Participants:
Todd Howe, product marketing manager, mobile generators, Doosan Infracore Portable Power, Mocksville, N.C.
Pam Meyer, equipment sales manager, Subaru, Wood Dale, Ill.
Erik Hansen, sales director, Kohler Rental, Kohler, Wis.
Tim Cresswell, marketing manager, Perkins Engines, Peterborough, United Kingdom
RER: Describe the current conditions in the generator rental market.
Howe: What we've seen in 2008 thus far is that the market is a little softer compared to where we were a year ago. We've been coming off record years — 2005 was a huge year, 2006 was even bigger and 2007 was right up there, about as big as 2006. With the general economic uncertainty that's out there within the business and financial media, coupled with what feels like a long winter, it has kept the season from starting as early as it has in the past couple of years. I'm not overly concerned about it; in fact I'm still fairly optimistic that we'll be back according to where we'd thought we'd be by the June time frame.
Meyer: I think we're going to continue to see the softer market for home construction. Otherwise, general rental seems somewhat steady. Rental companies are starting to watch their inventories very closely and also on what the economy is going to do The price of gas and diesel factors into this as well.
Hansen: Commodity markets (residential and light commercial construction) are both down considerably. Industrial (plant expansions and hotel construction) are about the same as last year. Hurricane contingency plans are much more price competitive, although the business is still there.
What types of new technologies and features are on the horizon for the next generations of generator models?
Howe: There are two key areas that customers are really going to be focusing in on — reduction of noise levels and improvements in fuel economy and fuel efficiency. Historically, noise levels have generally been something that mobile generator people have worked on. This is going to continue and we'll see that evolution of growing into lower dB(A) ratings. I think the market is currently expecting decibel ratings in the 65 to 70 dB(A) range. But I think the market is going to drive that to the low 60s, probably 60 to 62 dB(A) with the next generation of products.
As far as fuel efficiency, we're going to see manufacturers take a concerted effort at improving fuel economies on products. It won't be so much relying on engine manufacturers to come up with more fuel-efficient engines, but it is going to be more about managing the duty cycle of the machine.
Meyer: Generator performance primarily is based on the engine that powers it. Therefore, engine developments are where you see much of the enhancements when it comes to generators. For instance, Subaru continues to develop a wider offering of overhead-cam engines — the EX series. Recently, the EX40 was introduced, which delivers a maximum output of 14 hp. In the near future, this will be implemented into our RGX series of conventional generators and our line of inverter generators. The engine will allow for a more powerful generator, but will still offer the compact package of the overhead-cam design, which is an important consideration with any generator.
Hansen: Environmental concerns, such as emissions reduction, and alternative fuel options, such as biodiesel.
What are customers asking for in their generators and how are manufacturers responding to them?
Howe: For the mobile and rental generator type of market, the biggest thing customers ask for is versatility. Because of the life a generator lives in the rental environment, it needs to be a machine that can be utilized as much as possible. The more it is versatile to fit different applications, different requirements for voltage, different requirements for sound levels, the more that generator is going to be out of the rental yard generating income for the rental owner.
Meyer: The biggest thing that customers always ask for are quieter generators. And inverter generator technology answers this question for many customers. But customers are asking for this with conventional generators as well.
With conventional generators, we answer this demand with our specific engine designs. Because we are the engine manufacturer, we actually manufacture the muffler specifically for each engine. So if you look at the back of our generators, they all have a different muffler. The muffler is specific to that engine, and this allows us to make our conventional generators as quiet as possible.
Hansen: GPS technology is gradually becoming the norm and is expected in some markets. Kohler Rental was one of the first rental power companies to equip its rental generators with GPS a couple of years ago. This has helped us dramatically improve our equipment preventive maintenance program and better track and monitor equipment for improved visibility, productivity and operational performance. As a result, equipment failures are minimal, rental contracts more accurately reflect actual hours used on the equipment, and customer satisfaction is at an all-time high.
Cresswell: From an engines perspective, the demands include lower noise, increased power density and reduced operating costs. On the latest generation of Tier-3-certified engines, noise reduction is addressed in a few ways. Transmitted noise is reduced through detailed design of the primary engine structure, such as the shape and material selection of cylinder block and head. Radiated noise is reduced through the use of composite materials in timing-case covers and cylinder-head top covers, while lower-speed cooling fans and multi-shot fuel injection strategies help to address the root causes of engine noise.
Power density is driven by a desire to have a smaller engine, and hence package size, producing a given level of power. While initially attractive in terms of first cost and installed size, most manufacturers are quick to realize that there is a trade-off between hp/liter and total overall life of the engine. In the rental sector especially, reliability and durability are a high priority. Even with this in mind, the precise levels of combustion control delivered by the latest generations of electronically controlled engines, equipped with sophisticated common-rail fuel systems, have enabled significant advances to be made without sacrificing reliability and durability characteristics.
Operating costs manifest themselves predominantly as fuel and servicing costs. The trend towards ever-tighter emissions legislation tends to imply higher fuel consumption as fuel-injection timing is slowed and in-cylinder temperatures are reduced in pursuit of NOx reduction. Engine manufacturers are therefore focused in minimizing the tier-to-tier fuel consumption penalties through the use of more complex fuel injection strategies and more refined control systems.
Are there any major trends or changes in technology?
Howe: The biggest change is preparing for the next round of Tier-4 EPA regulations that will phase in beginning 2011. As we get to the middle year of 2008, we're already making our technology choices and developing our partnerships and strategies with our chosen engine suppliers. The technology changes in the Tier-4 side are going to be beyond what we've seen with the previous transitions, specifically with respect to after-treatment requirements and cooling-system requirements. The changes will be pretty dramatic for our packaging and will probably require product redesigns to be able to encompass this new technology, while allowing our products to perform as reliably as our previous generations of products.
Meyer: We continue to see a boom in inverter generators. This is not necessarily a new technology, but the acceptance of it continues to grow rapidly. One reason for this is that inverters are no longer seen as something just for the RV market and the traditional homeowner market. Again, everyone is looking for a quieter generator, and inverters are much quieter than standard conventional generators. Furthermore, the clean power that inverters offer is of interest to a wider audience. Rotary hammers and other equipment with smart-chip technology require clean power, so inverters are growing in demand with the general construction market.
Additionally, “green” technology is a buzz term with every industry right now and this can also be seen as a benefit with inverter generators. Since inverters feature engines that adjust in rpms to the amount of load, they are conserving engine and fuel use — and therefore are much more efficient.
Hansen: As we continue to drive our sales team to become “consultative” professionals, we see more unique requests and challenges. Our customers need rental equipment — but more importantly, they need creative solutions and technical expertise, which is really what we're all about.
Cresswell: There have been moves to introduce variable-speed gen-sets — initially using DC generators and using solid-state inverters to produce the required AC output — and more recently using CVT drives between a variable-speed engine and a standard AC alternator. Both these methods seek to reduce total installation cost by using a smaller engine for a given power, but running at a higher speed. The potential savings, however, have not been conclusively demonstrated over a wide power range versus the added cost of the incremental inverter or transmission technology. As most gen-set engine manufacturers also offer a full range of variable-speed industrial engines, such a trend would not be difficult to accommodate, should the economics of the rest of the system fall into place.
Is your company bringing anything unique to the generator market?
Howe: We are incorporating different features into products to provide other avenues for applications in rental without increasing the price in a dramatic way. Our approach to product specification and the features that we bundle onto our products in a standard configuration is what we try to bring to the customer by listening to their needs and understand the type of use that their customers put generators through.
Meyer: Because we manufacture our own engines, we can more intuitively develop our generators to work best with the engines powering them, resulting in a more compact and quieter product.
Cresswell: We can offer consistency in terms of product-performance attributes; operating characteristics, in terms of availability and overall buying experience; and service availability and competence.
