Fear the Cliff?

Now that the election hysteria is over, the American public has turned its attention to the dreaded fiscal cliff. Most experts agree that if this potential economic calamity is not dealt with by the end of this year, construction recovery could be postponed to 2015-16.

This is obviously not good news for the construction market, or the U.S. economy in general, but the silver lining to this storm cloud is that the equipment rental industry stands to benefit either way.

If the fiscal cliff is avoided, the economy will be poised to improve, hopefully resulting in increased construction activity that necessitates more renting of equipment. On the other hand, if Congress fails to act, contractors will be wise to remain conservative, which means keeping their fixed costs down by avoiding new debt service commitments, i.e., renting more equipment.

The rental industry has seen a double-digit increase in revenues around the country as contractors have relied on rental to outsource their risk and keep costs down. Many believe this shift toward rental is permanent, and as coarse as it might be to say so, the world’s misfortune is often the rental industry’s boon.

The prize is deserved, however, for in uncertain times, you offer your customers a service with immeasurable benefits, both to their bottom line and peace of mind. But as we move into a new era where rental becomes the standard method of equipment acquisition for contractors, it will be increasingly important to choose wise methods of differentiating your business from the competition. Resist the urge to compete on price, which only hurts everyone. Instead, work toward finding creative ways to bring extra value to the rental transaction, whether it’s by being a technological innovator or by positioning your company to be a true business partner, providing services to help customers manage all aspects of their owned fleets.

Whatever happens with the fiscal cliff, it’s certain the economic events of the past few years have set up the equipment rental industry for some unprecedented opportunities. The question now is how will we capitalize upon them.