As part of a recent series of interviews regarding the effects of the COVID-19 pandemic on the equipment rental business, RER recently interviewed Bill Gex, CEO of Bridgeville, Pa.-based Anderson Equipment Co. Via email, Gex discussed the effects of the pandemic on various markets, the positives of the residential markets, the challenges of meeting with new prospective clients, the challenges of getting work done around the house, and the supply and demand dynamic of rental fleets.
How has business been for you in 2020? How has the pandemic affected your business?
· The impact has been surprisingly mixed
· When the governors of Pennsylvania and New York shut down construction, we were worried about surviving. When work resumed, keeping up with demand was challenging.
· The impact has varied by end use segment. Residential construction continues to be strong. People are moving out of urban areas like New York and Boston which has keep contractors very busy. Our markets in New England are actually up this year. Residential work is also strong in the eastern New York and Pittsburgh markets.
· On the other hand, non-residential and infrastructure work is fading. The economy was very strong at the beginning of the year and these contractors were very busy. However, as contracts were completed, replacement work has softened considerably. The lack of an additional stimulus package and the current wave of COVID cases has created a lot of uncertainty with our customers.
How do you expect the pandemic to affect business going forward into 2021?
· As noted above, customers are concerned and are hesitant to make major commitments
· I think equipment demand will remain suppressed until a safe and effective vaccine is available on a widespread basis. The outlook then becomes more optimistic, but it is unclear what the demand for equipment will be. If COVID begins to dissipate in 2021, construction should gradually recover and equipment demand will increase. However, the states where we operate will have a lot of financial challenges. There will also be a glut of commercial real estate. Finally, many companies have endured financial hardships this year and may not be in a spending a lot of money. I think things will improve but the recovery will be gradual.
How has the pandemic affected and changed your company’s ability to meet with customers, go on jobsites and essentially conduct rental business as you always have?
· Initially yes. During the summer, things returned to normal. Currently, more transactions are being done over the phone.
· Maintaining existing relationships isn’t too hard. Developing new accounts is more challenging as customers are somewhat hesitant to meet with someone they don’t know.
Have there been any good opportunities that have come out of the pandemic, i.e., more people doing home improvements, work renting to testing centers, etc.?
· The impact of COVID has been surprising in many areas. The amount of residential work is a perfect example. I thought it would be easy to get some projects done around my house. I was completely wrong. At the beginning of May, all the good contractors in the Pittsburgh area were completely booked for the year. This situation is similar in all of our larger markets.
· While many businesses are struggling these days, we’ve had a number of residential customers who are enjoying record years.
This is a very uncertain time in the economy in regard to the pandemic and so many job cancelations. Does this uncertainty benefit rental in the sense that contractors would want to avoid capital expenditures on equipment and would therefore rent more?
· This is a hard question to answer. Our rental offering is really geared to excavation companies, infrastructure contractors and non-residential accounts. We also had a lot of volume with customers in the energy sector. For many of these customers, work has declined over the past year and Anderson’s rental demand has suffered. Furthermore, these customers had surplus equipment, so they utilized what they had instead of renting.
· To further complicate things, the amount of equipment going into rental fleets continued through most of last year and the first quarter of this year. Supply exceeded demand this year which didn’t help volume and pricing.
· You tend to see a surge in rental demand when the economy is improving. The reverse tends to be true when construction volume contracts. This year was consistent with past results.
