Capitalize on Concrete

Jan. 1, 2009
Concrete equipment rentals can be a successful key to unlocking additional business from existing rental customers whose specialties lie elsewhere.

Concrete work often bookends a contractor's project. It can start with pouring a foundation or other form work and end with pouring curbs and walkways or finishing decorative concrete. It can also lead to a lot more business for rental companies that can provide tools and equipment for all the work that comes in between.

According to statistics from the U.S. Census Bureau, annual volume in the ready-mixed concrete category is in the $25 to $27 billion range. Concrete forming, placement and finishing represent a sizable portion of construction segments accounting for $150 to $200 billion annually. Included in that range are $62 billion annually for Heavy/Civil Construction; $105 billion annually for Poured Foundation; and $30 billion annually for Structural.

Clearly, concrete work is big business and that often means huge rental revenues for companies that specialize in the rental of concrete-working equipment. Rental companies can also benefit from the convenience that they can provide to contractors who need other tools and equipment to get a job done.

RER recently interviewed several companies with a specialty niche in concrete rentals and learned what makes them successful. A common theme to their success is the fact that these companies successfully capitalize on securing additional rentals for projects that require work beyond the concrete job. When one project leads to another, that incoming rental revenue can add up fast, a welcome circumstance in the current economy.

“Concrete equipment rentals bring in that customer base that requires or needs many of our other materials or supplies, and vice versa,” says Bruce Logan, president and owner of Des Moines, Iowa-based Logan Contractors Supply, an 18-year-old family-owned business that caters to the concrete sector. With branches in Omaha; Kansas City, Kan.; and Bettendorf, Iowa, Logan offers a diversified range of concrete materials, supplies, rentals and rebar fabrication throughout the Midwest. “In addition, offering concrete rentals allows us an inventory of used equipment, and adds an inventory of the latest-model equipment to our fleet.”

For Citrus Heights, Calif.-based Aba Daba Rents and Ready Mix, concrete equipment rentals and an onsite concrete batch plant provide a broader customer base in its Northern California market. “We're able to provide additional services to the counties, city, municipalities and state government in our area,” says Bob Blackwell, Aba Daba Rents vice president. “[The concrete batch plant] adds additional revenues to our company, and it helps us to rent accessories and equipment with concrete projects.”

For Atlanta-based Home Depot Rentals the concrete and cutting category adds up to be its No. 1 rental tools segment, according to product manager, tool rental, Gary Lewis, who attributes that to the company's two-fold customer base. Because Home Depot caters to both professional and homeowner customers, and carries all of the products to complete the projects done by both, all it needs to fill in the blanks are the rental tools to do the job.

“We've got all the project materials, all that's missing are the tools,” Lewis says. “If it's a contractor who doesn't have all the tools they need for one reason or another — either it's a bigger job and they need additional tools; their tools have broken down; or possibly, what we're seeing a lot today, is general contractors that usually do larger projects and sub everything out are doing a lot more of the work themselves. Usually the subcontractors have the tools and the general contractors don't, so now they're renting the tools.”

On the homeowner side of Home Depot Rentals' business, most of the time a concrete job is once in a lifetime for them, explains Lewis, so it doesn't make sense to go out and spend $1,500 on a concrete breaker when they can rent one for $75 to complete that one job. That reasoning further explains what makes the concrete tool rental category a success for Home Depot.

For Boise, Idaho-based Tates Rents, concrete tool and equipment rentals enhance its overall rental business in two ways. “First, we are a resource for local home-owners,” says Krisjan Hiner, Tates Rents sales manager. “Not only do we have the tools and equipment needed for a homeowner to successfully start and complete concrete projects, we have a first-class staff that is willing and able to answer questions and help see a customer's project through to the end. Second, concrete tools and supplies are used by a wide range of contractors, not just concrete contractors. From time to time general contractors, landscape contractors, plumbing contractors, electrical contractors and other specialty contractors have to remove, fix, patch or replace concrete. Again, we are a resource to these customers and take great pride in helping them start and finish their job the right way.”

Hard facts

As with any niche in the rental industry, concrete equipment specialists need to understand their customers' needs and provide service based on relationships, Logan says. Combined with high-quality equipment, knowing what your customers want and need to do their jobs well is of the highest importance.

“This year you realize you are dealing with many medium- to small-sized contractors and you need to be pretty relationship based,” says Logan. “Many customers are not running $2 million lines of credit. You don't forgo good credit practices, but you do relax them a little bit.”

Home Depot's Lewis offers two key components to success in concrete equipment rentals — equipment in good working order and a well-maintained fleet. “The customer, especially the pro, is reliant on that well-run equipment or they're out of a job. That, or their job either becomes more costly or gets delayed. A fleet in great condition is key, and to maintain that we have maintenance technicians in each location.”

Hiner says finding success with concrete equipment rentals is no different from most other types of equipment rentals, noting that customers are looking for confidence in the tools their rental company is supplying them. Equipment should be clean, in great working order and ready for rent. “If a customer is uncertain about the type of tool needed for a certain job, we have experts on staff that will steer them in the right direction and see the job through to the end.”

Aba Daba's Blackwell agrees that having a staff who understands the nuances of concrete projects and how to recommend the right piece of equipment for a job is critical. “We are able to provide an expertise in concrete finishing that is available from our qualified employees,” Blackwell says. “We rent professional tools and can offer advice on the process of concrete finishing. We are successful because of an experienced staff and their knowledge, which comes directly from working with the concrete.”

Having a significant number of concrete-working machines in a rental fleet creates the opportunity to expand the types of jobs for which companies can provide rentals to concrete customers. “When somebody is doing a floor or a wall it opens up the door to another question: What else are you doing?” says Logan. “This is key to getting more business from that customer and building your business — being able to provide them with as much as you can of the equipment and services they need.”

Tools of the trade

Just as diverse as the jobs and construction projects that require concrete-working equipment are the tools and equipment used to accomplish them. So what tools and equipment are necessary to build a well utilized fleet of concrete rental equipment?

“To be successful you have to have a lot of various types of concrete equipment and a large quantity as well,” says Mike Demelo, vice president, equipment operations for Oxford Builders Supplies and Equipment Rentals, a rental operation based in London, Ontario, Canada. “As every concrete project is different, the equipment needed changes. Therefore, the equipment that needs to be stocked is quite diverse.”

Basics include items such as wheelbarrows, trowels, breakers, demolition hammers, mixers and hand tools. Other rental items recommended to comprise a well-stocked concrete fleet include concrete buckets, side chutes, aluminum beams, aluminum trusses, scaffolding, taper ties, carpenter brackets, elevator core forms, concrete vibrators, float finishers, whalers, stiffbacks, safety fencing, slab grabs, tower cranes, concrete finishing machines, power screeds, concrete pumps, grinding and planning tools, rotary hammers, air compressors, light towers, generators, hydro trowels, saws and other concrete cutters.

Consumable products that can add additional revenue to a rental company's bottom line are breathing masks, gloves, concrete forms, finishing hand tools, duct tape, curing compounds and sealers, grade stakes, form pins, and oils and release agents.

“The main customer service benefit of carrying this type of equipment is having more options for our customers, further distancing ourselves from our competitors,” says Tates' Hiner.

Survive and thrive

As with most segments of the construction industry, concrete construction has been impacted by the downturn in construction starts in the past year. As a result, companies that specialize in concrete equipment rentals have had to evaluate the way they do business and look for ways to stay profitable during the down time.

Tates Rents constantly engages its customers to learn how it can best suit their needs, even as those needs are changing. “We are always working to get better at what we do, on the front and back end,” Hiner says. “We know that the better job we do for our customers and the easier it is for them to come see us, the more business we will have.”

Keeping equipment well maintained, updated and looking new is another way to differentiate a concrete rental specialist from the competition. “We are continually trading in old equipment and purchasing new equipment to keep up with technology and ensure we have the latest in formwork supply,” says Demelo. “The new equipment has greater capacities and efficiencies, which allows the contractor to use less equipment, thus saving money.”

In an era when attention to sustainability and green manufacturing and business practices are more often at the forefront of people's minds, Blackwell's Aba Daba Rentals works hard to be progressive in its green initiatives and customer service. “We strive to offer excellent customer service in this specialty field. We continue to address environmental issues and we use recycled water to make concrete. We have an on-site wash-out facility and recycle unused concrete.”

Although the economy is questionable for the coming year, rental companies might consider additional investments in their fleets of concrete-working equipment, which can be a strong rental niche for companies that prepare by doing their homework, educating staff on concrete processes and making sure they have inventory to cover the many facets of concrete-related jobs.