still loaded on the stolen semi and trailer. Detectives and investigators from California and Arizona executed a search warrant and recovered a host of stolen equipment worth more than $500,000. This included a 2006 Kobelco excavator, 2011 Melroe excavator, 2003 Freightliner, 2001 Wallace lowboy trailer, 2003 Freightliner water truck, 1999 Sterling water truck, 2000 Case loader, Fleming trailers, 1999 Kenworth dump truck, light tower, Bobcat skid-steer and a towable generator. The equipment was recovered and arrests were made.