I was most intrigued by a small news story that a lot of people probably didn’t notice: Canadian Equipment Rental Fund, or CERF, which owns 4-Way Equipment Rental and a couple of other companies in the booming oil-rich Canadian province of Alberta signed a letter of intent to acquire an oilfield rental company (see page 13). They didn’t even name the oilfield rental company, but I was intrigued by the fact that CERF is headed in that direction.
Most of you probably aren’t likely to pay much attention to the doings of a small Canadian rental company, but the synergy between a construction equipment rental company and an oilfield equipment rental company strikes me as a natural one. I’ve actually been expecting something like this to happen for a while now. A lot of rental companies are doing good business in the energy rental market. The oil-sands region in Alberta is obviously a strong market for equipment rental as are the communities near the Bakken, Eagle Ford and Marcellus shales and other energy-producing regions in the U.S. Rentals to refineries, wind farms, pipeline construction, even support projects related to mining, are all strong areas at the moment.
There are oilfield rental specialists that rent a lot of equipment that aren’t part of the inventories of most of the equipment rental companies that readers of this magazine are involved with. Names like Stallion, Chesapeake, Great Plains, Quail Tools, Knight Oil Tools, Greene’s Energy Group and Gauthier’s. There’s plenty more of them, large and small. They rent stuff like drill collars, drill pipes, sand separators, blowout preventers, spacer spools, gate valves, frac tanks and frac heads, tubing of all kinds, ditch magnets, bleeder plugs, pipe joints, landing strings, and other items, some of which I’ve never heard of.
But a lot of those companies also rent earthmoving machines of all kinds, aerial work platforms, forklifts, telehandlers, light towers, generators, welders, air compressors and pumps. I would imagine many of these companies use similar software systems and operate using similar logistics.
As more construction-type equipment rental companies rent to energy markets, I would expect to see more synergies between construction equipment rental companies and oilfield equipment and tool rental companies. I know there are a lot of differences in who the customers are and who the suppliers are. But there might be as many similarities and synergies as differences. The oilfield rental companies are highly specialized and obviously the people who operate them know their markets far better than a company that specializes in construction rental, but it strikes me as an area worth exploring.
Maybe I’m overlooking something obviously fundamental to people who know both industries. Or maybe not? I hope to hear some feedback from readers about this issue.
The AED Executive Forum at the beginning of this month featured a good bit of discussion about rental. The Forum began around 2000 and the very first event was completely focused on rental as so many distributors were viewing rental as an important market they’d previously ignored.
In the middle part of the ‘00s, it seemed the sentiment among many distributors shifted. Although many remained strong in rental, others emphasized they were distributors first and foremost and rental was there when they needed it or as part of a rental-purchase option. Rent-to-rent seemed less attractive to many, especially upon having experienced what a different business model it is compared to the traditional distribution business.
This month’s cover story by Larry Kaye makes it clear that distributors need a multi-option approach to succeed in today’s marketplace and that rental is one of those options. Kaye also points out that OEMs need to see rental as an important part of their strategy, to accelerate market penetration and help the dealers that represent them be profitable. We can once again expect growing involvement in rental on the part of equipment distributors. While those distributors may compete for rent-to-rent business, there is nobody better — as Kaye’s piece points out — than dedicated equipment rental centers that open early and stay open late and excel in developing strong communication with their end-user customers.
Rental penetration is growing rapidly, a point Dan Kaplan certainly made clear in last month’s issue. As Kaye says, rental should be recognized as a strategic solution for everyone involved. It’s good for the OEM, good for the dealers and good for the contractor, truly a cornerstone for future distribution. rer