S1.E11: How Renting Equipment is Helping Solve a Contractor’s Labor, Materials-Availability Issues

When Johnson & Galyon traded its equipment for rentals, they freed up people and buildings where they can stage materials with long lead times. Here’s how it helps them get the ‘very best pricing’ from subcontractors.

When general contractor Johnson & Galyon traded in its equipment fleet to rent from The Cat Rental Store run by Stowers Equipment in Knoxville, Tenn., it made three categories of company resources available for more-valuable use. 

1. Personnel 

2. Real estate 

3. Capital 

People that had been maintaining machines and handling equipment logistics were reassigned to tasks in more-direct support of construction. That lightened the labor demand a little. More importantly, the administration resources the company would otherwise have to invest in replacing equipment and managing the fleet can now be spent recruiting craft labor. 

“We are really focused on finding the next generation of young carpenters, masons, concrete people, laborers and getting them trained and ready to go,” says CEO Doug Kennedy 

Equipment Facilities Now Support Construction 

The facilities change was surprisingly impactful. Shop and storage buildings formerly committed to equipment and parts inventory could be used for staging construction materials. 

“With the supply chain issues affecting our industry, we’ve moved into using those facilities to store and stage materials that we know are long-lead items – that take much longer to get than they had previously because of those supply chain issues,” says Kennedy. “So the second we sign a contract, we order those materials – it may be windows, roofing materials, a variety of different things – if our subcontractors don’t have the property to store them for us (very often they won’t) we’re able to bring those in here.” 

Moving equipment support to Stowers left Johnson & Galyon with a building where they can get wood in early and let it get acclimated to the climate under cover. Kennedy says ordering materials early has saved a lot of money beating inflation. He points out situations where ordering even a month early saved them up to 10% on the cost of wood. 

They invite subcontractors in during downtime to prep and prime wood, for example, before it goes out to the project site. 

“The quality control is a value to our customers. Perhaps equally important, though, our subcontractors know that we are helping them,” Kennedy says. “I think it helps us get the best pricing from our subcontractors because we can keep them flowing when they would have unproductive time (because of weather or labor demand).” 

A Business Easier to Run 

Growing equipment demand was overwhelming the combination of owned equipment supplemented by project-level rentals that the 108-year-old Johnson & Galyon had depended on to equip its projects.  

The company didn’t have enough capital tied up in equipment for it to be a driving issue behind their rental decision. Kennedy says rental’s real value is in “the way it makes our business easier to run so we can focus on supply chain issues, lack of labor force.”