“Rental continues to be a relationship industry,” says Larry Cox, vice president of sales and marketing at Sunstate Equipment Co., a Phoenix-based firm operating in nine Southwestern states. Cox believes it is relationships that drive a rental business whether it is a coast-to-coast company, a regional firm such as his own or a mom-and-pop operation. “We have built our reputation on providing a high level of service,” he says, “and not taking our customers for granted. We believe we are a value-added partner.”
Choosing a Partner
If contractors want such a partnership, what kind of equipment rental house should they choose? Some are most comfortable partnering with a national firm, such as Hertz Equipment Rental Corp., the nation’s third-largest rental house. Robert G. Cowing, the division’s vice president for sales, encourages that view. “All sizes of contractors, whether a local company or one handling projects at multiple geographic areas, are seeing the benefit of dealing with national equipment rental providers.”
He lists such advantages as comprehensive lineups of equipment, customized rental programs and support that includes maintenance of a machine and its tools. Hertz also offers rent-to-own programs so renters can segue into ownership. Yet some contractors needing to rent equipment turn to dealerships, where the emphasis is on the equipment. Southeastern Equipment Co. Inc. operates 18 branches in four Midwestern states, so it is hardly national in scope. Yet Southeastern rental customers have fully 50 brands to choose from, including various manufacturers of compact excavators, telehandlers and wheel loaders.
While such brand diversity is an asset, Southeastern regional manager Heath Watton argues that service is the dealership’s biggest attraction. “I think the big thing a renter should look for is service,” says Watton. “People rent from us because they know what they are getting. They know I am going to send them a piece of equipment no more than 2 years old that is well-maintained, and that they can go to work and not worry about it breaking down.”
Neil Carbaugh, rental manager for Carolina Cat in Charlotte, N.C., has a different take on the composition of a dealer’s rental inventory. All compact equipment leaving the Carolina Cat yard is branded with the Caterpillar name. Carbaugh believes such brand concentration is to a contractor’s advantage.
“I think a large part of the compact customer base prefer to stick with a brand, especially if they happen to own the same brand,” he says. “That has a lot of benefit to their operators. They experience much greater efficiency when an operator is familiar with a brand instead of having to, say, acclimate to the hydraulics of a different machine.”
Furthermore, a dealer with a full inventory of one brand will also have a full inventory of parts and technicians familiar with the equipment, he says. He believes that contractors do their operators no favor when they look at a machine as a commodity to be secured at the lowest price. “The people on the ground are the people who must work with whatever equipment shows up. There is a lot of value to be gained by operating a common platform, not to mention safety.”
For a Day or a Year
A virtue of compact equipment is its versatility. A compact loader can be utilized for one-day small jobs or as part of a larger fleet in a long-term construction project. As a result, most equipment rental houses will rent for just about any length of time. “Our customers rent by the day or up to several years, depending on their needs,” says Cowing of Hertz. Southeastern Equipment accommodates both types of users through separate rental offices — the dealership itself, as well as a separate outlet that opened last spring and caters to day-users. “We don’t even show daily rentals on our website,” says Watton, the Southeastern manager. “As a dealer, we seek multiple weeks or months. At our rental house, we will rent from four hours to a week.”
Southeastern’s two-outlet solution is a refinement on the typical dealership sales-rental model. Watton describes his company’s rental operation as “a sales house with a rental fleet. We like to have a comfortable split between sales and rental. Rental goes straight to our bottom line, and 50 percent of sales start as rental. We want to retain customers, not just rent to them. We rent to sell.”
About a quarter of Carolina Cat’s customers rent a machine for a day or two on up to a week, according to Carbaugh, but most equipment goes out for a month or more. The rental manager says his customer base is about evenly split between large contractors needing a piece of equipment to complement owned equipment for a particular task, and “up-and-coming” contractors with fewer than 10 employees and reliant on rented machinery.
Contractors looking for short-term use of compact equipment clearly have rental options. If a contractor isn’t particular about brand, he especially has choices. This is what Watton calls the “wheelbarrow” factor in compact equipment rentals. “If you are talking about the small end of equipment, everything is a wheelbarrow,” he says. “They became such a commodity that people just walk in and say, ‘I need a skid steer.’ Like a wheelbarrow, all manufacturers make one. They are just painted different colors.”
Generally speaking, mini excavators and skid steer/track loaders are the most sought-after rental machines, with augers, hammers and hydraulic thumbs among the most popular attachments.
The Renter’s Responsibility
The flip side to a rental transaction is what a customer brings to it. Some customers bring headaches. Each rental manager hopes that every person who walks in is a potentially good customer, but the reality is something else. Rental managers scrutinize each customer for evidence that he will be a responsible steward of a rented machine. As Cowing says: “We are thorough in our vetting of our customers.”
Sunstate’s Larry Cox concedes that “there are certain customers you should be leery of.” He believes that if a potential customer seems to be managing his business well, the business owner probably will look after rented equipment, too. “But we constantly monitor how customers treat us and our equipment,” he adds. “A good partnership is a two-way proposition. If we have a customer who abuses our people or our equipment, we have a discussion with him.”
Southeastern’s Watton agrees that having a history with a renter is best. “We all have to have new customers, but when you have seen a customer in your area, you know what kind of business he runs. In eastern Ohio, with all the oil and gas [fracking] activity, we are infiltrated every day with new customers. We have made a conscious decision not to do business with everybody.”
Adds Carbaugh at Carolina Cat: “I don’t think the rental industry has changed much when it comes to rental agreements.” Which is to say, a contractor ultimately is responsible for his rented machine.
Tags: 2015 February Print Issue, Caterpillar, Hertz Equipment Rental Corp., home, Rental Equipment, Southeastern Equipment, Sunstate Equipment Co.
Giles Lambertson is a freelance writer for Compact Equipment, based in Uvalde, Texas.