Level Year Likely Followed By Another

Staff | September 28, 2010

A survey of some of the state's larger rental companies shows that 2007 has been a generally steady year, similar to 2006, and that the year will coast to a close with the usual winter slowdown.

Although a few companies reported that 2007 had been a particularly good year for rental, the consensus is that 2006 and 2007 were both steady, but not high-volume years.

Residential, commercial and utility construction; road building; and larger infrastructure projects are seen as the industry's main drivers, with interest rates and oil prices also registering an important impact.

None of the companies surveyed has seen any large change in its type of customers, and none reported feeling an impact from radically new technology. The new products have been improvements in existing types of equipment.

Some companies, particularly those that rent larger equipment, say more contractors are tending to rent equipment until they are certain they have enough work to justify converting the rental to a purchase.

And some see possibilities for selling relatively new equipment from their rental fleets to contractors who want to upgrade for less than the price of a brand-new machine.

The state's more-populated regions reported the highest volumes, particularly southeastern Wisconsin, the Fox River Valley, Madison, and Wausau-Stevens Point.

Ron Aspenson, sales manager for Brooks Tractor Inc., says, "Rental volume is steady, about even with 2006. Rates have held steady, too, although we are heading into our usual winter slowdown. Fewer contractors are renting equipment to meet spikes in workload. More are leasing a piece of equipment for one job to see how it performs and to determine whether they have enough ongoing work to buy it."

Dan Soley, vice president of Miller-Bradford & Risberg, noted that 2007 rentals were slightly lower than in 2006, and that 2008 will probably be about the same. "Contractors have right-sized their fleets and are taking a wait-and-see approach. They will make sure the equipment they own is busy before they'll rent," he said.

"One exception," says Soley, "is that some contractors may be able to reduce their cost of operation by parking their older machines and leasing newer equipment that moves more dirt while burning less fuel."

Aring Equipment Co. Sales Manager Phil Lamarre notes that rentals, overall, have been a little slower than in 2006, but rentals of crushing equipment for the aggregate industry are currently strong.

Mark Syverson, sales manager for Vermeer-Wisconsin, Inc., says contractors are showing interest in larger equipment for specific jobs outside their core businesses. "For example," says Syverson, "a contractor who owns a 12-inch brush chipper might rent a 15-inch unit for one larger job. Or they might own a small trencher but rent a larger, 80-horsepower to 100-horsepower ride-on model as they stretch to a larger project. As contractors continue to work leaner, I expect they will rent more to get the capacity they need without a long-term capital investment."

Joe Welde, general manager at FABCO Rents-the CAT Rental Store, says even though residential- and road-construction rentals have begun to slow a little, commercial-construction rentals have remained strong. Like the rest of the industry, he expects the normal winter slowdown.

Rental Manager Roger Kopplin of Lincoln Contractors Supply (LCS) says that LCS's most-popular rental items are compressors, light towers and pumps (especially submersible and high-lift pumps). Also trending upward over the past five to six years, he says, have been dry-air heaters and ground-thawing equipment. LCS is expecting rentals to continue rising in 2008.

United Rentals also handles a wide range of construction equipment. Inside Sales Manager Jerod Schoneman, of the De Pere, Wis., store says that the 2007 rental volume has been steady and slightly higher than in 2006. He has noticed that competition in aerial booms and scissor lifts has been stiffening.

He notes that popular rental items right now include lights, dirt-engaging equipment, compressors, and pumps.

Schoneman also says that although rentals go to a broad cross section of the construction industry, three of the larger customer groups are general, mechanical, and electrical contractors, and that most of his rentals go to commercial construction rather than residential projects.

The outlook for 2008 remains sketchy, but in general the Wisconsin rental companies that Western Builder surveyed are predicting that next year will be similar to this one, or perhaps slightly slower.