When Vehicles Talk, Good Things Happen
Teck Resources is working with privately held SAFEmine to help avoid workplace vehicle accidents. That's a real-world example of how connecting the things around us using modern technology is changing the world. You can invest directly in this concept by owning Trimble Navigation .
Mining is a dangerous job. Trucks the size of large houses moving around in the same space as normal-sized pickup trucks is a recipe for disaster. While the pickup truck will lose against a giant dump truck, that doesn't mean there won't be damage to the massive machine. That's not to mention the impact of any downtime for repairs, which reduces productivity. Mining equipment is very expensive, so most companies don't keep extra trucks around.
That, of course, doesn't even take into consideration the impact that accidents can have on the lives of employees. It's why just about every miner talks about safety. For example, Teck CEO Don Lindsay noted in the company's annual report that, "Total reportable injury frequency and lost-time injury frequency were at the lowest level ever." in 2013. It was the third consecutive year of improvement.
Projects like installing collision avoidance systems are a key part of that. Here Teck worked with SAFEmine to put GPS-based devices in vehicles so they can warn operators before accidents take place. If you drive a car, you know all too well that sometimes you just don't see things that you need to see. The results of the trials were so impressive that Teck decided to roll the technology out to all of its surface mines.
Incremental, but important
Will you see the results of this initiative drop down to the bottom line? Probably not. However, it is this type of interconnected advance that allows Teck to keep its costs down. In the first quarter, the miner announced that it is cutting sustaining and development capital spending this year by an additional $150 million. On the sustaining side, "the deferral of equipment purchases" was a specific highlight.
Ensuring that giant, expensive trucks don't ram into each other is what allows for that to happen. The results? In a test of the SAFEmine system, speeding incidents, "close interactions" between small vehicles and trucks, and "close interactions" between large trucks all fell about 50%. That's the type of improvement that lets you put off the purchase of new machines.
GPS to the rescue
A GPS system is the heart of this advance, since it lets a computer track where every truck is and, more importantly, what's around every truck. That's not all that GPS can do, however. For example, Trimble uses GPS to enhance farming and construction equipment. Trimble's GPS systems can direct a human operator or just run the machines itself in some cases.
Using a computer and a connected fleet of machines, Trimble essentially allows for more precise work. In the farm space, that can increase crop yields (more revenue) and, if you let the machines run themselves, reduce staffing needs (lower costs).
The focus on interconnecting machines is why Trimble's revenues continue to head higher while the GPS industry's nameplate player Garmin has seen its top line decline. Devices that provide directions are nice, but growth is over in the space. On top of that, major competitors like automakers are incorporating GPS into their own systems.
It's about doing more
Putting some numbers to that, over the past five years, Trimble's revenues are up over 100% while Garmin's top line has fallen 10%. Clearly, taking GPS and connecting it to other devices so it improves overall performance is more valuable than just selling a stand-alone GPS. In other words, if you want a GPS play, buy Trimble and avoid Garmin. Trimble's ability to connect devices is exactly why major companies like Teck are able to make minor, but important changes that make shareholders richer.
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The article When Vehicles Talk, Good Things Happen originally appeared on Fool.com.Reuben Brewer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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