There’s a lot of talk in industry circles about the rebounding economy and its effect on rental businesses. We wanted to know what those of you on the front lines are seeing, so we called four rental businesses at random from across the country to get a real-world perspective on the issue. If you would like to lend your point of view to the discussion, please call (920) 563-1647
Texas: Foresight pays off
“We’ve seen an increase in activity around here,” says Dan Stewart, manager of Hilltop Rental. “We weren’t hit too hard. We didn’t see much of a downturn, but business is definitely good now.”
Hilltop Rental does both rentals and sales and has a mix of both heavier equipment and general tools in its inventory, explains Stewart.
“Two things are really helping us out now,” he says. “The jump in steel prices is one. Before that jump happened, we created a large inventory of equipment, and now it’s worth a lot more.
“The other factor is the treated wood issue,” he continues. “Before, treated wood had arsenic in it. Now it has a compound called ACQ, which is better for the environment, but corrosive to fasteners. The only type [of fasteners] that work well are stainless steel. We went from selling a box of nails for $89 to selling them for $170.”
Stewart says the foresight the company had on both issues has really paid off. “We saw both things, the steel hike and the treated wood issue, coming and we stocked up,” he explains.
Located in Tomball, which is 30 miles outside of Houston, Hilltop Rental caters to both construction contractors and homeowners. Stewart says his customers are staying busy.
“We hear the comment, ‘Not as busy as I’d like,’ a lot,” says Stewart. “But they’re staying busy, and so are we.”
Nevada: Heat is up, equipment rentals down
Las Vegas is one of the most active construction markets in the country, but equipment rentals at Ben’s Rent-All have not picked up much since the downturn of a few years back.
“Business is fairly slow,” says Joyce Lequesne, service manager at the single-branch, family-owned business.
Unlike in many parts of the country, warm weather can be detrimental to business in the desert. “It’s feast or famine. Party rental and lawn and garden slows due to the heat, but the contractors keep working.”
Due to the long-term slowing of their equipment rental business, Lequesne says Ben’s Rent-All has considered focusing all of its efforts on party rentals because no matter what the economy does, people can be counted on to celebrate weddings, graduations, birthdays, etc. “It balances out the homeowners who are aren’t doing the work around their houses that they used to.”
Even if the decision to phase out the equipment rental does come to pass, Lequesne says they would still keep their lawnmower repair shop, which is active.
“We’ll reevaluate all this in the fall,” she says.
Due to slow rental activity, Lequesne says the 25-year-old business has had to go without in some areas. “We usually keep two to three mechanics and now we have one full time and one part time,” she says. “It’s a little more difficult, but it’s workable.”
Pennsylvania: Global economy affects local business
Despite construction activity in the area, Construction Rental & Supply in Neville Island, PA is not seeing a jump in rentals.
“Business is flat,” says Ed Schneider, operations manager. “The global economy is such that manufacturing used to be strong in this area, but it’s weak as of late. The whole country has been pushing toward a service economy and manufacturers are going off to other countries, so there’s very little growth.”
Construction Rental & Supply serves a 200-mile radius in western Pennsylvania, eastern Ohio and northern West Virginia. Approximately 80 percent of the customers are contractors who are facing the same challenges with regard to the local economy, which has been down or flat since it turned south a few years ago.
“Contractors are searching for more work, so we have to piggyback with them to find new markets,” he explains. “For example, industrial contractors are looking to get into maintenance, so we’ve had to broaden our inventory to meet their needs.”
In general, Schneider says the 32-year-old company will look into new geographical markets or different product niches as it becomes necessary. “We’re not a huge company, so we can change direction quickly. We’ve done it before.”
Construction Rental & Supply has a commitment to personal service for its customers, but Schneider says tough times have created a different definition of loyalty. For example, his customers who are maintenance contractors often work three straight shifts. If a piece of equipment breaks, they need to replace it fast or they’ll lost three shifts of productivity. This creates a certain degree of urgency when renting.
“If I don’t have a piece of equipment here immediately when a customer needs it, they’ll go elsewhere,” he explains. “Loyalty means they might come to me first.”
Minnesota: New business is doing ‘relatively well’
Al Knudson was an electrical engineer with several rental properties when he decided to jump into the rental industry three years ago.
“I was always on the other side of the counter. Because of my rental properties, I was always doing some little project. I always thought it looked like a neat industry with some great people,” says Knudson, who is now owner and operator of Big Al’s Rental Center in Annandale. “I guess 9/11 prompted me to follow my dream. If you wait too long, you never know what might happen.”
So, just as the economy headed south, Knudson was opening his rental business. How did he survive the first three years?
“We’re doing relatively well,” Knudson says. “I don’t know if it’s because the economy is doing better in our area, or if’s because people are starting to know we’re here, but we’re growing.”
Big Al’s Rental Center has 40 percent construction, 40 percent general tool and 20 percent party equipment in its inventory. The largest equipment they carry are skid--steer loaders and compact excavators.
Located about an hour away on the western edge of the Twin Cities, Knudson says his area is growing fairly quickly and his rental business is growing with it.
“We’re in a growth pattern,” he says. “And in five years, we hope to be even bigger.”
Coming soon—The eighth annual edition of Construction Zone Safety.
This easy-to-read guide to equipment safety reaches 136,000 equipment owners and users with quick and concise reviews of safety information on everything from excavators to cut-off saws.Construction Zone Safety
Look for Construction Zone Safety with the August issue of Rental Product News.