Komatsu and JCB manufacture backhoe-loaders within a four-hour drive of each other in the Southeastern United States. Both operate state-of-the-art facilities where they assemble one of the most utilitarian pieces of equipment in the industry. And both say they're committed to producing more of these machines and probably skid-steer loaders as well, another highly versatile piece of equipment in the North American market.
Of course, these two manufacturers only represent what other competitors in these categories also know: There's a lot of market potential for compact equipment. Komatsu announced its commitment by opening a plant in Newberry, S.C.—its first in the United States dedicated to what it calls "utility" machines. JCB told us in March that it plans to be the No. 3 manufacturer in the world by 2005—in terms of units sold—much of that to be built around its compact line.
The rental market holds a pivotal spot in many suppliers' backhoe-loader marketing strategies, with 30 percent or more of the industry's backhoe-loaders sold there. First, rental companies buy the machines because the demand is high. They're simply so versatile that renting one rarely is a bad move when a short-term need arises. Rental houses need to keep these machines readily available and current.
Second, manufacturers that put a popular, highly rentable machine in play give potential buyers a chance to audition that machine in the field. Selling new equipment to the rental market makes perfect business sense.
For fleet managers, this presents two excellent opportunities for improved utilization and cost-effective operations. First, short- and even some long-term equipment needs can be met with the latest technology available in backhoe-loaders. Renting these new machines ensures efficiency and cost-effectiveness for the specific tasks currently at hand. Then, if the short-term need turns into a need to purchase, fleet managers can make an informed decision on brand and specifications.
But, and this is the second opportunity, fleet managers don't necessarily have to buy new if the need to rent changes to a need to own. The rental fleets turn this type of equipment quickly, so the used market may supply an opportunity to acquire an excellent machine at a reasonable price.
Equipment managers should keep rental in mind to take advantage of today's hotly contested backhoe-loader market, whether it's buying or renting.