Overuse Injury: The Good, Bad & The Reaity So the yard switchers are being used as much as 10 times their expected use! McMurray Whale was onto something with his probing questions/suggestions at the conference call. Why would a rail company utilize the equippment so intensively? Well, its hard to escape the conclusion that the Green Goats are doing the job and everyone involved, in and around the Green Goat loves it. It has windows and its quiet and it is cheap to run and it hardly pollutes. And it does the work. Yep, I can see where the rail companies are coming from.
Now the problem. What we have is comparable to somewone buying a waffle iron at "The Bay" and then taking it on the Fair circuit (CNE, PNE, Klondike days, Stampede,etc.,) and using it for 16 hours a day for six months. Surprise, surpise, we have a "waffle-iron" life issue. In other words, folks, what we have here is someone who has bought an appliance for domestic use and put it to heavy commercial use. And, darn that waffle iron, of all things it broke down in the warranty period. Funny how others who have purchased the waffle iron and used it occassionally or even in a waffle-loving house, are having no problems at all. And to make the obvious point, so to is it unsurprising that light or medium use of the Green Goat by RailPower's customers has not created any battery life issues.
O.k., what happens next. Our Fair guy goes to the Bay and says that after only 6 months the waffle iron isn't performing the way it needs to make waffles. When he makes his warranty claim he is asked about the use he has put it to and, being the honest sort, spills the beans. Well, you know the rest. "Sorry sir, this is a domestic appliance, not a commercial or industrial appliance. The warranty is only good if its used in its intended way. We have commercial models of the waffle iron as well but they are substantially more expensive. Worth it though. They are really heavy duty."
Of course, RailPower can't react that way. It is a small cap company that is just beginning its commercial rollout. Good will is absolutely critical and getting into an unpleasant discussion about a warranty claim being inappropriate in the circumstances, just isn't on, not given RailPower's ambition.
The Company did absolutely the right thing by responding with "we will fix the problem". What is critical for this emerging company is customer confidence in the product and the company. No doubt RailPower's customers know exactly what is going on. RailPower's wilingess to fix the problem is first rate service, expensive (for RailPower), but first rate. But in the long term, folks, it may turn out to be a cheap fix.
The crtical thing now is that the fix works, whether the fix involves new batteries or gen sets or something else doesn't much matter. Of course, the fix has to reasonably cost effective. It can't take the total cost of the Goat to the point of making it uncompetitive. That doesn't sound like a problem. And it is also critical that new deliveries don't have battery life issues. Whether future orders have incorporated in them the battery/gen set solution or whether the vehicle of choice becomes one of the smaller road switchers (as was suggested in the Conference call), if the solution eliminates the problem, this will be but a bump in the road. And, in that event, the strategy of being a first class company ensuring customer satisfaction, no questions asked, will pay dividends. No doubt RailPower will be able to figure out quickly whether the cost of the solution can be passed on to the customer who wants to utilize the heavy duty version of the yard switcher. If the advantages of the units are as compelling as they appear to be, I suspect that added costs will be passed on without customer resistance.
Sprott and others seem to be betting that the problem will be solved.