Tools and equipment are huge investments for electrical contractors. Keeping these assets safe requires well-planned efforts. 

The construction industry experiences $1 billion in theft-related financial losses annually, according to the National Equipment Register (NER). Some parts of the country have even become hot spots for tool and equipment theft, especially during summer holiday weekends. 

In 2024, Alterman Inc., Live Oak, Texas, spent between $2.5 and $3 million on tools. Equipment expenditures, including on trucks, were between $3 and $5 million.

Though NER considers Texas one of those hot spots, theft doesn’t represent a huge problem for Alterman. Company revenues were $560 million in 2024. Losses paled in comparison and generally included breakage, wear and tear, and replacement. 

Even so, Alterman develops strategies to reduce theft and other losses to improve the company’s rate of return of tools and equipment.

Break-ins

“We’ve had a few break-ins in the past, usually around holidays or extended weekends,” said Ryan Smajstrla, associate director of purchasing for Alterman. “They’ll cut through the chain link fence and take tools from the gang boxes. We’ve also had some rental vehicles stolen.”

Not long ago, the company’s tool department noticed a significant discrepancy. 

“We sent $300,000 worth of tools to the job site and about $60,000 worth didn’t come back,” Smajstrla said.

Some of those tools started showing up for sale on Facebook Marketplace, a pawn shop website and Craigslist. 

“Stolen tools usually end up for sale in the San Antonio area, but we’ve also seen them for sale in Mexico,” he said. “If we find out an employee is selling them, they’re usually terminated.”

With break-in thefts, larger numbers of tools go missing overnight, but the bigger concern can be lost time and labor.

“If a significant amount of tools or equipment is stolen at once, Alterman considers submitting a claim to their insurance company,” Smajstrla said. 

To do that, site supervisors must take an inventory of what’s on site, then compare that to what was delivered. Results go to Alterman’s legal department. 

While that’s going on, Alterman’s tool department scrambles to get tools to the work site so people can start working. They also will check on-site cameras to see what happened and file a police report.

The company has worked out a protocol, but Smajstrla said big theft events are rare.

Day-to-day losses

“I wouldn’t say break-ins are a huge problem,” Smajstrla said. “Most of the theft isn’t break-ins. It’s the day-to-day onesies and twosies that go missing and accumulate over time.”

The loss comes to light when the tool department works with a site supervisor to perform scheduled audits of tools and equipment, or around the time a project is closing down.

For Alterman, greater numbers of tools walk away with larger projects such as data centers and water treatment plants, which comprise about 60% of the company’s business. 

Theft losses are not nearly as dramatic with smaller jobs associated with maintenance work, low-voltage work and renovation of office space where smaller teams are working.

“We’re most vulnerable with larger projects that have more than 200 electricians and other trades working in the area,” Smajstrla said. “These are much more difficult to keep track of than, say, a 10-man job. There’s also no specific event to report for filing a police report.”

On a more hopeful note, tool kitting to increase efficiency has made the problem easier to address. With kitting, workers open a gang box at a work site and every tool has its place. This makes it easier for site supervisors or tool department personnel to spot missing tools and perform quick inventories. 

The purchasing and tool departments also schedule regular meetings with the job site logistics coordinators to perform tool inventories. This supports detection of tool losses early on and throughout any given project.

After purchasing tools, Alterman paints them a distinctive shade of green. “It’s a visual aid to let others know right away the tools belong to Alterman,” Smajstrla said.

Tracking tech

Alterman also applies a tool tracking tag with an engraved number on each tool. The tracking labels and green paint are difficult to remove.

In addition to marking its tools, Alterman uses tool-tracking software. The Milwaukee One Key system from Milwaukee Tool, Brookfield, Wis., enables a GPS locator for higher-value tools such as impact drills, hammer drills and slotted drive system tools. The cost is an additional $20–$30 more per tool, but Smajstrla said the expense is worth it to avoid the replacement cost and downtime trying to locate tools. 

Other tool-tracking programs include Kojo Construction software from Kojo Technologies Inc., Covina, Calif., and Cleveland-based Remarcable’s software. 

“These enable you to have easy access at all times to a list of what tools are where,” Smajstrla said.

Alterman attaches the Milwaukee Tick GPS tracker to some higher-­value tools. For others, the tool department epoxies an Apple AirTag.

For keeping vehicles and equipment safe, Alterman uses software from Samsara, San Francisco, which tracks critical operating information such as odometer readings, hours of operation, and maintenance records and locations. 

Thieves are getting smarter and know how to rewire and get inside to disconnect the GPS, Smajstrla said. One Caterpillar skid steer owned by a rental company was stolen from an Alterman work site. 

“Typically, the rental company goes through Telematics on each device to see if they can recover it,” Smajstrla said. “If they can’t locate it, then we have to pay for it. We want to avoid this.”

Alterman Inc. marks tools with distinctive green paint and applies tracking labels
that are difficult to remove. It also kits tools for job sites and conducts regular on-site tool audits. 

Tracking trailers 

Alterman owns 60 to 70 trailers of different sizes. As with tools and equipment, the company labels and tracks trailers, which NER says are extremely vulnerable to theft. 

But again, Alterman is less focused on theft than wanting to avoid loss of productivity, which occurs when trailers are not accounted for and are sitting unused after their work is done at a particular job site.

“We’re putting GPS tracking on them, which saves lots of time,” Smajstrla said “With so many different pieces and so many different job sites, trailers were getting moved and we’d ended up making a lot of phone calls to see who had them.”

Planned maintenance

Historically, Alterman has treated tools, equipment and vehicles as indirect job costs, but now the company is evaluating implementation of an internal tool and equipment program to make those assets a direct job cost.

The 2023–2024 NECA Tool & Equipment Rental Guide suggests that electrical contractors seek a return on investments in tools and equipment. The guide also recommends the cost of tools and equipment be included in project estimates as a direct job expense, not as general overhead or operating expenses. 

To help electrical contractors figure out the rate of return on tools and equipment, the guide provides strategies for internal estimating of cost accounting and for quoting rental prices to customers for specific projects. Rates are based on average allowances for depreciation, shop maintenance and repairs, storage, handling, insurance, taxes, interest, fuel, and certain operating expendables such as lubrication, filters and tires.

Alterman came up with an at-cost rate for its tools based upon average lifespan. The rate is lower than what NECA suggests. 

“But we’re OK with that,” Smajstrla said. “We don’t need to turn a profit on tools. We just want to break even.” 

In the past, Alterman leased equipment. 

“Now, we’re in the process of financing or paying cash for equipment,” he said.

That equipment will be sent to work sites collectively manned by 1,700–2,000 employees.

“Our tool manager, myself, our CFO and accounting department are considering implementing a standard rental structure for tools across the company. But again, for us, it’s about figuring cost but not making money on this segment,” Smajstrla said.

The change from leasing to owning equipment is less about covering theft and more that the expense paid to lease or manage assets from a third party was more than for financing ownership, Smajstrla said. 

The lion’s share of productivity loss comes from wear and tear, so Alterman works with equipment manufacturers to schedule regular vehicle maintenance at job sites either quarterly or at hourly use intervals. 

Acquisition of new equipment includes operator training along with extended warranty and maintenance packages. Advanced telematics enable manufacturers to forecast service needs based on actual use.

Avoiding downtime associated with having to transport the equipment to the dealer or to a designated mechanic makes the service expense worthwhile, Smajstrla said.

At 2,000 hours or after expiration of a three-year equipment warranty, the equipment is evaluated to see if it should be replaced, he said. “That represents the sweet spot for maximum return at auction.”

Benefiting the bottom line

Knowing the whereabouts of tools, trailers and equipment discourages theft and facilitates productivity, Smajstrla said. And having a clear picture of equipment- and tool-­related expenses improves their rate of return.

NATALI_MIS / STOCK.ADOBE.COM | MONGKOL / STOCK.ADOBE.COM | Ryan Smajstrla