By Amanda L. Gutshall
CEG ASSOCIATE EDITOR
The rental market for construction equipment has become big business lately, with many manufacturers getting into the game.
Most manufacturers have detailed rental plans for their dealers to follow; others let the dealers use whatever plan is necessary for the customer.
Either way, construction equipment renters have a vast resource of rental programs out there for them. The only problem is distinguishing between manufacturers’ and individual dealers’ plans.
Construction Equipment Guide got a hold of many manufacturers in the industry to find out what their rental plans are and how they can affect those who are looking to rent equipment.
In 1997, Caterpillar announced the launch of The Rental Store, to define the company’s role in the rental business.
According to Ron Choate, Caterpillar marketing manager, “The Rental Store leverages the strength of the Caterpillar name, builds awareness of Cat in a new business and unifies the identity of the dealers in the business.
“With the need for smaller, more versatile equipment and the growing demand for more rental equipment, we know we can respond to customers with the right equipment, at the right location and with the right service each time they call or walk through the door,” he said.
Through Cat’s Rental Stores, which are located throughout the United States, rental customers can get prompt over-the-counter or over-the-phone service, Choate said.
“Dealer rental businesses will be easy to work with. We want customers to come to one place and get everything they need, whether it’s a Cat backhoe or a compressor,” he added.
Cat’s goal, he continued, “is to help our customers get the job done, no matter what the project or type of equipment they are using. The Rental Store will do that by fast response, convenient locations and the right inventory at competitive prices.”
Mustang Manufacturing sells its equipment to its dealers who then put the equipment into their rental fleets for customers to use, according to Diane Manning, marketing administration manager, Mustang.
There are guidelines that Mustang holds for its dealers. These include low-rate financing at a special rate with various incentive programs, added Mark Hennessey, project manager.
Mustang offers skid steer loaders and mini-excavators to its dealer network.
In the future, Mustang is “looking to encourage our dealers to pursue rental houses to help increase our penetration of the rental market and our exposure to people renting equipment. The more Mustang equipment in the rental houses, the more dealers will get the equipment,” Hennessey said.
“Rental houses are a good way to get people to see the equipment, increase sales and penetrate the market,” he explained.
Stihl Inc. sells its equipment to authorized rental dealers through its network of regional distributors and branches, according to Terry Richards, strategic accounts manager. The plans vary by region.
The company offers documents for its dealers, which include a Stihl Product Liability Guidelines booklet and an essay titled, “Business Practices Stihl Recommends all Rental Dealers Follow.”
Not all of Stihl’s construction equipment is sent to a rental dealer. “Stihl manufactures a broad range of products, not all of which are of interest to the rental business segment. The selection of appropriate rental equipment varies by region and by the clientele of the store,” Richards said.
Any extra equipment on hand is sold through the normal channels of distribution, he added.
In the future, “Stihl will continue to recognize the changes in the rental marketplace and improve the service it provides to the rental industry,” Richards said.
Rental Service Corporation
Rental Service Corporation (RSC) has a somewhat different approach to its dealer system. Unlike a manufacturer with a dealer system, all RSC stores are company owned and operate under one system, said Jeff Cummings, director of sales and marketing.
“Although we offer used equipment sales, our main focus is equipment rental. We work very hard to offer each customer a one-stop shop for their rental needs. Each RSC store and each RSC sales rep are linked to our computer system. This makes it easy to interact internally as well as externally,” he said.
RSC has invested more than $1 billion in its rental fleet to meet customers’ needs. According to Cummings, with more than 350 locations and an average equipment age of two years or less, RSC goes to great lengths to obtain and retain satisfied customers. “If a store doesn’t have a piece of equipment, we’ll find it for you. RSC has the size and the buying power to be the only resource a customer needs,” he added.
If there is any extra equipment, the company’s main method of moving equipment is yard sales. These can occur as often as every quarter within each district.
“Yard sales allow us to show customer appreciation with refreshments and on-site RSC contacts, build awareness of RSC and our system, showcase the inventory that we have to offer and finally, to offer equipment that’s priced to sell,” Cummings explained.
For the years to come, RSC has many plans in the works. The company has ongoing efforts that are focused on technology and communication to help benefit the customer find and purchase rental equipment in an easier way.
Allmand Brothers sells its equipment in a variety of ways. The company has individual dealers, but also sells to rental companies. Allmand’s dealers do not have to follow specific rental plans, however Allmand dealers can sell equipment for cash, provide terms and financing for equipment, or conditional sales contracts and leases, according to Jerry Greenquist, vice president of sales and marketing.
The company’s entire product line is sold to rental dealers and companies and all excess is sold.
Looking ahead, Allmand is “constantly striving to make it easier for our customers to do business with us, and to give our customers more opportunities to be successful. If they are successful, if they are happy with us…they will continue to do business with us,” Greenquist said.
Bomag Light Equipment Division
Bomag Light Equipment Division was formed to sell compaction and related light construction equipment directly to the rental industry. The company sells to individual dealers and rental companies.
The entire light compaction and construction equipment line is available to dealers. Whatever is left over from rental is then sold, said Burt de Jong, vice president of sales and marketing, Bomag Light Equipment Division.
“We expect the rental industry – and, in turn, our rental equipment division – to enjoy continued growth. We will continue to actively anticipate and respond to the needs of our rental customers,” de Jong added.
Compaction America does things a bit differently than most. According to Steve Wilson, manager, marketing services, Compaction America, “We do offer direct rental to the distributor or customer base. We do have a consignment program to distributors and, in some cases, to national accounts. We supply products to our distributors at reduced rates so they can go out and develop and build their rental program.”
Compaction America does not have a specific rental plan for its distributors, however, the company does remind its distributors that the equipment that is sold for rental is not to go into a direct retail sale, Wilson said.
The company offers all Bomag heavy equipment to its dealer’s locations. In the past few years Compaction America has not had to worry about excess equipment, but if it did, Wilson said, “we would probably look to discount that product to sell on a retail basis through our distribution.”
As for getting into factory stores in the future, the company has decided not to go that route at this point, Wilson noted. “We continue to try to encourage the distributors to expand their rental market and in turn that should help our direct sales.
“We foresee a continuing consolidation trend – the small rental company disappearing – and perhaps a future consolidation with the big rentals to where there will be just a few big players. We are striving to be one of the preferred suppliers or vendors to them,” he added.
Dynaweld, a manufacturer of equipment trailers, sells directly to the rental industry. Its dealers also can provide service to the rental industry on their own, according to Dave Bradfield, national sales and marketing manager, Dynaweld. The company has no specific rental plan for its dealers to follow.
Dynaweld offers equipment trailers from 5 to 60 tons for the rental industry.
In the years to come, the company plans to focus on direct mailings and more sales solicitation of individual rental stores, as well as regional and national buying influences, Bradfield said.
Mayville Engineering Company (MEC) sells its equipment directly to rental companies for their rental fleets, but not for resale, said Jim Sokoly, director of sales.
The company encourages its dealer network to rent and sell MEC products, but the company does not get involved with how the dealers do this, Sokoly added.
All of the company’s scissor and boom lift models are available for the rental industry. “Normally we do not have much excess inventory. We build for stock in November and December but these units are sold to our dealers when the demand increases beyond our capacity in February,” he said.
In the future, MEC intends to help its dealers increase their fleets by working with finance companies to fund dealer expansion.
Right now Stone Equipment is looking to continue to upgrade its support to dealers and is always looking for ways to continue to improve its equipment and reduce costs to its dealers, said Kathryn Reissig, marketing service manager, Stone..
Stone’s equipment is purchased by its customers for both rental and/or resale. Although the company does have business plans with many of the key national accounts, those are customized per account.
All of Stone Equipment is available for its dealers, and the company does not worry about excess equipment because everything is built to order, Reissig added.
Along with its existing Rent to Sell plan, Komatsu has developed a “Rent to Rent” plan, said Al Yang, public relations specialist, Komatsu Utility Corporation.
The reason for this new program was because the market shifted from outright sales to more customers requesting rentals.
In response, Komatsu has gone to great lengths to fulfill those customers’ needs. Komatsu Rents is currently approaching 100 rental outlets nationwide under the ’Komatsu Rents’ banner.
Komatsu Rents furnishes Komatsu products as well as a variety of preferred brand name allied These allied products are based on their reputation and their ability to meet Komatsu’s quality standards, according to Yang.
Komatsu Rents locations are subsidiaries of the local distributor. This ensures that productive, sophisticated and affordable machines are available to the rental market. The rental program, he said, helps promote operator confidence and machine reliability.
Komatsu Rents asks its dealers to customize programs to fit their local market needs, Yang added.
Komatsu Rental distributors offer all of their equipment for rent. The types of equipment available depend on the geographic location, type of application, types of support equipment available, ’rent-a-bility’ and availability. The fleet varies according to the market’s needs, he said.
As for aged/used equipment, Yang said that when inventory is replaced with newer updated equipment, the existing stock can be reconditioned and sold through the Komatsu ReMarketing program. Some of the equipment is available with a warranty.
“This enables the seasoned renter to make the transition to full-time owner of Komatsu equipment with confidence,” he added.
Kubota Tractor sells its equipment to independent dealers, who have their own rental stores. The company provides incentives to its dealers who sell to the rental market, according to Keith Rohrbacker, product manager for construction equipment.
Because Kubota’s product line is used in rental applications, the company finds methods to sell all inventories to existing dealers.
Terex Light Construction
Amida, Bartell Power Products and Benford Compaction Products all are divisions of Terex Light Construction equipment.
Amida is known, according to George Moeller, Terex Light Construction, for manufacturing a broad line of products geared for the rental industry. Bartell and Benford also offer many of its products to the rental industry.
Terex does not own any rental stores but instead sells its equipment through a network of factory-employed regional sales managers that cover the national chains and independent operators, according to Moeller.
“Purchasing agreements with several national and regional rental chains are currently in place,” he added.
Terex, Moeller said, “will continue in its mission to offer the rental industry simple, available and cost effective tools to satisfy our most important client, our rental customer.”