The rental equipment industry may be enjoying robust health and unprecedented growth, but the recent prosperity party may come to a crashing end if more is not done to address the shortage of skilled labor.
It comes as no surprise to rental center owners and managers that finding qualified people, especially in the area of technical repair and maintenance, is a challenge. What is now becoming more visible is how the shortage will impact business operations and the bottom line.
The shop is not the only place where labor pains are being felt. Filling management positions with experienced personnel is becoming a serious headache for rental centers of all sizes.
"There is a feeding frenzy for experienced people," says Bud Howard, vice president of sales and marketing at RSC, who adds that his company is trying very hard to retain people and keep them happy.
Several industry leaders expect that the mechanics drought, in particular, will get worse before it gets better. More and more operators are learning firsthand how escalating labor problems can hurt businesses. A revolving door of mechanics, crippling warranty costs, increased safety risks, chronic equipment breakdowns and excessive overtime expense are symptoms of the core problem: Not enough bodies are available to repair and maintain equipment.
"It's just going to get worse year after year," says Joe Novak, assistant executive director at Woodland, Calif.-based Rental Industry Association, which primarily serves members in California and Nevada. "It may get to the point that if equipment breaks down, you just throw it away."
Many industry leaders acknowledge the gloomy scenario, and they recognize that to attract more young people into skilled technical work, they will have to wage the battle on several fronts.
Construction equipment manufacturers, for example, are increasing connections with junior high and high schools to introduce high-tech, clean-hands computer diagnostic and problem-solving concepts to youths who may not be interested in a four-year university experience. The military is a hot pool to recruit talent from, but the number of qualified candidates there is also dwindling.
Meanwhile, the rental industry continues to defend itself against the widespread societal "dirty and dangerous" label placed on a number of hands-on profess ions. Another worrisome issue is that for the group of students who are drawn to mechanical repair, many will likely be targets of automotive industry recruitment once they complete their training. The automotive industry is not only a few years ahead in anticipating and responding to its labor gap, it generally pays its mechanics better.
Joe Lynch, deputy executive vice president at the American Rental Association, says the current employment climate should prompt rental center owners and operators to sharpen their knowledge on how to compensate and reward employees. "They will need to prepare to spend more," says Lynch.
Meanwhile, many rental companies are appreciating the value of experienced technicians like never before. Aggressive recruitment campaigns are creating rivalries between rental centers, and more operators are trying to build employee loyalty with incentive programs, specialized training and simple, appreciative gestures. Many owners and managers are continually worried about mechanics' jumping ship.
Manufacturer response Clearly, equipment manufacturers would prefer to have their products maintained and repaired properly so that they perform as intended and the rental user is satisfied. As these manufacturers grow increasingly anxious about technical competence in equipment upkeep, they are stepping forward by joining forces with other equipment makers and aligning with educational organizations.
"Our dealers have told us that this is the No. 1 issue that we should address," says Tom Kane, assistant director of Kubota's national training program. Kane is also a board director and co-founder of the Austin, Texas-based Equipment and Engine Training Council, a national organization involving numerous heavy equipment manufacturers that works with technical schools to attract and train individuals in equipment technology.
The EETC announced in December that it has joined with Associated Equipment Distributors Foundation (the educational arm of the AED), to accredit equipment training programs in trade/vocational schools and community colleges. Schools can apply for accreditation in diesel engines/fuel systems, hydraulics, electronic systems, power trains and safety. The development is seen as a major step in strengthening ties between students and the heavy equipment industry, and Kane notes the program's creation was in large part modeled after recruitment and training successes in the automotive industry.
Mike McGinty, program director at the AED Foundation, says linking with the EETC will reinforce outreach efforts. "It's part of a whole program to get local AED members to do a lot more student recruitment, instead of waiting for students to come to them," says McGinty. "We would like them to take a more active role to go to junior high and high schools to give out literature, videos and posters and to attend recruitment events."
Despite the optimism generated by such programs, other obstacles remain. Because of decreasing enrollment and the prohibitive cost of setting up and maintaining a technical equipment program, many vocational schools have dropped equipment technology. McGinty, however, is hopeful that in time manufacturers will increase their equipment donations to jump-start foundering programs. "If we can improve the pool of kids, manufacturers are more likely to offer loans or give training aids," says McGinty.
Some manufacturers, such as Kubota Tractor Corp., are heavily involved in feeding schools with needed equipment. To date, Kubota has donated more than 1,000 gasoline engines, valued at nearly $500,000, to selected schools that were also asked to pursue EETC accreditation.
Because accreditation will establish competency standards in five areas, it will become public which schools make the cut. "We think manufacturers will be much more willing to come to the aid of an accredited school," says McGinty.
Although efforts to connect with vocational schools are important, others believe reaching students in secondary grades is even more critical. Students often are pressured by parents and counselors to attend four-year universities and may know little about vocational alternatives.
"The high school counselors are our biggest enemy," says Novak. "They are taught to tell people that all students should be pursuing is a four-year college education."
Kane is a big believer in introducing mechanical fundamentals to students at a young age. "The best place to start is with a small gasoline engine program. That's where the magic is," says Kane. "It is geared toward students who like solving problems and like using their hands." He emphasizes that a segment of every student population includes those who are "spatially adapted," possessing the capacity to mentally simplify complex engineering or technical concepts. Sound training ideally develops and refines these abilities.
Finding and keeping Improvement of vocational education may sound like a nice long-term solution, but most rental center operators say the pain of the labor shortage is especially acute right now. Many operators report feeling unease about whether their mechanics will stay with them, and wonder what will prompt mechanics to accept offers elsewhere. Other owners are especially attentive to the needs of their employees.
"In this yard, we pay our people really well," says Rick Campbell, manager of Fairfield Rental Service in Fairfield, Calif., which competes directly with branches of two major consolidators. Fairfield Rental employees are paid above industry averages and offered a full line of benefits, according to Campbell, who says that bonds with long-term customers are strengthened through the loyalty of a contended staff.
Employee loyalty, in fact, has become a particularly hot topic in the rental industry. Many operators debate whether to plow expenses and resources into the development of a mechanic if that person might wind up working for a competitor. The issue frequently comes up when manufacturers schedule regional training sessions. Rental operators must weigh the benefits of increasing the competence of their workers with the risk of their being lured away at the event by representatives from deeper pocketed manufacturers or other rental center organizations.
Reluctance to send employees to such events is shortsighted, says Russ Williams, who, during his long career with Southern California-based Sam's U-Rent, was personnel manager for several years. "By not doing it, they are creating poor quality service within their organization," says Williams. "If that person continues to stay with the company, he or she will likely be low-motivated and could wind up losing customers."
The long-standing business mantra of "the customer is No. 1" is misguided, says Williams. He believes that if owners and managers treat employees as the top priority, customers will reap the benefits of a well-functioning business. "The employees will only treat customers as well as they are treated," says Williams.
Above and beyond The severity of the labor crisis will continue to be difficult to measure, but its presence is undeniable. Dozens of strategies to recruit and keep people are being employed, but workers will ultimately define the conditions that will keep them happy.
Larger chains, in fact, are spending a lot of time finding out what their employees want while showing them the way up the company ladder. NationsRent, No. 8 on the RER 100, is one company that devotes itself to promoting and tries to encourage employees to see opportunities beyond their current positions, says Troy Gabriel, vice president of operations. "We think the appropriate strategy is to bring people up through the ranks," he says.
Gabriel says that as a result of acquisitions, NationsRent has attracted new talent. "As we have integrated those businesses into our system and re-brand them under NationsRent, we are able to attract additional needed mechanics," he says.
The brunt of labor aches for NationsRent is instead being felt at the store manager level, where rental management experience is hard to come by.
Howard, at RSC, says the amount of promotional opportunities for rental center employees has never been greater. Among several strategies to attract new people, RSC employees receive small stipends if they are able to draw a friend or associate into the company.
"Here at RSC we are focused on our employees and it's more than lip service," says Howard. "We spend a lot of time communicating with our people. We try to immerse them into our culture, and we preach that constantly to our managers."
Daniel Bickford didn't like what he was seeing. Bickford wanted to keep his rental company, Eagle Rental of Waterville, Maine, in the growth fast lane. But all he could think about were the headaches of trying to find quality employees and how Eagle's emergence would take a devastating hit without a stream of new workers.
Those worries were eased two years ago when Bickford teamed up with representatives from Kennebec Valley Technical College in Fairfield, Maine. Bickford was the driving force behind the creation of a hydraulics and pneumatics program that has evolved into a full-blown equipment maintenance curriculum.
"He was very forward thinking," says KVTC president Barbara Woodlee. "Many of us read about the shortage of technical workers, but Dan took it very seriously, and he saw how the crisis would affect not just his own business but related businesses."
Bickford, a community leader in this south central region of Maine, spent hundreds of hours setting up the educational program. He urged the college to focus on "fluid power," believing that repairing equipment such as boom lifts and excavators would provide solid practical experience. The first group of students is set to graduate in the spring.
As one of New England's fastest growing independents, Bickford has an especially acute need for mechanics and truck drivers. He is currently paying out a "tremendous amount" for overtime as many Eagle mechanics work more than 60 hours a week. "It puts enormous strain on our existing repair service," he says.
Although Maine is known as a blue-collar state, many laborers lack the technical skills many industries require. "There are enough of us out there, maybe 14 or 15 businesses, that need help," says Bickford, noting a major tannery and paper mill are short of skilled staff.
Bickford's background and industry connections were especially useful in establishing the Kennebec program, says Woodlee. "If you don't have a champion, you're not going to have a program," she says. "He really helped us with lending equipment and steering vendors in our direction."
When the newly minted graduates walk out of Kennebec in a few months, Bickford hopes at least three will join Eagle. "We'll see quickly how well they've been trained," he says.