Better Roads Digital Magazine
Issue link: https://read.dmtmag.com/i/85910
NEWUSED RENTAL by Marcia Gruver Doyle WHY RENT? A sour economy has underlined – and put a few exclamation points behind – the rental option Late-breaking news: In a $4.2 billion transac- tion, United Rentals has bought the number-two player in the rental mar- ket, RSC Holdings. United Rentals says the buy creates a company with "more attractive busi- ness mix, greater scale and enhanced growth prospects." In addition, the combination will ac- celerate United's growth with industrial customers and "provide a lower cost base and less volatile revenue profile to better position the company through all phases of the business cycle." billion. And yet in this revitalized rental market many contrac- tors are still struggling to find work. What gives? PERFECT RENTAL MARKET? The deep depths this industry has gone through has cre- ated the right conditions for the rental market. "Contractors are becoming totally aware of rental and using it at a much higher degree than in previous eco- nomic cycles," says Christine Wehrman, CEO of the American Rental Associa- tion. 31g February 2012 Better Roads T here's an interesting split going on in rental these days. "Almost every national rental company has seen double digit growth, and that's not with double digit growth in the end markets," says Matthew Flannery, executive vice president, opera- tions and sales, United Rentals. "I don't see it slowing down in the near term." Working with the American Rental Association, IHS Global In- sight projects total North American construction and industrial equip- ment rental revenue to reach an annual growth rate of 18.9 percent in 2015. That equates to more than $29 billion in revenue in 2015, well above the 2007 peak of $25.4 Recent growth by national chains bears this out. As of press time, United Rentals just bought Blue Mountain Equipment Rental, its fourth buy in 2011. Volvo Rents, converting from a purely franchise model to a mix of both franchises and company-owned stores (see story on page 43), made more than 50 acquisitions since its reor- ganization announcement last year. And RSC now has 51 express locations, start ups that allow it quick entry into an area, and the ability to take time to make a brick-and- mortar decision. And, Wehrman says, independent companies continue to remain "as strong as ever. They are also replenishing their fleets. And regardless of the size of the rental com- pany, it's still a relationship business." "This is the greatest period for rental sampling than has probably ever existed because more people are challenged with buying," says Frank Roth, RSC's vice president of mar- keting and innovation. "It's a chance for us to showcase how competitive rental can be against ownership." CORE REASONS The core reasons to rent haven't changed much, but the economy has underlined and put a few exclamation points behind them: Freeing capital. With access to capital a challenge, how you use it becomes even more critical. Renting instead of buying frees up your capital for other needs, and in some cases may be the only alternative if financing is denied. "Rental helps you manage your capital risks," says Chris Gustafson, rental and used equipment division manager, Caterpillar. Flexibility. The type and number of rental machines can be easily adjusted and different jobs require differ-