8 minute read
EQUIPMENT RENTALS
A temporary toolbox has the right equipment at the right time
By Rachael Kvapil
Charles Klever, president of Yukon Equipment, Inc., says his company regularly rents a variety of heavy construction vehicles, including dozers, loaders, backhoes, sweepers, compaction rollers, and more. However, Yukon Equipment has recently seen a rise in the demand for excavators at all three of their locations in Anchorage, Fairbanks, and Wasilla. The main inventory of full-size excavators runs from 29,000 pounds to 55,000 pounds and comes with steel and rubber tracks. Several have front blades, and almost all come equipped with multiple buckets and hydraulic thumbs. Although many envision long lines of cranes and backhoes aligned in an otherwise empty lot, heavy construction vehicles are only one type of equipment rental. Nick Ferree, Vice President of Equipment Source, Inc. (ESI) says compact construction equipment and smaller equipment like heaters, generators, and snowblowers also make up a significant portion of equipment rentals. Compact construction equipment allows crews to accomplish many of the same tasks but on a smaller scale. He says the type of rental equipment is often seasonal. "In the spring and summer, contractors and homeowners rent more earth movers to work on dirt work and landscaping," says Ferree. "In the fall and winter, contractors who are enclosing buildings and finishing the inside will rent heaters to keep
their workspace warm. Snow removal equipment is also more in demand."
Klever says management of the rental fleet requires constant review of equipment usage and calculation of return on assets. This analysis includes finding the right mix of rental inventory of updated equipment and keeping a constant schedule of rentals moving in and out the door. "Choices pertaining to the length of rental, whether daily, weekly, or monthly—plus ensuring you have equipment for your regular customers— is essential to keeping renters coming back," says Klever.
Once customers schedule a rental, they have to get the equipment to their worksite. Hand-held construction tools, heaters, generators, and snowblowers can fit in a utility vehicle or on a small trailer. However, larger equipment or bulk rentals require more complicated logistics. Ferree says ESI rents trailers to customers who want to haul compact construction equipment. ESI also frequently delivers equipment or arranges for the delivery of equipment through a third-party service.
Keep Things Running
The rental department does not work in a silo. The final piece happens behind the scenes after the rental equipment has been returned. Ensuring rental equipment functions properly for the next person requires a service and maintenance team to inspect the machinery each time it's returned, repair any damage, and replace parts and fluids as needed. Without service and maintenance, Klever says equipment rentals wouldn't be possible. "Service department maintenance, from our factory-trained techs, is a vital function of the overall rental operation," says Klever.
Ferree says the amount of maintenance required for rental equipment often depends on the age of the rental fleet. Older fleets can become labor intensive versus fleets that are replaced more often. Even then, rental equipment logs more run-time than owned equipment that might not be used every day. Of all the departments, the service department is often one of the busiest, as it is finalizing equipment ordered through the sales department
Nick Ferree, Vice President, Equipment Source, Inc.
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Rentals can either serve as the main equipment used by a builder or as a supplement to an existing fleet that they already own.
Yukon Equipment Inc.
Companies like Yukon Equipment Inc. offer rent-to-buy programs for users who determine they would like to purchase a machine they’ve rented several times.
Yukon Equipment Inc.
Rental departments make sure the right machinery is available to the customer at the right time and at the proper location. The service department handles maintenance of the machine when it returns, making sure any damage is fixed and all the parts are functioning properly. in addition to performing warranty repairs and regular maintenance on customer equipment purchased in previous years. "We have a dozen service technicians between Anchorage and Fairbanks cleaning and maintaining hundreds of pieces," says Ferree.
One way to reduce wear and tear on rental equipment is to ensure the customer chooses the right tool for the job. Klever says a savvy rental manager carefully selects the equipment available in the fleet and makes sure his team understands its purpose and how to use it. Likewise, it's also advantageous to rent to repeat customers with a track record of returning equipment in good shape.
Generally, special certifications are not required to rent equipment, but Ferree says insurance is a must. The contractor generally carries insurance for heavy equipment, like a 50,000-pound excavator. Smaller equipment can sometimes be covered by a homeowner's policy, and ESI sells insurance policies that cover the equipment being rented. "We try to do some screening when we meet the client," says Ferree. "We don't necessarily rent equipment based on specific criteria, but if we are not comfortable renting the equipment to someone, we will turn them away. This includes not having the right trailer to haul something. If we're not sure it's safe, it's better to turn away a customer in that situation than destroy the equipment or someone gets hurt."
Rent vs. Buy
Rentals make up 10 percent of ESI's annual revenue and 15 percent to 20 percent of Yukon Equipment's. Providing equipment rentals is labor intensive from a maintenance perspective and logistically challenging for remote clients, yet both companies offer this option because it is beneficial to the customer. Ferree explains that there are many reasons why customers choose to rent versus buy equipment. The most obvious is that owning compact and heavy equipment is outside of many people's budgets. The starting cost of compact equipment is about the same as a high-end passenger vehicle, but the
Yukon Equipment has seen a rise in the demand for excavators at all three of its Alaska locations, where its stock of full-size excavators ranges from 29,000 to 55,000 pounds.
Yukon Equipment Inc.
costs quickly escalate if additional attachments or features are also purchased. Heavy equipment often costs more than the average home. Besides the initial cost, there are other factors to consider, such as storage and maintenance. And even if a potential customer can afford a machine, has a place to store it, and can arrange for regular maintenance, they may not have the need for regular access to these types of machines. "Weekend warriors won't run a machine every day," says Ferree. "Neither will a construction company that only works in the summer. There are many reasons why people prefer to rent over buy."
He adds that some companies simply have separate budgets for renting and buying equipment and choose not to reallocate funds. Most of the time, he finds that customers have a sense of ease with rental equipment. Continual use and extreme weather can cause equipment to occasionally break down, so rental customers like the fact that they can call the company and swap it out.
In many cases, long-time renters eventually purchase equipment they use most frequently. Klever says his company has developed a rent-toown process to help make ownership more achievable. Yukon Equipment can apply most or all of a customer's rental payments toward a purchase. This arrangement usually happens with a customer who rents the same machine for a couple of months and then decides to buy it. Klever says Yukon Equipment is unique in this regard, as he knows many dealers do not offer this option. In most cases, dealers keep rental fleet machines as rentals until the time for disposal. At Yukon Equipment, they regularly sell from their rental fleet and replace the units when possible. "Having the sales staff work with the rental department can help people who are eventually looking to buy a piece of machinery," says Klever. "It's important to develop a solid relationship with the dealership, so I suggest walking the equipment yard and looking at the different options before you make a decision."
Ferree says it's important to contact a rental department long before the start of a project, especially for a firsttime contractor. Though many people have a good idea of what equipment they need, it is still important to discuss options. Klever agrees that setting up an account as far in advance as possible is a must. He says last-minute rentals can be difficult because of the limited number of machines available. He says the mistake most people make is calling around even after finding an available machine. "If it's available, I would schedule a rental," says Klever. "It's not worth calling around to try and save a small amount of money. It's more important to have the equipment you need for the required job."
