Many equipment companies would be content with selling 20 pieces of heavy machinery to the lead contractor on a $330 million earthmoving project. After all, the package of new excavators, dozers and wheel loaders for New Jersey's Atlantic City-Brigantine Connector project had a combined price tag of several million dollars.
But not Binder Machinery, whose Binder Equipment Rentals subsidiary is ranked No. 58 on the RER 100. Owner Bob Binder and vice president of sales Bill Kretschmer knew the project had the potential to be much more than just a one-time windfall for the Komatsu dealer.
Instead of simply filling the large initial order for equipment, Binder negotiated with the joint-venture lead contractor Yonkers Contracting-Granite Construction to be its preferred provider of all rental equipment, parts, service and equipment sales for the three-year project.
Considering that the job includes constructing a 2,000-foot tunnel, 11 bridges and more than two miles of road, the deal with the lead contractor has provided a substantial boost for both Binder and its 2-year-old rental subsidiary.
"In the past, many companies would have sold the earthmoving equipment and said to themselves, 'Hey, that was a pretty good order,'" says Bill Birch, general manager of Binder Equipment Rentals. "But we looked at it as just the tip of the iceberg."
The preferred provider arrangement between Binder and Yonkers-Granite exemplifies a new reality of the equipment business: With increased competition for contractors' business, few, if any, one-dimensional equipment providers will experience continued success.
For that reason, the trend of distributors and rental companies partnering with contractors and industrial plants is growing. While aerial work platform rental specialists and national chains are generally credited with pioneering the concept of sole-source arrangements, many different types of other rental companies now use the preferred-provider model for heavy equipment.
"Yonkers wanted to be able to pick up the phone and resolve all of their equipment needs immediately," says Birch. "They didn't want to hear about long transit times for equipment. They didn't want to hear, 'My mechanic can be there in three hours.' They didn't want to hear, 'The parts can be there in three days.' They expect us to be here in any capacity at any hour of the day or night to help them get their job done."
The partnership necessitated the expansion of Binder, which is based in South Plainfield, N.J. The company's one branch location - in Voorhees, N.J., about 40 miles from Atlantic City - was deemed too far away to react with immediacy to the contractors' needs. In November 1998, as ground was broken on the project, Binder opened a temporary branch in Atlantic City on a small lot literally across the street from the on-site headquarters for Yonkers-Granite.
"Because this is a design-and-build project, the job is constantly changing as are our equipment needs," says Bruce Carnovale, project engineer for Yonkers-Granite. "On a large project such as this, it is extremely important that we don't have to wait for equipment. With this arrangement, there is no waiting for equipment."
The Binder branch - which is housed in three temporary trailer offices - serves as a makeshift parts-stocking facility. It also houses a limited number of rental pieces on the 1-acre lot. Three Binder employees - a sales/service manager, a sales rep and a customer service rep - staff the temporary branch.
Binder began work earlier this year on a permanent facility on 8 acres about five miles from Atlantic City. It is currently undergoing town-zoning approval to be operational next year.
In addition to expanding its physical presence, Binder also had to expand its product offerings to serve the project.
"We never sold a portable welder in the history of this company until Yonkers wanted to buy five welders recently," Birch says. "We got those welders for them and now there are a total of eight welders on the job. This partnership involves everything and anything they need to get their job done."
One afternoon in March, unforeseen circumstances necessitated a one-time night shift for tunnel construction. Four Binder light towers were on the job before dusk.
"The support we have received by having the satellite office right across the street has been tremendous," says Bob McGee, a job superintendent. "Binder has even anticipated equipment needs that we hadn't even thought about, which is terrific from our point of view."
The commitment from Binder is not only appreciated, but rewarded in the form of more business. About 75 percent of Yonkers-Granite's subcontractors on the tunnel project are using Binder equipment for their short-term rental needs.
"If you are going to be a preferred provider, you have to have a wide range of inventory," Birch says. "And as more and more rental companies evolve into one-stop shops, we'll see more of them in partnerships such as this."