Stay up to date: Follow along with the 2018 Florida Auctions → Click for more.

Iron Theft Continues as a $1 Billion-a-Year Enterprise

Thu October 09, 2003 - Northeast Edition
Tracy Carbasho



Stealing heavy equipment and tools has become a lucrative business that robs the construction industry of as much as $1 billion each year.

“It is human nature to assume that ’it will not happen to me,’ but if the true size of the problem was known, equipment owners would realize that there is a good chance that it will happen to them if they do not take anti-theft measures,’’ said David Shillingford, president of the National Equipment Register Inc. (NER) in New York City.

“The full cost of a theft is also often underestimated. It is only when it is too late that someone who thought their insurance covered everything may find out otherwise. What about business interruption, deductibles and future premium increases or even denial of coverage? Saying that it’s okay because you’re insured is a dangerous comment.’’

He said contractors also can be faced with missing completion dates, spending valuable work time dealing with police and insurers, renting additional equipment and repairing any damage that occurred during the incident. He noted that it is difficult to estimate the overall monetary impact of equipment theft considering the wide repercussions that can take place.

Shillingford’s three-year study into the problem of equipment theft in the United States and Europe led to the development of the NER in 2001. His research shows that the inaccurate and delayed reporting of thefts often contributes to the inability to recover the stolen equipment.

“A car theft will be discovered hours, if not minutes, after the crime. However, an equipment theft on a Friday night might not be discovered until Monday morning,’’ he noted. “Equipment owners with larger fleets, multi-site operations and some rented equipment may not discover the theft for days, weeks or in extreme cases — months. This gives the thief a window of opportunity when any investigation by law enforcement will not find a theft report. This is a particular problem because suspicious activity, such as moving equipment at a strange time of day or on ill-suited transport, is most likely to occur during this window.”

Shillingford pointed out that the rightful owner of off-road equipment can be difficult to determine since there is no mandated registration system for this type of machinery. The lack of available data for heavy equipment makes it even more difficult for law enforcement to identify and recover stolen items.

Once a theft is discovered, there are a number of hurdles that can hinder the successful filing of a loss report. While automobiles can be identified by an internationally standardized 17-character Vehicle Identification Number (VIN), there is no set format for numbering heavy equipment.

Without registration or title documents, the victim of a theft may not have a record of the Product Identification Number (PIN) or serial number, which is key information necessary to identify the equipment.

In many cases where the owner has a PIN, it may be a shortened version such as that which appears on the bill of sale. Data entry errors also may occur, creating confusion about whether the loss should be filed as an “article” or a “vehicle’’ in national police and insurance computers. No matter what the reason, an inaccurate PIN renders a theft report nearly useless.

To deter theft and increase the chances of recovery when a unit is stolen, the NER has created Heavy Equipment Loss Prevention Technology, a low-cost solution to equipment theft.

Owners can confidentially register their entire fleet with the NER for a small cost by visiting the Web site at www.nerusa.com. The larger the fleet, the smaller the cost per piece of equipment.

Glen Sider, operations director of the NER, said the register provides a weather-resistant decal for each item that clearly tells potential thieves that the equipment is registered in a national database used by thousands of special law enforcement officers to identify the true owner. Shillingford said the NER provides officers with investigation advice and searches via a 24-hour hotline.

Shillingford said equipment owners gain major benefits by registering their property with the NER. Thieves will be deterred when they see the NER decals. Even if the decal or identification numbers are removed, the equipment is still registered and can be tracked.

“A theft may not be discovered for days or even weeks, during which time law enforcement may have investigated the equipment with no success if it is not registered,” said Shillingford. “The NER will be able to identify the owner of registered equipment that is found in suspicious circumstances even before the theft has been discovered.

“As soon as a theft is detected, the NER can be notified and a full loss report will be added to the database, ensuring the speed and accuracy of the loss report. The NER’s close relationship with insurers allows us to provide information to expedite insurance claims,’’ added Shillingford. “We have helped police recover more than $1.5-million worth of equipment since we began operations in 2001 and the database of stolen equipment now includes more than 26,000 machines.”

Shillingford said loss deterrence and the increased chance of recovery will improve loss experience and help control the cost of risk. Some insurance companies are considering incentives for owners who register their equipment.

Ed Sparkman, who worked as a police officer in Michigan for 14 years, now serves as the public affairs manager of the National Insurance Crime Bureau (NICB). He also served as a field agent for the NICB in Michigan for nine years before assuming his current role in Illinois.

Sparkman said contractors and equipment owners should take a proactive approach to protecting themselves and their machinery from being targeted by criminals. The NICB recommends that contractors document every piece of equipment they own by taking photos, listing the proper PINs for each item and keeping all receipts.

The NICB also discourages contractors from using universal keys, even though they may be more convenient on a job site which includes several pieces of similar equipment. Sparkman suggests that unique keys be used for each unit of machinery.

“If equipment is left at a job site, render it immobile or make it difficult to steal by clustering it in a circle so that it’s hard to get to,’’ said Sparkman. “Don’t leave equipment on a trailer either because this makes it easier to steal. If you leave equipment at a site over the weekend, inspect the job area occasionally to make sure nothing is missing. This will increase the chances of recovering equipment if you notice it is missing on a Saturday instead of on Monday.’’

The NICB suggests that stolen equipment be reported to the local police agency, which enters the details into the FBI’s National Crime Information Center (NCIC) database. The NICB maintains a mirror image of the NCIC records.

Sparkman said some owners may fail to report a crime for fear the insurance company will raise their premiums or they might have to pay a high deductible. However, he strongly urges contractors to report all cases of theft.

“You should also notify the dealer where you bought the equipment or the local dealer so they can document the theft in the warranty records,’’ added Sparkman. “If the thief takes the equipment in to have it worked on, the dealer will know that the equipment is stolen.’’

The NICB is a proponent of anti-theft equipment to prevent incidents and tracking devices to help recover the items, if they are stolen.

LoJack Corp., based in Westwood, MA, has been providing stolen vehicle recovery technology for the consumer automobile industry since 1986. The LoJack system includes a radio-frequency transceiver that is hidden in the automobile. When the vehicle is reported stolen, the unit is automatically activated and emits radio signals. LoJack provides local, county and state police with tracking technology so they can receive the radio signals.

This covert technology also is available from LoJack for pickups, construction equipment and trailers that transport the machinery.

“LoJack uses radio-frequency technology that enable law enforcement to recover stolen equipment, even if it is hidden inside a garage,’’ said Paul McMahon, director of marketing and corporate communications. “LoJack is the only system that’s fully integrated with law enforcement. Nationally, we have a 90-percent recovery rate for vehicles, including construction equipment.’’

To create a picture of the breadth of construction equipment theft on a national basis, LoJack tracked recovery reports from January through December 2001. The results showed that the rate of theft and recovery were the highest in states where rapid growth is fueling construction projects.

Accounting for 85 percent of the recoveries were Florida, Georgia, California, Texas and Arizona, while 15 percent of the recoveries were in Massachusetts, New York, Maryland, Illinois, New Jersey, Michigan and Connecticut. According to the report, Florida was the most active area with 36 percent of recoveries, followed by Georgia and California at 16 and 15 percent, respectively.

The LoJack study also found that construction theft is generally a local issue since 70 percent of the stolen equipment never left the vicinity within which it was taken. The equipment was either in use at another local job site or being kept in storage.

McMahon said approximately half of the LoJack-equipped construction items were recovered in less than three hours after being reported to the police. The quick recovery has resulted in less than 5 percent of the stolen equipment being damaged.

LoJack’s data shows that four types of equipment account for 67 percent of the thefts in the construction industry. McMahon said skid steers are the most frequently stolen based on their ease of transport and high demand as a multifunctional piece of equipment on job sites.

The second most sought after piece of equipment by thieves is the combination backhoe and front-end loaders, which can be used for many types of jobs. Since there is little visual differentiation between one backhoe and the next and they share a common key, they are easy targets for criminals.

Compressors and generators round out the list of most frequently stolen equipment. The high rental cost of compressors makes them attractive to thieves who want to use them on other jobs or resell them below market value. The compressors are easy to steal because they can be readily attached to a trailer hitch.

Generators also are versatile pieces of equipment with a high rental cost and they can be easily attached to a trailer hitch. This type of equipment is useful both in the private and commercial sectors. Today’s high energy costs motivate thieves to steal valuable generators.

The LoJack study reveals that 88 percent of the stolen equipment was four years old or less and 20 percent of the thefts were reported on Monday mornings.

“If companies aren’t buying the tracking devices for economic reasons, they should consider that the individuals behind the thefts are professionals and close to $1 billion a year is lost nationwide due to the theft of construction equipment and tools,’’ said McMahon. “We often hear of theft occurring at an active job site where you see someone with a hard hat and think that they own the equipment. This crime is like a giant spider web where the center is the cost of the stolen equipment and then there are ripples of associated costs for work stoppages, repairs and other items.’’