Filling the Gap

As the construction market inches its way to recovery,contractors are eager to dive back into work andexplore new projects. But before crews can get back tothe grind, they need to make sure they have the rightmachines for the job. Although opportunities are beginning topop up, the effects of the downturn are still being felt, especiallyfor those with minimized equipment fleets — and that’s whererental can play a big role.

“We have seen an increase in customers who are rentingequipment to supplement their fleets,” says Drew DeLaney,General Manager of Beard Equipment Co. “This increaseddemand is the result of many contractors who had reduced theirfleets over the last few years and look to renting machines insteadof committing to buying new machines.”

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While contractors begin to dip their toes into the recoveringmarket, the anxiety over purchasing new equipment may be veryreal for some. To calm those fears, rental presents crews with theopportunity to still bid on projects and fill any equipment voidsas they need.

 “For many contractors in the United States, the past severalyears have been a perfect storm of challenges,” says MattFlannery, COO of United Rentals. “In addition to tighter accessto capital, commercial construction went through a substantialdecline. The economic benefits of renting, and the flexibility itoffers in terms of bidding on different types of work, have helpedto drive rental penetration.”

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According to both DeLaney and Flannery, reduced tail swingexcavators have been a popular rental item among utility andexcavation contractors thanks to their small size in urban areas.Other popular equipment rentals have been wheel loaders, smallvacuum trailers and trench shoring systems.

“Some of the greatest momentum for us in the utilityconstruction and excavation sectors is related to our trenchsafety training services, including certification for CompetentPerson Training and Confined Space Training,” says Flannery. “Inaddition to OSHA standards and soil classifications, contractorslearn how to select the proper shoring or shielding system forsite and environmental conditions. If we can increase the safetyand productivity of a contractor’s crew through training, everyequipment rental saves them money.”

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Rental has also been a great way for contractors to try out newerequipment, specifically machines that boast Tier 4 Interim (Tier4i) technology. The rental period gives crews the opportunityto become accustomed to the latest and greatest advancementsmanufacturers have to offer.

“The rental activity also is giving contractors a chance toexperience iT4 machines to get comfortable with how theemissions regulations have changed the machines,” says DeLaney.“Dealer and rental company fleets have been updated with newerinventory, and in many cases, expanded to be prepared for theincrease in rental demand.”

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Ready to Rent?

If rental is on your crew’s agenda, there are some importantconsiderations to make when selecting a rental company ordealer. First, it’s important to do your homework and know whoyou’re planning to rent from and what equipment they have onhand. Bryce Puckett, Texas Division Rental Manager for KirbySmith Machinery Inc., points out that although some companiesoffer low prices, their equipment may be older and rundown.A knowledgeable staff is also important so they can answerany questions a renter may have — particularly with newer,complicated engines and hydraulic systems.

The service capability of a rental company is a significantconsideration that needs to be addressed up front. Importantquestions to ask a company or dealer include:

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• If required, does the rental company have the ability to offerfield service?
• If so, do they have multiple field service trucks? How busyare they?
• Do they have service capacity in the area where my jobsite isin today? How about tomorrow?

“Be mindful of where your jobsites are currently and wherethey will be in the future to help make that decision for you,”says Puckett. “A contractor may be working in one region now,but in the future, if I’m going to keep that piece of equipmentout, does the rental company have the ability to service themachine in the next area where my jobsite will be?”

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After selecting the right company or dealer to work with, it’simportant to know your options when renting a machine. Whenit comes to rental agreements, Puckett mentions that there arethree main types of renting available:

• Pure rental. This type of rental is the most common and isbasically an agreement to pay for usage of a machine for aperiod of time. Since the time extends into perpetuity until aunit is returned, a renter is going to pay fees — whether it’s aday, week or even longer.

• Rental-purchase option. This option is similar to pure rentalexcept that during the rental, the contractor has the option ofpurchasing the unit with a portion of the rental fees appliedto the purchase price. However, Puckett warns that theamount that’s applied varies by company, so it’s something aperspective buyer should know up front.

• Leasing. Although often confused with rental, a lease is aset agreement typically between a bank and a contractor topay for equipment usage for a certain period of time. Mostcontracts are for a 24-month minimum lease period, and atthe end of that lease, a contractor can purchase the machinefor a certain price.

As 2013 continues to roll on and contractors find more workto be done, rental is a viable option to fulfilling a need forequipment. New projects call for their own arsenal of machinesand rental is a growing trend to answer contractors’ needs.

“For many contractors, the economic benefits of renting andthe flexibility it offers in terms of bidding on different types ofwork, have been a real eye-opener during the downturn,” saysFlannery. “Contractors now see the rental option as a soundbusiness strategy in the recovery, which is why growth in theequipment rental industry has been outpacing the recovery inconstruction. We expect the penetration trend to continue.”

Pam Kleineke
is Associate Editor of Utility Contractor.