The High Cost of Construction Equipment Theft:

1
The High Cost of Construction Equipment Theft
How to Protect Your Business fromthis Growing
Problem
Presented by and San Diego, CA January 27,
2006
2
Introduction

• Welcome
• Guest Speakers
• Mike Miller
• Law Enforcement Liaison, LoJack Corporation
• James Cadigan
• Director of Operations, National Insurance Crime
  Bureau

3
Agenda

• Equipment Theft A Large and Growing Problem
• Facts You Should Know
• The Who, What, When, Where Why of
  Theft
• Protecting Your Equipment From Theft
• A Practical, Step-by-Step Approach
• Questions Answers

4
Equipment TheftA Large and Growing Problem
5
Equipment Theft The Problem

• Annual losses and indirect costs from theft are
  reported to be as high as 1 billion
• 72 of equipment owners have had equipment stolen
  in past 5 years
• 64 of those affected by theft never saw their
  equipment again
• 65 of equipment recovered was damaged

Source Construction Equipment Theft Survey
Conducted By Cygnus Business Media (2005) and
LoJack 2005 Theft Study
6
Equipment Theft The Price Tag

• Direct Costs
• Initial investment
• Deductibles
• Project delays
• Equipment replacement--five most stolen items
• Backhoe loaders -- 45,000 - 55,000
• Skid steer loaders -- 25,000 - 35,000
• Generators -- 25,000 up to 150,000 for trailer
  mounts
• Air compressors -- 15,000 - 18,000
• Forklifts -- 12,000 - 50,000
• cost averages for used items, 3-5 years old

7
Equipment Theft The Price Tag

• Hidden Costs
• Lost revenue
• Rental revenue
• Job delays (contractors)
• Premium increases
• insurance deductibles
• Losses from uninsured
• equipment
• Crew equipment downtime
• Potential contract penalties
• Costs to replace vehicle
• contents

8
Facts You Should Know The Who, What, When,
Where Why of Theft
9
Who Are the Culprits Behind this Growing Problem
and Why?

• Organized crime rings
• Most often, theft is done at the hands of
  professional thieves
• They know just what they wantand how to get it
• A profitable undertaking
• Growth of construction is fueling demand for
  equipment
• Most heavy equipment carries a hefty price tag
  a big bang for the buck
• With typically low risks
• Lack of site/vehicle security investigation
  issues
• Lack of attention from law enforcement as a
  criminal trend
• Weak penalties
• Viewed as victimless crime
• Lack of preventative measures taken by equipment
  owners
• Lack of familiarity with equipment among law
  enforcement

10
What is the Most Common Stolen Equipment?

• Thieves target equipment that is
• In-demand and therefore easy to
• resell
• Physically easy to remove from
• jobsites
• Industry trend toward smaller, more
• versatile equipment has helped
• equipment thieves
• Skid steers, mini-excavators, mini-
• track loaders
• Towables (generators, compressors,
• welders) are easy pickins

2005 Top Stolen Equipment Categories
11
Where When is Equipment Stolen?

• Equipment is typically stolen from
• jobsites
• Equipment yards / storage facilities
• are also targeted
• The vast majority of equipment
• thieves operate at night
• Weekend thefts are common
• Theft often not discovered until Monday
• morning

12
What Happens to Stolen Equipment?

• Equipment is often left in a remote location
  for a cooling
• off period or concealed in a garage/
  warehouse
• environment
• Equipment is taken to another job site
• Equipment is taken to a yard/warehouse (theft
  ring
• operation) in which PINs are removed and item
  is readied
• for resale

13
Hot Spots Top Theft Areas
See NICB for data
Source See NICB for Data
14
Why Is Equipment so Vulnerable to Theft?

• Lack of paper trail or inferior record keeping
• Title registration of equipment are not
  mandated
• Lack of standardization of Product
  Identification Numbers
• (PINs), Serial Numbers (S/Ns)
• Poor physical security
• Remote, poorly-secured jobsites
• Open cab machines
• One key fits all

15
Why Is Equipment so Vulnerable to Theft?

• Theft detection issues
• Remote sites, weak inventory control
• Relatively easy to change identity of equipment
  (remove or
• switch PIN)
• No unique identifiers (APBBe on the lookout
  for a yellow
• bulldozer)
• Historically, law enforcement more focused on
  vehicle theft
• And investigation challenges
• Lack of standards for PINs, S/Ns
• Lack of documentation for equipment

16
Protecting Your Equipment From Theft A
Practical, Step-by-Step Approach
17
How To Protect Your Equipment and Business From
Theft

• Keep Good Records
• Label your equipment with unique identifying
  numbers
• Product Identification Numbers (PIN)
• Owner Applied Number (OAN)
• Consider marking above numbers in multiple
  locations on
• equipment
• Keep accurate inventory records
• Record manufacturer, model number, year, PIN and
• purchase date for each piece of equipment
• Record serial numbers of each major component
  parts

18
How to Protect Your Business and Equipment from
Theft

• Focus on Physical Security
• When possible, fence in or park your equipment
  together to
• prevent access
• Communicate with law enforcement. Request more
  frequent
• patrols, especially in known high-theft areas
• Use immobilization devices such as wheel locks,
  fuel shut-
• offs or ignition locks
• Consider installing battery-disconnect switches
• Consider installing equipment tracking devices
  for
• Equipment recovery (LoJack) or
• Asset management (GPS solutions)
• Consider registering your equipment with a
  national database

19
What to Do If Your Equipment Is Stolen

• Contact police immediately to file a stolen
  equipment report
• Be prepared to provide the following information
• Manufacturer
• Model number and color
• Serial or Product Identification Number (PIN)
• Date of purchase
• Identifying marks
• Report the full, accurate PIN or serial number
• Contact your insurance company to file a claim
  within 24 hours of discovering the theft
• Provide a copy of the police report or the case
  number
• Spread the word especially with other equipment
  owners in your area

20
Resources

• National Insurance Crime Bureau (NICB)
• LoJack Corporation
• Associated Equipment Distributors (AED)
• Association of Equipment Management
  Professionals (AEMP)
• Inland Marine Underwriters Association (IMUA)
• Stolen Heavy Construction Equipment Bulletin
• Association of General Contractors (AGC)
• National Equipment Register (NER)
• California Crime Prevention Council
• International Association of Auto Theft
  Investigators (IAATI)
• Industry Publications

21
Questions Answers