Equipment World

July 2016

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EquipmentWorld.com | July 2016 29 buy, lease, rent | by Marcia Gruver Doyle | MGruver@randallreilly.com RISK AVOIDANCE: the mantra for new equipment users The Great Recession offi cially ended in June 2009, but it's taken contractors much longer to both absorb their losses and adjust their business practices. For some contractors, 2016 looks a lot like 2006, and they don't perceive their equipment acquisition strategies as having changed much in comparison. "O ur views haven't changed drastically when it comes to buying new equipment," says Al Gorick, president Gorick Construction, Binghamton, New York. "We have always tried to make pur- chasing decisions based on projected utilization, and when a good value presents itself." Still others, such as G. W. Tatro Construction of Jeffersonville, Vermont, didn't have much of a recession. The company continued to buy during the downturn, especially since equip- ment was so readily available and at attractive prices. Because of this, Greg Tatro, company president, says there's been no significant changes either in the company's purchase or rental strategies. "We'll usually rent if we have a need for two or three months," he says. Lon- ger term rentals are handled by rental purchase options (RPOs) and converted at the end of the year "if it makes sense." A defi nite shift Whatever contractor perceptions are, a defi nite shift in contractor acquisition practices has been felt on the supplier side. "There seems to be a transfer of assets on the balance sheet from customers to dealers and rent- al houses," says Mike Rankin, vice president of construction fi nance at Volvo Financial Services. Adds Matt McDonnough, Cat Financial sales manager, Northern region: "Prior to the Great Re- cession, contractors felt much more comfortable purchasing equipment, with the idea that new work would replace old work. Today, they are much more conservative, and looking for vendors or fi nance companies to share more of the risk." "We're seeing that contractors are willing to ac- cept less margin as long as there's less risk," says Brian Harris, vice president of Vermeer Texas- Louisiana. In response, Harris says his dealership has ramped up its rental fl eet, seen an increase in the the amount of RPOs it handles, and added to its used equipment fl eet to address more price- conscious buyers. 2015's positive impact Industry associations were a happy bunch at the end of 2015. Not only had Congress finally signed a five-year highway bill, it also had added two Christmas tax presents: extending the bonus depreciation and making Section 179 ex-

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