Rental Industry Struggling, But Still On Solid Footing

By Jeff Griffin, Senior Editor | July 2010 Vol. 65 No. 7

Rental is an important source of income for many equipment dealers, especially when sales are slow, and offer the opportunity to make rent-to-buy deals. Equipment dealers also are a source for horizontal directional drills, vacuum excavators, vibratory plows of varied sizes and trenchers larger than non-specialist rental centers offer.

Research Firm Looks at Equipment Rental Market
The American Rental Association ARA) has worked with IHS Global Insight to develop research and reports about the rental market.

Earlier this year, ARA’s monthly magazine published a question-and-answer interview with Scott Hazelton, IHS Global Insight director, business planning solutions.

Highlights of Hazelton’s comments are summarized below:

“Construction and industrial equipment rental revenue depends upon construction spending and industrial production. Various rental companies have product lines that might be geared toward specific sub-segments, such as industrial plants and highway/street/bridge construction. In general, residential construction is not that relevant to construction as it needs less machinery than other construction segments and rental has lower penetration.

“The general tool segment also relies on industrial production and construction spending, but here there is a higher influence from residential construction. This segment should outperform the construction and industrial equipment segment in the near term as residential construction sees the beginning of a recovery.

“The key is nonresidential construction spending and the composition of this spending changed in 2009 and will remain so through 2011. In particular, commercial construction -- retail, lodging, warehousing and office buildings -- is in dramatic decline. Institutional construction -- hospitals, schools and government buildings -- is less impacted and growing in some areas as stimulus funding provides a boost. Similarly, infrastructure spending will have more importance over the next year or so as publicly funded construction gains share from privately funded buildings.

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