I recently had the pleasure of interviewing Rental Service Corp.'s new CEO Freek Nijdam, an excerpt of which appears on page 10, and among the many interesting points he brought up is how the penetration of rental in the United States still lags far behind trends in Europe. The logical conclusion Nijdam comes up with is that, despite the current economic slump, rental still is the wave of the future and eventually demand will increase and the market will expand.
It's obvious that demand will increase when the economy improves, but that leads us to the question of how much potential is there for increased rental penetration. We've all heard the numbers — they say about 80 percent of all equipment used in the United Kingdom is rented, compared to about 20 or 25 percent in the United States.
Some of the reasons for that are related to size. The U.K. is so much smaller geographically that land is therefore more expensive and contractors cannot afford space to store equipment and the necessary infrastructure to maintain equipment becomes even more cost-prohibitive. But although land pressures are not the same in the U.S., the trend towards outsourcing has been a growing reality as more and more companies determine that having to concentrate resources on fleet management takes away from doing what they do best, which is building.
That's the message rental companies should be hammering home to their customers and prospective customers over and over again. What are you, an equipment maintenance specialist or a builder of buildings? Are you a shop of mechanics or do you pave highways? Do you want your personnel to spend their time shopping to buy equipment or looking for more construction business? Should they be searching for good deals to dispose of used equipment or trying to develop ways to finish projects more efficiently and effectively.
I believe that's the message we need to be getting across to our customers, not just that your particular rental company can rent them a backhoe $20 cheaper than the competitor down the block. That also means that we as an industry — the editorial staffs of our magazines, the personnel of industry associations, and the marketing staffs of rental companies as well — should be getting that message across to a wider audience. And if the methods aren't readily apparent as to how to achieve that goal, we should be putting our heads together via e-mails and conferences and ad campaigns and whatever it takes to figure out how to get that message across.
Right now the whole industry is suffering because supply has outstripped demand. Sooner or later, the economy will heat up again. But our problems will only be solved until the next down cycle. Not until rentals is a way of life on a much wider scale will the dynamics of the business reach the proportions that will keep the engines of the rental industry ignited.