RER Industry Survey: The Readers Speak

Feb. 1, 2005
Many rental people have expressed great enthusiasm about global positioning systems. Those that have adopted them on their equipment are particularly

Many rental people have expressed great enthusiasm about global positioning systems. Those that have adopted them on their equipment are particularly excited about GPS' ability to deter theft, and how the ability to track the physical location of equipment on the jobsite facilitates service calls and pickup of equipment when it is no longer being used. GPS' diagnostic capability also contributes significantly to cost savings. Rental consultant Dan Kaplan, of Daniel Kaplan Associates, states in this very issue (See Outlooks, page 52): “As far as the future; look at remote wireless equipment tracking systems to bring the rental industry to the next level. These systems today can tell a rental company where their equipment is at all times. When the equipment is being operated, for instance on evenings and weekends. Additionally these systems can communicate back to the rental company important operating data such as the hours on a machine.”

However, the cost of GPS is such that, for the majority of rental companies, they are only worthwhile on large equipment. The benefits of using GPS on compact or smaller equipment or for those with smaller fleets is still not widely recognized as only 17 percent of respondents currently use the systems on their fleet but about 29 percent say they expect to use them in the future. An additional 39 percent say they don't know if they will use the systems in the future, while about 32 percent say they have no plans of using GPS in the future.

Of those that do use GPS, 66 percent use them for tracking the physical location of equipment on the jobsite; 61 percent for anti-theft purposes; 45 percent for keeping a record of usage on the jobsite; 36 percent for diagnostic purposes and 16 percent for other uses, including tracking salesmen's vehicles and tracking delivery vehicles to help estimate time of delivery.

The sky is not falling

In contrast to those that predicted 10 years ago that the entry of “big-box” improvement centers in tool and equipment rental would spell the end of the independent, 31 percent of survey respondents say the participation of mass merchandisers such as The Home Depot and Lowe has had “no impact” on their business, even now that The Home Depot has more than 1,000 tool rental departments. About half of survey respondents rated their impact on them as 2 or 3 on a scale of 1 to 5 — with 5 being most significant — with only 5 percent rating their impact as “significant.”

The reality appears to be that big-box rental departments have become part of the market without significantly taking business away from other rental players, with many competitors believing that the mass merchandisers have expanded the rental market and therefore by exposing more potential customers to rental, they have made up for whatever business they may have taken from other rental businesses. A decisive 63 percent believe that home-improvement rental departments will play an increasingly significant role in the coming years, while about 30 percent doubt their programs will grow in significance.

If it's broke, fix it

Nearly ¾ of survey respondents — 72 percent — say they repair customer-owned equipment, while half said that portion of their business has grown over the past two years. Not only has it grown, the majority — 61 percent — expect this portion to continue to grow, while only 17 percent respond that they don't expect to grow the service portion of their businesses. And nearly half of respondents — 47.7 percent — provide service contracts for customers, while a roughly equal number — 48.7 percent — do not. About 59 percent of respondents said they have made efforts to grow the service portion of their business over the past two years. The ability to repair equipment on the jobsite has become the norm in the industry, with 77 percent of respondents utilizing service trucks to repair equipment on the jobsite.

As part of a growing emphasis on service, 42 percent of survey respondents said they have increased their parts inventory over the past two years, while 22 percent decreased it and about 33 percent stayed the same. About 39 percent expect to increase their parts inventory in the next year, while 41 percent expect to stay about the same, and 15 percent plan to decrease it.