The economy has reached a turning point and is getting better. That's the consensus of most North American economists. In terms of the construction market, most manufacturers that supply the rental industry are selling more equipment to the rental channel, and the profit/loss statements, stock prices and sales numbers of most manufacturers are far more encouraging than a year ago.

Some in the rental business are saying the same thing. The second half of 2010 provided a glimmer of hope for many rental companies, many of whom expect improvements in 2011. For the most part, most rental companies saw 2010 as an improvement compared with 2009, but that improvement brings to mind the title of a novel from the 1960s called “Been Down So Long it Looks Like Up to Me.” For many it was up, but still far from pre-recession levels, and many discussed the need to get accustomed to a “new normal.” Rick Dahl, of Sugar Grove, Ill.-based Metrolift, perhaps said it best: “We started out the first half of the year by digging a huge hole of losses with an excavator and finished the second half of the year backfilling that deep hole with spoonfuls of profits.”

While many economic indicators are looking up, the economy is still risky business and the soft housing market, the glut of homes and office space, massive unemployment, and a still-muddled credit market, are making rental people and their customers cautious and nervous.

A sense of recovery is still far from universal. A recent informal RER survey of readers reveals that while most had improved results in 2010 and expect continuing improvement in 2011, not all have seen a turning point. Some say 2010 was ‘more of the same,’ expecting the softness to continue into 2011. Still, more than half of the respondents noted an improvement in 2010 with about a third of respondents reporting 2010 as essentially flat. About 10 percent reported 2010 as actually worse than 2009.

But, for the most part, the consensus is an improving trend. As Bob Kendall of Seattle-based Star Rentals said, in a comment whose tone was echoed by a number of people: “As I look back over the past year nothing seems a lot different and looking forward nothing looks overly encouraging but for whatever reason things just feel better.” Customers tend to at least be inquiring more and expecting better things to come.

Rental companies generally are saying that 2010 was, as RSC Rentals CEO Erik Olsson puts it, “a tale of two halves” with the second half of 2010 being what many see as a turning point.

“Our business began the year very weak, but began improving in March and has stayed strong ever since,” says Howard Hicks of San Antonio-based Holt Cat.

“We project an overall increase in revenue, year over year, of about 8 percent,” adds Bill Thompson of Thompson Pump. “Our rental-related revenue showed the greatest improvement and may come in at 35 percent over 2009. Sales of pumps and equipment, although higher than 2009, were disappointing and the increases were minor. I attribute the languishing of sales to the continued limited availability of financing for contractors, their lack of confidence in economic improvement in the short-term and the general decline in construction activity.”

Part of the 2010 improvement, on the part of many rental companies, was not so much that business improved but that the austerity measures and enhanced efficiencies they found themselves forced into helped bring about better results. “Overall, our volume between 2009 and 2010 has not really changed,” says Joel Theros of Theros Equipment. “But we have been able to derive more profitability and better cash flow as a result of further streamlining of our operations and continued pay-down of pre-existing debt from equipment notes.”

Others are less positive in their reports about 2010.

“2010 has been the worst year for us rental revenue-wise,” says Ron Pikulik of Patten Industries, Chicago. “We are down significantly year over year. The biggest reason is on the heavy side — there has been no large dirt site work and the road work has been patching. The smaller products' rental revenue has remained flat.”

With accelerating momentum for some in the second half of 2010, there is heightened optimism for 2011. In fact, 75 percent of respondents to RER's survey predict 2011 will be a better year than 2010, with projections varying from 1 or 2 percent to double digits, with most on the cautious side.

“We expect markets to continue to improve slowly,” says Marty Moore of Caterpillar dealer Nebraska Rents. “[But] high unemployment, housing inventory, and state and municipal financial conditions as well as federal government debt continue to be worrisome.”

“We expect business to improve slowly in all markets,” adds Sarah Rothenbuhler of Bellingham, Wash.-based Birch Equipment Rental and Sales. “Home improvement has shown the first signs. We're still prepped and ready for the turnaround in the construction, manufacturing and industrial markets that we serve. We are however actively hiring for yard reps, sales staff and mechanics and drivers now as it takes about a year to begin to really get knowledgeable for all facets of our industry and the industries we support.”