Issue link: http://read.dmtmag.com/i/146868
Rental ("Not Your Grandfather's Rental Companies" continued from page 47) of new construction equipment sold in 2010 went to rental companies. In 2012 that sales figure was at 56 percent. "When you look at construction equipment population totals, roughly 15 percent of the total equipment population was in rentals," Yengst said. "In 2011 and 2012 those population figures were between 17 and 19 percent. This all clearly shows there is a growing number of machines in the population that are in rental. You can definitely see that. It doesn't indicate penetration percentages, but it does tell you there's a growing presence going to rental rather than to purchasing." Yengst pointed out that the longevity of construction equipment will probably keep equipment rental penetration from exceeding 50 percent in the near future and possibly for the next five years. "The population of machines already in use is not going to decline that much over the next 10 years," Yengst said. Kaplan believes equipment rental penetration will flatten out in the next two to three years. He also expects to see consolidation of rental equipment companies. "Consolidation is imminent," Kaplan said. "I can't predict exactly how that will happen, but I do believe it will happen and is likely to occur in 2013." Kaplan also predicted that equipment manufacturers may undergo significant changes in producing and marketing equipment in upcoming months and years as equipment rental companies continue taking a larger bite out of total equipment sales. "Rental company buyers are highly disciplined," Kaplan said. "Because their orders are so large, they can extract significant pricing opportunities. That could pose a dilemma for equipment manufacturers when one large, sophisticated customer is buying a major portion of their equipment. It adds an element of uncertainty for... manufacturers." Depending on continued economic stability and growth, Kaplan said he believes contractors could expect to see rental rates increase between 3 and 4 percent by 2015. Sophisticated software and disciplined managers are using data to assist them in controlling rates. "You're dealing with a level of professionalism that allows rental companies to understand the customer base, manage rental rates and not be at risk of a salesman dictating rates," Kaplan said. "This is not your grandfather's rental company. They're highly sophisticated, well managed and getting even better." All the men agreed that continued economic uncertainty will heavily influence both how contractors view equipment ownership and how much equipment rental activities increase in the near future. "What happened between 2007 and 2011 was a catastrophe," McClelland said. "Credit restrictions are different now and play a role in ownership patterns. If a contractor couldn't afford to own equipment before, they may have trouble getting credit now.freelance "Rental equipment is being offered at a very competitive price with a lot of professionalism," McClelland added. "I don't think construction contractors are going back to the ownership patterns we saw through 2008." n Loretta Sorensen is a South Dakotabased freelance writer who covers construction, business, and agriculture. She can be reached at sorensenlms@gmail.com. Advertisers' Index Ajax Tool Works. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Apex Supply Chain Technologies. . . . . . . . . . . . . . . . . . . . . . 52 Bell Trucks of America. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 BLS Enterprises, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 DIS Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Dispatching Solutions, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . 20 EPG Insurance, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Federated Insurance Companies. . . . . . . . . . . . . . . . . . . . . . 58 GE Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 HKX, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Hydrema Exports A/S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Infor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Knapheide Manufacturing Company, The. . . . . . . . . . . . . . . 54 LayMor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Leading Edge Attachments. . . . . . . . . . . . . . . . . . . . . . . . . . 17 Liebherr Construction Equipment Co.. . . . . . . . . . . . . . . . . . 56 LiuGong Construction Machinery. . . . . . . . . . . . . . . . . . . . IFC Loftness Attachments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Pierce-Pacific Manufacturing Co. Inc.. . . . . . . . . . . . . . . . . . 50 PriSim Business War Games, Inc.. . . . . . . . . . . . . . . . . . . . . . 41 Ritchie Bros. Auctioneers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SANY Heavy Industry Co., LTD . . . . . . . . . . . . . . . . . . . . . . . . 9 Sentry Insurance Company. . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Verizon Networkfleet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Wacker Neuson Corporation. . . . . . . . . . . . . . . . . . . . . . . . . 15 Wells Fargo Equipment Finance. . . . . . . . . . . . . . . . . . . . . . . 13 Werk-Brau Company, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . IBC XAPT Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . OBC XL Specialized Trailers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 As the official magazine of Associated Equipment Distributors, this publication carries authoritative notices and articles in regard to the activities of the association. In all other respects, the association cannot be responsible for the contents thereof or the opinions of contributors. Copyright © 2013 by Associated Equipment Distributors. Construction Equipment Distribution (ISSN0010-6755) is published monthly as the official journal of Associated Equipment Distributors. Subscription rate — $39 per year for members; $79 per year for nonmembers. Office of publication: 600 W. 22nd St., 220, Oak Brook, Ill. Phone: 630-574-0650. Periodicals postage at Hinsdale, Ill. 60521 and other post offices. Additional entry, Pontiac, Ill. POSTMASTER: Send address changes to Construction Equipment Distribution, 600 W. 22nd St., Suite 220, Oak Brook, Ill. 60523 August 2013 | Construction Equipment Distribution | www.cedmag.com | 63 46_Rental_Feature_Index_KP.indd 63 7/25/13 12:52 PM