Equipment rental continues to increase and it appears that this trend will continue into the foreseeable future. At a recent Illinois Equipment Distributors meeting Frank Manfredi, Manfredi & Associates and Machinery Outlook, told attendees that the rental trend was on a extended growth curve as illustrated in the following chart:
In our recent Buyers' Intentions Study (November 2007) we asked our readers a couple of questions about their equipment acquisition plans for 2008. The results are as follows:
The trend still exists whereby respondents are increasing their renting and leasing of more equipment and owning of less equipment. Five years ago, respondents reported renting 11 percent of their construction equipment, leasing 8 percent of their equipment and owning 81 percent of their equipment fleet. Four years ago, 15.1 percent of the fleet was rented, 8.3 percent leased and 76.6 percent owned. Three years ago, 21.5 percent of the fleet was rented, 10.0 percent leased and 80.6 percent owned (slight overstatement of responses). Two years ago the trend continued — 18.8 percent of the fleet was rented, 6.8 percent leased and 69.5 percent owned (slight understatement of responses). Last year, 22.2 percent of the fleet was rented, 8.4 percent was leased and 69.5 percent was owned (slight rounding error). This year, 19.8 percent of the fleet is rented, 11.7 percent is leased and 67.3 percent is owned (slight rounding error). From the survey five years ago to the survey this year, the percentage of fleets rented has increased from 11 percent to 19.8 percent and the percentage of fleets owned has decreased from 81 percent to 67.3 percent. While equipment ownership remained stable this year, equipment rentals decreased and the use of lease options increased.
Respondents are planning to acquire an assortment of equipment in 2008. Thirty-seven pieces of equipment were included in the survey and all pieces were listed as planned acquisitions for 2008. Respondents were asked to check which pieces of equipment they plan to acquire in 2008 and indicate whether the equipment would be rented or bought. The 22 pieces of equipment listed in the accompanying chart are representative of the top 10 rent and purchase options listed by respondents. There are 22 pieces of equipment listed rather than 10 because not each piece of equipment fell within the top 10 for each category and there were ties within the categories. The list of the equipment includes aerial work platforms, air compressors, backhoe loaders, ride-on compactors, walk-behind compactors*,computers/software, hydraulic cranes, truck-mounted cranes*, crawler dozers, hydraulic excavators, high-reach/rough-terrain forklifts*, generators, GPS technology* (first time on survey), lasers, light towers, rubber-tired loaders*, skid-steer loaders, pressure washers, trench boxes*, heavy-duty trucks (over 26,000 GVW), light to medium trucks (to 26,000 GVW), and welding equipment. Equipment followed by an asterisk (*) denotes equipment not mentioned in the top 10 lists from last year.
Most respondents identified their business as one of three categories — as general building construction (32.4 percent), as highway and heavy construction (22.2 percent) or special trade contractor (18 percent). Other industry member (14.6 percent) and other contractor (10.2 percent) help to round out the types of businesses surveyed. Very few respondents (2.5 percent) classify themselves as a construction material producer.
It is interesting to note that hydraulic excavators were listed as the piece of equipment most likely to be rented in 2008 (24.4 percent) with aerial work platforms and backhoe loader tying for second place at 20.6 percent. Crawler dozers and high-reach/rough-terrain forklifts tied for third place at 16.3 percent.
Statistics are numbers that can mean virtually anything you want them to depending on your interpretation. The bottom line is that even with a slowdown in the residential market construction is still strong in other market segments and that you are continuing to use rental as one of your equipment acquisition/ownership strategies.