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Equipment Trends By Debbie McClung ot long ago, purchasing compact equipment wasn't financially viable for many landscape contractors. Projects dried up, cash reserves were thin and equipment loans were difficult — if not impossible — to secure. Rental answered a very critical need, and it proved its value again as one of the first industry segments to bounce back from the recession. However, a fleet expansion decision takes careful consideration and planning. Although rental remains a strong alternative to ownership, an improving economy is helping contractors gain the confidence to buy compact equipment again. Rental and acquisition strategies each offer unique benefits for different stages in an operation's life cycle, and both are demonstrating positive trends. Sales of compact equipment are steadily increasing. According to an annual study performed by KHL Group, sales of construction equipment by the world's 50 largest manufacturers grew 25 percent in 2011 to $182 billion, surpassing the previous high of $168 billion set in 2008 before the financial crisis. On top of that industry record-setting increase, an analysis of the rental equipment industry by Yengst Associates shows that the rental industry is the largest buyer of compact equipment. Shares of unit sales to the rental market in 2011 was at 55 percent penetration and increased to more than 60 percent for specific categories of compact equipment, such as track and skid-steer loaders and excavators (Note: 2011 data was released in June 2012). N 22 Landscape and Irrigation January 2013 As you evaluate where your business and equipment needs stand today with where you want to be positioned in the future, it's important to weigh your options by looking at considerations such as jobsite factors, machine size, attachment versatility and capital resources. "With compact equipment, there are times when ownership will emerge as the best solution to equip your company, and other times when it clearly makes more sense to rent," said Mike Fitzgerald, loader product specialist with Bobcat Company. "The final decision boils down to being able to complete the work you're performing in the most efficient and affordable manner possible." Jobsite factors When trying to make a decision about how to add a compact track loader, skid-steer loader or compact excavator to your fleet, manufacturers typically recommend starting with the scope of work. Is there an expectation that the length of a contract and the volume of work will sustain a commitment to a long-term purchase that would be better served with an acquisition? Perhaps the need for a machine or attachment is based on a relatively short-term project, and it's most feasible to pay only the fees associated with a rental arrangement? Fitzgerald points out that the economy is directly impacting the rental or purchase decision in another way. In the boom days before the recession, many contractors had larger projects. It was easy to take on larger jobs that subsequently needed larger equipment, but changing project tasks can routinely dictate the need for a different size of machine. "Many projects that are being done now are rework and remodeling.We're seeing home additions and outdoor home improvements instead of new homes, so the work is in tighter quarters. If you used to complete work with a larger model of compact equipment, you might need a machine with a smaller footprint to get into these confined areas. Rental may be the best option if you only need a machine for that one project or a few times a year," said Fitzgerald. Jobsite conditions may provide the most compelling reason to rent or own. Perhaps you're a contractor who performs paving projects using skid-steer loaders, but you won a bid for a project in different terrain. If the ground is going to be softer, muddier or sandier, it might be the time to consider renting a compact track loader. Likewise, a landscaper who regularly does dirt work and owns a track loader may have a contract on a solid surface where a skid-steer loader may be more conducive to productivity. Certain landscaping applications provide equipment owners more confidence that a compact track loader, skid-steer loader or compact excavator will be used to its maximum capacity for the life of the unit. For example, nurseries or landscape centers typically find it easier to purchase a loader because they have established retail www.landscapeirrigation.com All photos provided by Bobcat Company When to Rent, When to Buy