When you think about ways to profile the construction industry, equipment rental isn’t the first thing that comes to mind, but perhaps it should be. Rental trends are surprisingly specific — and provide insights into cost control, productivity and safety.
What does the rental market say about utility contractors? The answer lies in the data, provided here by the industry’s largest supplier, United Rentals.
The analysis is based on the number of equipment rental transactions with utility contractors during 2016. It excludes boom lifts, forklifts and scissor lifts, since these categories show up as “most rented” by almost all contractor types. Trench systems were also excluded for this purpose, in order to focus on general construction equipment.
All of these items can be considered staples of the trade — broadly used for multiple applications and often used together on the same job. Each machine on the list has reasons why it qualifies as a staple. A 3-in. pump, for example, is about the size of a generator: small enough to transport on a work truck but with enough capacity to be productive.
So why not own them, rather than rent them? The answer, says Brent Kuchynka, is not “either/or” but rather “both.” Kuchynka, United Rentals’ vice president of corporate fleet management, says there are good reasons to rent equipment as a supplemental fleet strategy.
“Take any one of the top five items — if a contractor utilizes that kind of machine at least 75 percent of the time, it makes sense to own one or more units,” he says. “That’s the baseline inventory. Then as more work comes in, or the nature of the job changes, rental is a way to ‘flex up’ the equipment.
“Flexing isn’t tied solely to project scope; you could have an accelerated deadline that requires doubling up on crew or working night hours. It’s not cost effective to purchase 10 light towers for one project unless you see a long-term need for those towers at 75 percent utilization, minimum.”
Not Just Cost, Total Cost
There’s a large variance in the cost of purchasing the top five items; this is naturally one consideration when deciding the baseline inventory investment. A rammer typically costs $2,000 to $3,000, while a trash pump may be a third of that price. So do you buy pumps and rent rammers?
That depends on the total cost, says Kuchynka, which involves more than the purchase price.
“There’s the capital investment, but then there’s also the cost of labor — or more specifically, the cost of idle labor,” he says. “You don’t want a crew standing by when they could be working to advance the project. That needs to be taken into account before deciding what equipment you want
“For certain types of workers, like utility maintenance workers, it can make sense to have a fully outfitted service truck and trailer, maybe even a mini excavator, as one unit. That allows the worker to move around somewhat self-sufficiently. But it’s a significant investment — and for other types of utility work, rental is a more strategic option.”
There’s also a productivity component to rental that appeals to many contractors. “Every product benefits from R&D, including the staples,” says Kuchynka. “Light towers used to be nearly as wide as a trailer; today, most are just a few feet wide. You get the same capacity of light output but they’re more manageable. You can move the towers around onsite and haul 16 of them on a truckload, instead of eight. More productive, less total cost.”
With mini excavators, Kuchynka cites designs for zero tail swing, universal attachments and other capabilities as productivity enhancements. These may not be available on older models owned by the contractor. It can be a good compromise to rent supplemental machines — continuing to utilize the original capital investment while boosting productivity.
“The best new technologies with mini excavators are not the attachments themselves, but rather the adaptability that has evolved to accommodate different brands of equipment,” notes Kuchynka. “The majority of attachments used to be manufacturer-specific. An attachment would only work with dirt equipment — excavators, backhoes and skid steers — from the same brand.
“The innovation of quick-couplers with a single pin means that a bucket or attachment can be used on equipment from multiple manufacturers,” says Kuchynka. “This has been transformative: It improved the turnaround time of changing out attachments, which benefits the rental prep process and makes contractors more efficient. The new coupling designs have also improved the safety aspect for operators because they reduce the manual labor required to change out attachments.”
The versatility of attachment technologies resonates with utility contractors because of the challenges associated with the work. For example, while hydraulic breakers are typically used to break concrete, there’s also a ripper-type bucket that can cut through soil that has a high concentration of rock. With quick coupling, the contractor is more likely to use the proper attachment for each task because it’s faster and safer to swap them out.
So what are the chances the top five rental items will look different a year from now? United Rentals sees definite up-and-comers in terms of demand, such as the compact 5,000-lb capacity forward reach lift. Nevertheless, the staples are likely to stay at the top for utility contractors who flex between rented and owned equipment resources. The strategy behind that is solid as a rock.
Lucy Peterson is president of Balboni Associates Inc.