Options to Put You in the Operator's Seat

Rent, buy or lease? It can be a tough choice, but never more so than in today's uncertain construction environment.

"Our contractor customers have had to make difficult decisions over the last few years regarding equipment and personnel reductions," comments Keith Rohrbacker, product manager - construction equipment, Kubota Tractor Corp. "I think that there is increased demand for machinery as jobs slowly come back. Still, the days of a job backlog have not resurfaced that might justify equipment purchases."

Evolving emissions regulations aren't helping. "New environmental regulations impact our customers that must use new Tier IV engines," says Rohrbacker. "Should you purchase now or wait until the newly certified models are released?"

The choice is even more problematic when it involves smaller units such as compact excavators, which have a lower cost of ownership vs. full-size machines, but may also have lower utilization in certain fleets. Weighing all of your options is essential to ensure you get the best value for your particular situation.

When rental is right

"In the current economy, renting has become more prevalent than purchasing because of the uncertainty in the market," says Jay Baudhuin, product manager - compact equipment, Wacker Neuson Corp. "Contractors do not want to buy equipment because they don't know if they will be able to utilize it efficiently."

"If a contractor does not have a steady line of projects, then renting makes sense," agrees Allen Rudd, national marketing manager, Takeuchi. "Renting is convenient without many of the costs associated with ownership, such as transportation, insurance or service technicians. You also don't continue to incur costs on the machine when the economy slows down."

Rental lets you obtain equipment on an as-needed basis. "Usually, a contractor is looking for a piece of equipment for a short-term need," says Kendall Aldridge, national sales manager, IHI/Compact Excavator Sales. "Say he is doing a job where he doesn't have the piece of equipment, and it's going to [last] maybe two, three or four months. Depending on the cost of renting vs. what it takes to purchase, he will typically rent it instead."

"It also makes sense to rent if a job calls for a specific [machine] that the contractor doesn't have in his inventory," says Rudd. "Matching the right machine with the job is more productive and efficient."

Another advantage of rental is reduced maintenance. "Typically, when a contractor rents a piece of equipment, whoever he rents it from is maintaining the equipment," Aldridge points out. "They will come out and service the equipment on a regular basis."

Rental also simplifies the bidding and billing process by establishing a set cost for the machine.

Of course, rental has its downsides, as well. You are not gaining any equity in the machine, and you are at the mercy of the rental center's inventory at any given time. "If you need a certain size or type of machine with a particular attachment on a regular basis, availability of a rental unit may be a concern," says Greg Rostberg, Bobcat Co. "If you are a long distance from the rental source, or if you work in remote locations or require equipment on a moment's notice, delivery time and expense may be a consideration."

Economic conditions have made equipment availability even more uncertain. "When the economy was really bad, rental companies had equipment sitting, and they got rid of a lot of it," Aldridge says. "Now, we're seeing the construction industry starting to come back, and these companies do not have enough pieces of equipment -- the demand is bigger than the supply right now."

As such, if a particular size or configuration of compact excavator is a "must have" on a project, you may want to consider a purchase, lease or long-term rent-to-own agreement to ensure its availability when needed.

When buying may be better