The Case for Renting Equipment
In today’s challenging economy, the reasons for contractors and construction companies to rent equipment versus purchasing are magnified.
“What rental offers contractors and construction companies is a cost-effective alternative to owning equipment, because equipment becomes a fixed cost without the accompanying overhead of ownership such as maintenance, repair and storage,” says Christine Wehrman, CEO of the American Rental Association (ARA) in Moline, Ill. “The rental company handles and pays for the warranty, maintenance and upkeep of the equipment.”
Many forecasting companies are seeing signs of better days ahead for the economy, in general, and for the construction industry, in particular. As a result, the ARA also is expecting an increase in equipment rental revenues, as existing and new customers discover the benefits of renting equipment on an “as needed” basis.
Scott Hazelton is a senior partner with IHS Global Insight in Lexington, Mass., an economic forecasting firm that ARA and RENTAL MANAGEMENT magazine partners with to compile exclusive equipment rental industry-specific data and analyses. Hazelton says part of the rationale is a function of continued uncertain market conditions that make rental of equipment desirable.
“With the cost of new equipment in the tens or even hundreds of thousands of dollars, a contractor needs to be very sure of future demand for new equipment,” Hazelton says. “Very few have that confidence just now, so as they win projects, they opt to rent. This behavior will be most pronounced in the near-term.
“The severity of this recession forced many contractors to de-fleet and to age what fleet they kept,” he continues. “So, as they win new jobs, there may not be the equipment at hand to deploy, which will reinforce rental’s potential.”
Wehrman adds that, while some say credit is loosening, it also remains difficult for many to obtain financing for equipment purchases. “If you find yourself in this position, renting offers access to a wide variety of equipment as needed for the job at hand,” he says.
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Rental companies offer equipment experts who can become trusted and valued partners to help contractors achieve goals and efficiently complete projects with the right tools at the right time. The rental company’s trained professionals should be able to help customers evaluate and secure the right equipment for the job at hand as well as provide training on how to properly use the equipment.
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For many, price is a prime consideration, but the lowest rate doesn’t always ensure the greatest value or least cost when renting equipment. Other factors to consider include the availability of equipment, proximity of the rental store to the jobsite and customer service.
Equipment rental inventory is turned regularly, providing later equipment models with the newest safety features, emissions controls and better fuel economy that meet new governmental requirements.
What most contractors and construction companies usually look for from a rental store are well-maintained equipment that works as promised, prompt delivery and the ability to reach someone at any time of the day or night, if there’s a problem with a machine.
It doesn’t matter whether the company is large in size or a one-person operation, renting equipment can be a viable, cost-effective alternative. Some may use equipment rental as a way to test tools prior to purchase or to augment current fleet during busier times of year.
To help contractors and construction companies find equipment rental stores, ARA offers www.RentalHQ.com, an online rental locator. Users can enter their zip codes and the type of equipment needed to get a list of local ARA-member rental companies that can help meet their needs.