S1.E9: Contractor Counts the Ways Renting Improved its Equipment Operations

When Johnson & Galyon decided to rent all of its equipment needs from a single rental partner, they expected machine performance to improve but CEO Doug Kennedy seems a little surprised at how deeply the value penetrated into his company.

Leaders at Johnson & Galyon, an East-Tennessee general contractor, swapped the company’s equipment for a full-time rental commitment with Stowers Machinery not to save money, but as an investment in better equipment quality. 

Some hefty changes in resource allocation>were side benefits, but once they got worked out sustainable machine rates with the Cat Rental Store, the deal’s focus shifted to getting top-tier equipment reliability and performance. Trading in their owned equipment for Stowers’ rental fleet made a big difference. Machine age in the Johnson & Galyon fleet ranged from 6 months to 10 years old, and downtime could be a major interruption to project workflow. In the event of a breakdown, CEO Doug Kennedy says it could have been a day or more to put the machine back in service or get a rental on the site to take its place – whether the project was up against a deadline or not. 

“We build things,” Kennedy says, really summing up why his company exited the equipment-ownership process. “We’re not in the equipment rental business.”

Outsourcing Equipment Logistics

He says the equipment from the Cat Rental Store is not only in new-to-excellent condition, but they’ve come to depend on the service Stowers supplies to minimize surprises.

“In almost a year (renting from Stowers), we’ve only had two pieces of equipment go down,” Kennedy says. “And if we do have something down, we pick up the phone and Stowers has usually got another piece out to us that afternoon.”

Emergency response is an important part of the relationship, but an even better indicator of the rental partnership’s value is the day-in, day-out logistics – having the right machines on the job at the right time. Stowers people attend Johnson & Galyon project-team meetings to make sure they’re ready with the week’s equipment needs.

“Kirk Johnson, Stowers Machinery sales rep, should be out visiting every job site every week or every other week touching base with the project managers; planning; keeping lines of communication open,  says Ed Rottmann, chief operating officer at Stowers. “We’re trying to minimize the amount they have to call us with issues that need solved this afternoon.”  

Outsourcing Idle Equipment

One real, albeit hard to measure, contributor to real equipment cost savings is gaining an equipment partner with the capacity and focus to monitor equipment utilization. Savings add up here quickly because by watching Caterpillar VisionLink data feeds form its equipment, Stowers is able to identify machines on Johnson & Galyon sites that aren’t, and the contractor encourages the machine vendor to help them move equipment around to where it is needed.

Part of the Stowers presence on the contractor’s sites is letting the project managers know when there are opportunities to move underused machines around, rather than bring more machines out. It’s an administrative function that Johnson & Galyon didn’t have resources dedicated to, and ultimately decided they could more effectively outsource than provide themselves.   

Ensuring Top-notch Equipment

Kennedy admits that the Cat Rental Store equipment is a pretty big step up from the contractor’s own fleet.

“We’re getting technology-driven, up-to-date, safer equipment as a result of this change and, while it’s something we had hoped for, it has been an added value to this whole process,” he says. 

All the machines are more advanced, technologically, and Stowers has trained the contractor’s crews, providing certifications where it’s needed. Joystick control of skid steers, for example, was a big change that made some long-time Johnson & Galyon operators nervous. 

“Now they’re the first to say, ‘Well there was nothing to that transition. I thought it would be difficult and it was very simple,’” says Kennedy.

Only a couple of the contractor’s machines had cabs and climate control, as you might expect, is a huge upgrade for the crews.

“We’re able to help our people be in a better condition than before,” says Kennedy, and that’s become an important incentive the company is happy to supply for its operators.