Interim Tier 4 is shifting into gear in a few months. How dramatically the new engine regulations are going to play out in the marketplace and how fast remains to be seen. Hopefully you already know more about them than what we could tell you in these pages. If not, hopefully this issue will be the start of your education on the matter. While some minimize the impact, many others say Tier-4 emissions standards will impact the equipment industry far more dramatically than any regulations have ever done.
Engines and equipment will become more expensive. It might be gradual, with manufacturers sensitive about raising prices too dramatically after the fierce recession this industry has been through, and is still in to a large degree. Many OEMs — not only engine makers — have spent in the hundreds of millions of dollars to adapt their equipment to changes in engines. Engine manufacturers are attempting to incorporate after-treatment devices as unobtrusively as possible so that OEMs won't have to alter designs. The application and the particular solutions the engine manufacturers are designing play variable roles in that process and from what I'm aware of the efforts have been herculean and impressive, with some manufacturers spending close to half their R&D budget.
Because of grandfather-type clauses, you won't have to replace your whole fleet right away, so don't panic. But there are a lot of issues you need to know about and I wouldn't stand still in your education process. Regulations vary with different types of equipment; you need to know about what oil to use and how much and a whole range of issues. With the Internet at your disposal, it shouldn't be too hard to do some research about what you need to know. You may need training to perform diagnostics on new engines, don't overlook the need to ensure your service staff stays current and make sure you're talking to your manufacturers about how equipment is going to change.
Tony Salia, vice president of engineering for Gehl Co., suggests the following points for rental companies: Start to educate your end-user customers on the timing and benefits of the new emissions regulations. Prepare your customers for the potential cost impact of more expensive equipment. Don't forget that manufacturers will be looking to pass along costs to you. Hard as it is to keep rental rates up, it won't be easy to pass along costs to your customers in these competitive times, so don't miss this perfect opportunity to educate your customers to the fact that you have no choice but to charge them more.
And don't neglect doing an analysis of timing the introduction of Tier-4-compliant machines to your fleets. There are benefits — and this will vary according to different markets and you need to study yours — to having IT4-compliant engines in your equipment fleet. You need to weigh the costs and benefits for your particular business.
A lot will depend on the kind of business you're in. Tier-4-compliant equipment will help rental companies meet contract-specific emission requirements that are already coming into effect on public-works and other kinds of jobsites. It's not just about improving the environment, which everyone cares about but generally not at the cost of their livelihood. There are growing business benefits and necessities to having an emissions-compliant fleet.
I know many of you regularly read RER Reports, our weekly electronic newsletter that provides up-to-date news, analysis and interviews about the rental industry. As subscribers know, you get more news every week in the electronic newsletter than you get every month in the magazine, and the subscription is free at www.rermag.com. And we post news to that website every day, so if you're a junkie for news about the rental industry and its suppliers and customers, I suggest you log in.
The bigger news is we've added an extra edition of RER Reports so that it now lands in your e-mailbox twice a week — Mondays and Thursdays. If you aren't familiar with it, check it out at www.rerreports.com. There's a lot of news and it's available to you for free with just a couple of keystrokes. We're increasing the frequency because we live in an accelerated world now and we felt the need to get it to you more quickly. We offer international news, financial news and analysis, and more in-depth interviews than we have space to print in the magazine. It's more of an Internet world than ever before, so check out what we have to offer.