Theft of tools and equipment from construction jobsites is a major concern among contractors. Two recent studies show that most contractors say the problem is serious, but they are unsure what to do about it. For many, it's a problem they simply deal with on a regular basis, figuring the cost of theft into the finished product. The studies, one by toolmaker DeWalt and the other by the National Equipment Register, an industry trade group, quantify the problem of tool and equipment theft, identify the costs, and address potential solutions—many of which involve distributors—to what they say is a growing problem nationwide.

"It's a serious economic problem...and the situation is getting worse," says David Shillingford, president and COO of NER, which is based in New York and produces a yearly construction equipment theft report. "Generally, a crime wave...gets worse and continues to get worse until something is done about it."

NER tracks the theft of construction equipment, such as tractors, loaders, excavators, dozers and others, while the DeWalt report studied the theft of tools, materials, equipment and vehicles. Bill Pugh, group marketing director at DeWalt, agrees with Shillingford that theft is a growing problem, primarily because of the ease with which a thief can steal from a jobsite.

"You or I can put a hard hat on, walk on a jobsite and steal something," he says. "At the same time, construction has been on a high growth path, so [theft] proliferates as the construction community grows."

Ninety-seven percent of construction industry professionals surveyed by DeWalt say they are concerned about jobsite security, and 60 percent say tool theft is the number one concern with the greatest financial impact. NER's 2003 Equipment Theft Report shows that as little as 10 percent to 15 percent of stolen equipment is recovered, and that the low recovery rate is due to several factors—including the delay in theft discovery and reporting, and the lack of resources that law enforcement can dedicate to equipment investigations.

Though the statistics are daunting, Pugh and Shillingford say there is much contractors can do to secure their tools and equipment. With help from suppliers (industrial/construction distributors and equipment dealers), they can use a combination of old methods and new technologies to reduce theft, easing the financial burden it causes and the headaches that come along with it.

DeWalt, a power tool and accessory manufacturer based in Towson, Md., released the findings of its jobsite security survey last fall. The company interviewed more than 200 end users on jobsites across the country and worked with an independent research company that polled more than 1,500 construction end users and buyers. They found that:

• 97 percent of construction industry professionals surveyed are concerned about jobsite security;
• Tool theft, material theft, and truck/van protection are the top three types of jobsite losses;
• Replacement cost, lost time and decreased personal productivity are the top three reasons for jobsite security concerns;
• More than 50 percent of those surveyed have had equipment stolen in the past 12 months;
• More than 75 percent of jobsite theft occurs at night and on weekends;
• and 77 percent of jobsites have experienced theft up to five times each year over the past three years.

The study found that the cost of these problems adds up. The National Insurance Crime Bureau and the Associated General Contractors of America, for example, both reported in 2003 that more than $1 billion is lost annually due to theft of construction equipment and tools. As it turns out, few construction sites are protected by security systems, according to the DeWalt study, and those that have protection usually adopt residential systems, which are not designed to meet jobsite needs. Consequently, theft occurs, leading to financial and productivity losses that ultimately increase costs for consumers—especially those purchasing new homes. The National Assn. of Home Builders reports that residential jobsite losses account for an annual 1 percent to 2 percent increase in the cost of building a new home.

What's more, the financial impact of jobsite theft affects the bottom line of both commercial and residential contractors. Many contractors who purchase their own tools and equipment see the loss coming directly out of their own pockets.

"I think most of these guys view it as a problem and a general annoyance because it's been going on for so long," says Pugh. "There's also an emotional element here. Everyone's been hurt one time or another. It gets personal."

NER found that the top 10 states where theft occurred in 2003 were: Texas, North Carolina, Florida, California, Georgia, Illinois, Tennessee, Ohio, South Carolina and Indiana. The top five states accounted for 33 percent of the total number of thefts that year. Not surprisingly, theft levels closely follow the amount of equipment in a particular area—so states with the highest volume of construction, maintenance and agriculture have the highest number of thefts. A rise in construction activity in the last few years will therefore correspond to a rise in tool and equipment theft.

NER also found that, of heavy equipment, tractors are the most commonly stolen items. Skid steer loaders and backhoe loaders are a close second and third, respectively. NER says these items are most often stolen because they are easily transportable.

NER's report estimates that the total value of equipment stolen annually ranges between $300 million and $1 billion. The report also shows that the high and increasing incidence of equipment theft is due to:

• The ease with which stolen equipment can be sold for high cash values;
• Low physical security on equipment and at worksites;
• Low risk of detection;
• And low penalties if prosecuted.

Because recovery rates are low, NER advises contractors to focus on risk management—finding ways to secure jobsites to prevent theft from happening in the first place. The group publishes a guide to loss prevention and security techniques for equipment owners, and has its own registration database that can help law enforcement personnel track stolen equipment. In effect since 2002, the database includes more than 10 million ownership records, which lists owner information and includes the equipment's serial number.

This is a service the contractor can obtain for himself, but it's also something distributors can provide, says Shillingford. Decals on the equipment show thieves that it's registered with NER. Shillingford says there are other, similar programs available to contractors and distributors, as well as independent products that mark, track or immobilize equipment, but adds that they are not as widely used as they could be.

"I don't think there are enough [dealers/distributors] offering that [kind of] service, to see if the clients really believe in these devices," says Shillingford. "It's a shame when someone has their equipment stolen and they don't know the serial number—then they can't get it back."

In addition to registration services and marking devices, there are some simple steps contractors can take to secure their tools and equipment. Having a formal security policy, keeping careful inventory, and working with employees to deter theft are all important, according to NER. In addition, warning signs, fencing, gates, lighting and locks are key parts of securing tools and equipment.

Shillingford advocates a common-sense approach to securing the jobsite, saying that he realizes not all solutions will work in every situation.

"It has to aid productivity and profitability," he explains. "We list everything that someone would do in an ideal world...In some cases, worksites cannot be fenced in, or the cost would be prohibitive. You have to look at different ways of securing worksites, based on common sense and having a system and managing that system."

One example Shillingford gives is parking a small piece of equipment between two bigger pieces, making it more difficult to steal the smaller, easily transported item. Shillingford adds that in NER's talks with end users, the group has found that many of them are not taking the simple steps they could be taking to reduce theft.

Ken Currence, vice president of sales and marketing for A.H. Harris, a Connecticut-based construction distributor, came face to face with a similar problem recently. On a recent sales call in New Jersey, he and his regional manager discovered that a customer was having a problem with tools and parts being stolen from a jobsite storage trailer. The customer had been buying large volumes of product from A.H. Harris and storing it on site—the incentive being deep discounts for buying in bulk. Currence and his colleague quickly realized that the volume discount was being negated by the cost of theft.

The solution? A.H. Harris could manage the inventory for the customer, providing the total need for the jobsite, but bringing the products to the site on an as-needed basis. This solution cost the customer more up front, of course, but it had the potential to save money on the other end by reducing theft.

"If we're bringing this product out on multiple trips, we can't sell it at the same margin as before," Currence explains. "But we feel that, if you can relate to their theft and help find a way to control it, they may be willing to pay more."

Currence says tool theft hasn't been a major issue on his company's radar screen, but that it's something they'll be taking a closer look at in the future.

"We will be proactive with this," he says. "It is probably a bigger problem than we know, and we can help [customers] with it."

For many distributors—and, indeed, for manufacturers, as well—tool and equipment theft is a double-edged sword. After all, the more tools and equipment that are stolen, the more the customer has to purchase. But as Pugh points out, the ultimate goal is to keep the end user happy, and that may mean taking away the pain that comes along with theft.

"Any distributor I've talked to has got a story. They've all got some of their best end users that have a problem on a Monday morning—they need products on short notice," says Pugh. "That's good for business, they sell more tools—but they want to make sure their end users are more satisfied."

With that in mind, DeWalt recently launched a new product aimed at protecting tools and equipment on the jobsite. It's a portable, wireless alarm system designed for the construction industry. Called Sitelock, it uses wireless technology to monitor numerous pieces of equipment or areas simultaneously.

The self-installed system can be customized for different jobsites. Through a base unit stationed in an indoor location, the remote sensors can be programmed individually to monitor key assets and areas on the site. If an intruder tries to enter a secured area, disturb a piece of protected equipment, or remove a sensor, the alarm activates and a signal is sent via wireless technology to a monitoring service.

There are similar products on the market, but Pugh says his company's solution is unique in its mobility. Sitelock can be moved as jobsite locations change, with no roaming fees or location change costs, he says, adding that it's not a one-size-fits-all solution. He says it's designed especially for industrial and commercial contractors who have larger jobsites and a lot of assets sitting on those sites.

Pugh adds that the product will be marketed and sold through distributors.

Hughes Supply, one of the nation's largest construction supplies distributors, is selling Sitelock as part of its asset management program, which aims to help contractors reduce jobsite theft. Though the system may be more costly for customers up front, it's an innovative product that will yield cost savings in the end, says Scott Stiglich, director of marketing and operations for tools and fasteners at Hughes Supply. Stiglich says Hughes has been investigating the asset management issue for a couple of years now.

"The bottom line is, it's important for Hughes Supply to come up with solutions that are innovative and [provide] cost savings to the customer," says Stiglich. "We have a lot of big, key customers that obviously incur intangible costs due to theft."

Hughes Supply's tool specialists—field sales reps who focus on tools, safety products, fasteners and industrial supplies—will target its asset management program at key accounts, the ones that have the biggest potential for loss. Hughes Supply already offers customers products designed to deter theft—tool storage chests, locks, etc.—but this is a higher-tech step in that direction.

Stiglich says theft control devices such as Sitelock are not the kind of thing customers would typically seek from industrial distributors. Given the consolidating nature of distribution, however, he says fewer people are providing more services, leading customers to seek an even wider array of solutions from their distributors than they have in the past. Expertise also comes into play.

"We truly understand the challenges our customers face each day because we've been in the business for 76 years," says Lauren Brey, director of corporate communications for Hughes. "People trust our knowledge and reputation, and we are constantly looking for ways to provide greater value."

Shillingford says that's just what many contractors are looking for—knowledge and advice to help them address the growing problem of tool and equipment theft. Whether it's promoting awareness by talking about the issue or offering additional products to help secure the jobsite, he says everyone in the construction industry has a role to play in stopping this growing problem.

"This is a bad thing for society in general," Shillingford says. "Whether the cost is borne by the contractor, the insurance company...ultimately, someone has to pay for it. In the end, the consumer pays for it. Housing prices go up, roads cost more...It's a serious problem."