Although this year’s RER 100 was less dramatic than recent years in terms of rental volume growth, there certainly were some strong performances and significant growth trends. Also, from many comes a positive sense that the economy is doing well and 2017 is starting out relatively strong.
While rental customers are busy in most of North America, and construction trends, particularly in non-residential and multi-dwelling residential, continue strong, the oil-and-gas industry is still uncertain. Several RER 100 executives said the oil-and-gas markets started the year pretty well and demand seemed to be improving. But as we were getting ready to celebrate this point, close to press time, oil prices took a tumble into the low-$40 a barrel range. At this writing, U.S. crude is about $47 a barrel. I’m not going to claim to be an expert on the direction of oil prices. Quite a few rental companies will be watching the oil trends carefully.
The pipeline market on the other hand is looking far more promising and several RER 100 companies are expecting very strong growth in this field, possibly a significant growth trend.
While many in the industry are pleased that the current administration has talked of infrastructure spending boosts, the prospects for it appear less than certain and a number of RER 100 executives have doubts about its ability to pull it off. But even though that seems to be on the back burner, the important thing to this industry is that customers are busy. And while competition is ever increasing, meaning the obvious pressure on rental rates, people seem optimistic there will be enough work to keep their machines utilized.
Consolidation continues to be a rental industry trend. United Rentals will be adding NES Rentals to its revenues and seem assured of rental growth this year based on that as well as market conditions. Sunbelt Rentals continues to add bolt-ons, and its recent acquisitions of Pride Equipment in New York City and Noble Iron’s Los Angeles facility gives it much added strength in the country’s two largest markets. I suspect Sunbelt has other acquisition targets in its sights. Maxim Crane has been a major acquirer, as Apollo Global Management acquired it along with AmQuip, and has since added Essex, Coast Crane and CraneWorks to its growing group of crane rental companies. And in case nobody has noticed, Rental Equipment Investment Corp., led by Kevin Fitzgerald, has been acquiring companies up in the Northwest and Northern Rocky Mountain Region and creating a formidable regional group.
Safway Group, which acquired Spider, Div. of Safeworks last year, recently agreed to merge with Brand Energy & Infrastructure Services, which has 210 branches on six continents, creating another supergroup. Canada’s Cooper Equipment Rentals, which in recent years acquired SMS Rents, among others, continues its growth with the purchase of 4-Way Equipment Rentals and has added some new startup branches.
There was some impressive growth on this year’s RER 100 among smaller companies that had nothing to do with acquisitions. How about May Heavy Equipment in Lexington, N.C.? Maybe not a household name, but apparently pretty well known in the Southeast with a 42.3-percent rental volume boost year over year, providing tons of earthmoving equipment and, evidently, moving many tons of earth!
Home Depot Rentals did well in 2016. Sims Crane jumped close to 30 percent in Florida’s crane rental market, and Blanchard Rental Services and Gregory Poole Equipment, also in the Southeast, posted impressive growth years. Thompson Pump, Rental One, Stowers Machinery, Able Equipment Rental, Diamond Rental, PDQ, Contractors Equipment Corp., Cloverdale Equipment, Ames Taping Tools, Ahern Rentals, LaLonde Equipment Rentals and Lizzy Lift all posted strong years. And there were others.
For the most part, RER 100 companies are expressing optimism and expecting good things for 2017. I see branches being built, new headquarters being constructed, improvements in IT systems and people paying attention to metrics and intelligent ways to improve their businesses. I don’t sense wild, unbridled expansion at the expense of good common sense going on. I may be wrong, but it seems to me that the quality of leadership is imaginative and cognizant of lessons learned in rental industry battles and cycles.
But there is an underlying concern regarding the amount of competition in a lot of markets and the same concerns about rental rates that we’ve heard before. It is definitely a dynamic to keep an eye on. Crowded marketplaces can create dangerous bidding wars in the wrong direction. It’s happening in a number of markets and the problem is not likely to go away any time soon.
We’ll see how it all plays out the rest of 2017.
