Anderson Equipment Co. posted a remarkable 64.7-percent rental volume increase in 2011, one of the largest jumps on the new RER 100. RER’s Michael Roth interviewed Anderson’s CEO, Bill Gex, about the increase in rental, how it navigated the recession, and the state of rental rates.
RER: Was there any particular customer sector that contributed the most to Anderson Equipment’s improvement in 2011?
Rental demand increased across Anderson’s territory. Natural gas development in Western Pennsylvania had a significant impact on our operations but I was very pleased with higher rental volume in Anderson’s other locations. There is still significant economic uncertainty among our customers and they continue to have a bias towards rentals.
Were there some things that your company did, either in 2011 or before, that helped make improvement possible?
We predicted the trend back in 2010 and placed a large order for equipment almost two years ago. While our competitors were lacking inventory, we increased Anderson’s fleet by over 20 percent and essentially had all machines utilized for a good part of the year.
What are your expectations for 2012?
Rentals continue to be strong. During the first quarter, Anderson’s rental business increased by over a third. However, we are concerned rental demand will slow down unless natural gas prices increase.
What about rental rates for your company and in your markets in 2011 versus the previous year?
Book rates were increased and discounting decreased so our net rental rates improved. As equipment costs increase due to Tier 4, we expect higher rates in the future. Unfortunately, the acquisition cost of equipment has gone up dramatically. We feel that the cost of a Tier 4 Final machine will end up costing 25- to 30-percent more than a Tier 3. It will be interesting to see how much of this cost will be absorbed by the end user.