Wartgow says many maintenance contractors are looking to procure new mowing, trimming and debris cleanup equipment again in 2011, as most contractors have remained busy in these service sectors, so equipment is wearing out at a normal pace of anywhere from one to three years. "With respect to installation equipment such as compact track loaders and related attachments, contractors are still touch and go," he says. "There is still a lot of uncertainty in this area of the business, due to a housing market that seems to be refusing to correct itself. That said, contractors are on the lookout for additional services they can provide a client, and renting tools like attachments, compact excavators, track loaders and aerators makes sense."
Demand for aerials should start to increase
Whether they're involved in general construction, landscaping, concrete or are simply do-it-yourselfers, your customers use aerial work platforms and when they do, they rent them. So how will this market segment fare in 2011? To find out, we asked Tim Whiteman, managing director of the International Powered Access Federation (IPAF) for his take on the subject.
"Aerial work platforms will continue to be a preferred means to place workers at height, especially as falls from other types of temporary access continue to be the single-largest cause of fatalities in the construction industry," Whiteman says. "AWPs provide a fully guarded, railed work platform at the exact height of work to increase the safety and efficiency of the worker. The financial crisis has had a temporary impact on the aerials business, but IPAF’s annual market reports indicate that business will improve during 2011. The past few years have seen a reduction in capacity in rental fleets and personnel to levels required to address current demands and focus on profitability rather than growth.
"Rental fleet sizes were reduced through direct sales, but auctions were required to move the large amounts of excess fleet in the market," he continues. "Auctions generally move equipment at lower prices, thus reducing the value of existing fleets. This experience should be an example for rental companies to grow their rental fleets only to a capacity that can be maintained over the long haul. If your rental fleet is of size to take every rental opportunity during peak demand, you will have too much equipment for your demand during the full year and/or when any downturn occurs."
Whiteman predicts in the short term, rental companies will grow cautiously, as the strength of the economy will be both erratic and cyclical. "Aging fleets, smaller fleets from several years of selling used fleet with little to no additions, opportunities with new models and technology, and the beginning of financial recovery will all bring a slow increase in fleet acquisitions," he explains.
As always, Whiteman notes, niche markets provide greater rates and utilization. "Bringing in new products and technology will offer better ROI," he advises rental businesses. "Fleets that are well maintained both mechanically and in appearance provide an edge with users. Rental companies that offer their customers value-added service(s) will hold an edge over their competitors."
Whatever your market niche is, no equipment rental business can escape the effects of economic factors far outside of its control. Understanding how these factors are challenging your customers, however, can provide you with the insight necessary to tweak your business plan in anticipation of the inevitable, as well as assist you in remaining a vital solutions provider to the professionals your serve.