Compact equipment experts weigh in on market trends and the big future of little machines.
Eleven compact equipment experts — representing nine manufacturers and one industry publication — gave RER their two cents on market growth, technology trends and high fuel prices. The panel includes:
Randy Vargason, Mustang general manager
Doug Dahlgren, Allmand Bros. product manager
Kent Pellegrini, Caterpillar Inc., skid-steer loader/multi-terrain loader industry manager
Greg Lawrence, The Toro Company marketing product manager, Dingo compact utility loaders
Jim Hughes and Dave Wolf, Case Construction Equipment brand marketing managers
Bill Gearhart, Yanmar Construction Equipment assistant marketing and product manager
Gregg Zupancic, John Deere Worldwide Construction & Forestry product marketing manager, skid steers and compact track loaders
Mike Ross, Takeuchi Mfg. national product and training manager
Lowell Stout, Terex senior product manager
Keith Gribbins,Compact Equipment magazine managing editor
What is the definition of compact equipment? What are the requirements to be categorized as compact?
Randy Vargason: Rather than focusing on dimensions to categorize equipment, we focus on utility. We define compact equipment as units designed to work on residential or small commercial sites. Ideal for the small to mid-sized contractor, these units are typically transportable via a pickup truck or small trailer. Compact equipment’s value comes from its versatility and ability to accomplish several tasks that may have only been possible with large, dedicated machines in the past.
Doug Dahlgren: I don’t generally think of compact equipment in terms of a certain size or specification. While some manufacturers may argue that it’s anything under 50 hp, I think it depends more on the applications for which the equipment is suited. I think the key features of compact equipment include its lighter weight and ease of operation and transportation, which makes this equipment ideal for the rental market.
Kent Pellegrini: Classifications by operating load are typical in the light construction market as many customers relate the operating load to their specific type of work. Size and width requirements are another that enables the contractor to access work areas larger equipment cannot. Cost factor is a driver when considering compact construction equipment, as this is generally an affordable size class. The size class allows for a company to grow into larger machines later if their budget cannot justify it at the present time.
Greg Lawrence: The term compact equipment is used for a broad range of products that span several different industries. In terms of compact utility loaders, we define “compact” as any unit that has an engine of 25 hp or less and can fit in tight areas. Compact utility loaders, mini-excavators and small track loaders all fall under that category.
Jim Hughes/Dave Wolf: There is no industry standard that determines what requirements categorize equipment as compact or heavy. Case categorizes skid-steer loaders, loader backhoes, mini-excavators, compact track loaders and compact wheel loaders as compact equipment. While there aren’t specific requirements necessary for equipment to be categorized as compact equipment, it encompasses equipment designed specifically to get into tight quarters and is easily moved from jobsite to jobsite.
Gregg Zupancic: John Deere categorizes the compact equipment business as products that fit into tight places, get the job done quickly and cost effectively, and that can be loaded onto a truck and trailer to the next job without a CDL license.
Mike Ross: We consider machines with operating weights less than 8 tons and equipped with engines in the zero to 100-hp range to be compact equipment.
Lowell Stout: Compact equipment can be defined as machines that are smaller in size and have less performance than the conventional, traditional products of the same type. For example, wheel loaders that are 2 cubic yards and up in size have been the traditional products for many years. So you could conclude that any machine smaller than 2 cubic yards is a compact wheel loader. However, some people prefer to classify any wheel loader that has less than 80 hp as compact. The construction industry is still sorting itself out when it comes to compact terminology and how it is applied to various types of products. And now we have the term “mini” to define within “compact.”
Keith Gribbins: Compact equipment can be categorized in many different ways. Some machines are just categorized as compact — skid steers and compact utility loaders for instance. Every size of those machines are called compact. But other machines like backhoe loaders, excavators and tractors have big and small sizes.
- Compact tractors are categorized as tractors under 40 PTO hp. 20 PTO hp and under are considered sub-compact.
- Excavators that are 6 metric tons and below are mini or compact excavators.
- Backhoe loaders with a dig depth of 14 feet or below are considered compact.
- Telehandlers with a two-stage boom that reaches no higher than 20 to 25 feet are considered compact. Telescopic tool carriers are also considered compact.
When we started the magazine, we defined compact equipment as any machine that an operator could haul behind a truck on a trailer without needing a CDL. But typically, every machine is categorized by manufacturers and Association of Equipment Manufacturers as compact, midi or full size.
What does the overall market look like?
Vargason: The compact market remains robust. Track loaders are extremely popular, and sales continue to increase year over year. Skid steers will always be a market favorite, and they continue to experience healthy sales. There has been some discussion as to whether the skid steer can bear the weight of the track loader. It has proven it can. While sales are not increasing at the same rate they had in the years prior to the rise in popularity of the track loader, they continue to be strong.
Compact excavators and telehandlers are showing excellent growth over last year, as the market learns just how much value these versatile and powerful — yet compact — units can add to a fleet.
Dahlgren: I think the market is very strong right now and should continue to grow. While some people look at these machines as simply “downsized” versions of full-size machines, the fact is they’re serious pieces of equipment that are appropriate for a wide variety of smaller jobs. For example, it wouldn’t make any sense to use a full-size excavator to put a hot tub in a backyard, but a piece of compact equipment is just right for this kind of project. There’s a large market for these machines due to the variety of applications they can be used in, and I don’t see that changing.
Lawrence: The compact equipment industry has experienced steady, double-digit growth over the last several years. As jobsites become tighter and tighter (properties are getting smaller), many contractors are turning to smaller, more versatile equipment to do the jobs that were traditionally done by larger, application-specific machines. We hope this trend will continue in the near-term future.
Hughes/Wolf: The overall compact equipment market is growing rapidly. All of the
product lines are realizing growth. Compact track loaders, mini-excavators and compact wheel loaders are growing at a phenomenal rate.
Gearhart: The compact equipment market is very good right now and looks like unit volumes should increase in the next few years.
Zupancic: John Deere entered into the compact construction equipment business with a focused business unit, Commercial Worksite Products, in 1997 — a four-model introduction of Deere designed and manufactured skid steers. In the past seven years the CWP product line has evolved and grown into a 13-tractor lineup that includes more than 100 Worksite Pro Attachments.
Ross: The compact market remains very strong. Contractors continue to discover the advantages of using smaller, more maneuverable equipment on jobsites. Our compact excavator and rubber track loader sales continue to climb despite several new competitors in the market. More than anything else, contractors seek out durable, productive, and reliable equipment that can be used on multiple jobs. I think it’s very telling to see how many big equipment contractors now have several compact machines in their fleet.
Stout: The compact equipment market is strong with some segments stronger than others. The mini/compact excavator market continues to grow and get stronger while some other segments are not seeing the same buoyancy.
Gribbins: From our studies, the overall compact equipment market is the biggest growth segment of the construction, rental and landscape industries. Unit sales are astounding and there’s growth in nearly every machine category.
Skid steer sales numbers: 2003 — 57,000; 2004 — 65,500; and 2005 — 66,500.
Compact excavator numbers: 2003 — 14,000; 2004 — 17,000-18,000; and 2005 — 20,000 plus.
Compact track loader numbers: 2000 — 3,300; 2004 —16,000; 2005 — 20,000.
Interest in small machinery can be tracked by sales numbers as well as interest from manufacturers. Caterpillar, Case, New Holland, Gehl, JCB, Mustang, John Deere, Volvo, Ditch Witch, Vermeer and others have greatly expanded their product lines in the compact equipment realm. Gehl just discontinued its agriculture implement line to solely focus on compact equipment. JCB recently created an entire division dedicated to small machines. After the horizontal directional drilling market fell out in 2001, Vermeer and Ditch Witch turned to compact equipment (compact utility loaders and mini-excavators) to reinvigorate their equipment lineups.
Another growing factor for small machinery is the private user market — large estate owners, sundowners or hobby farmers. These are baby boomers with disposable income who have a piece of property and need to invest in or rent a small piece of equipment to tackle their daily to-do list. They dig drainage and fenceposts, cut grass, remove snow and grade gravel driveways. In 2005, more than 135,000 compact tractors were sold in North America, and 60 to 70 percent of those sales were to private users.
What effect did the 2005 hurricane season have on the market? How are you preparing for the 2006 hurricane season?
Vargason: Demand for compact equipment was intense during the height of last year’s cleanup efforts in the affected portions of the United States, and units continue to move toward the southern portion of the country. In terms of preparation for the upcoming hurricane season, we have outlined procedures that will enable us to act as soon as warnings of a hurricane or large storm present themselves. Our region sales managers and dealers have done an excellent job brainstorming how we will reach one another in an emergency, how we will place advanced orders and how we will support our affected dealerships and their customers.
Dahlgren: By the time the hurricane season really hit, we were already in the middle of servicing commitments to our existing customers and didn’t have a lot of extra equipment to divert to the hard-hit areas. However, I know some of our customers moved their existing equipment to those locations affected by the hurricanes.
Lawrence: As a result of last year’s hurricanes, many machines were redeployed in different ways — for cleanup and demolition tasks rather than for landscaping or building water features. That’s because these machines are good at getting on beaches and in basements where large equipment can’t go. After the storms, landscapers saw their lawn maintenance businesses change gears, shifting to debris removal, fencing repair, and recovery efforts. We are aware of some landscapers who say they are doing four times the amount of business they had been doing and are booked months out with work. They are serving the same customers — just with different needs. The true (total) impact on equipment sales has not been felt because permanent reconstruction work has just begun in some areas.
Hughes/Wolf: The 2005 hurricane season certainly impacted sales for compact equipment because all of those areas hit by the hurricanes needed to be cleaned up and rebuilt. Construction equipment in general played a large role in the cleanup effort. In terms of the 2006 hurricane season, no one can really predict what will happen. However, Case was quick and able to respond last year and will assist whenever disaster relief is required.
Gearhart: When we at Yanmar learned of the severity of the damage resulting from hurricane Katrina, we donated compact wheel loaders to the Louisiana National Guard to help them with their efforts to provide emergency relief to the residents after the storm. Our compact wheel loaders were a welcomed addition because our units are designed to operate in tight urban areas where larger equipment can’t operate. The general market for compact equipment in the storm areas is up as a result of private reconstruction jobs. We have not taken steps to specifically address hurricane situations but we are preparing for an overall growing market segment.
Zupancic: The 2005 hurricane season drove an initial surge in industry sales. However, many folks on the Gulf Coast were not able to purchase their equipment to help move past the devastation of the 2005 season. An effort at the John Deere Dubuque Works, in Dubuque, Iowa, exemplifies the commitment employees, dealers, suppliers and John Deere made to help with Hurricane Katrina relief efforts. More than 250 members of the United Auto Workers at the Dubuque Works volunteered their personal time to build backhoe loaders and skid-steer loaders needed by organizations working on relief and restoration activities in the region affected by Hurricane Katrina.
Ross: Sales of compact equipment were up in the Southeast for the fourth quarter of 2005 and first quarter of 2006. Some areas will continue to need additional equipment for years to come.
Stout: It obviously increased the sales and rentals of both compact and heavy products. Last year’s hurricanes produced a heavy demand for some attachments not usually seen in a more normal sales year. We believe that attachment manufacturers will be better prepared to produce the special attachments like grapple buckets and thumbs in 2006 than they were in 2005. Plus, some of these products are being carried over in rental fleets.
How much has the market grown in the last year, and what do you anticipate for the coming year?
Vargason:Leveling off of skid-steer loader sales will remain as the popularity of other compact units continues to soar. Track loader, telehandler and compact excavator sales should continue on their upward trajectories.
Dahlgren: Since the construction market as a whole is strong and growing, the rental and purchase of compact equipment will continue to grow as well.
Lawrence: Compact utility loaders are new to the market compared to some other equipment in rental yards. Rental yards and contractors are identifying new ways to use these machines every day, and the equipment also is replacing application-specific machines because of its versatility, making it easier to rent. We think this trend will continue, and are hopeful we’ll see double-digit growth for this category in the future.
Hughes/Wolf: It’s hard to put the growth into numbers because one of the products, compact track loaders, is not officially tracked by AEM. However, forecast and economic indicators show steady growth into next year.
Gearhart: I would estimate that the markets we participate in have grown around 20 percent, and I would anticipate a similar growth rate for 2006.
Zupancic: The most noticeable drivers of the compact equipment business are closely tied to housing and construction markets and thus the rental and landscape industries have been two of the main economic highlights for the business. These segments offer the largest growth potential for the compact equipment market segment in 2006 and beyond. As interest rates stay at reasonable levels, the building and landscape segments of the business will stay strong and drive future compact equipment sales. The skid steer and compact track loader markets were strong once again in 2005. The 2006 outlook continues to be positive. Skid-steer sales are projected to be up slightly and the compact track loader market is expected to see significant growth due to more competitors entering the business and additional familiarity with performance attributes.
The attachment business is the major purchase driver of the compact equipment business. The whole key to the compact business is attachment versatility. For example, if a customer buys a hydraulic hammer and scrap grapple to do demolition work, when that business gets slow, the customer has the opportunity to purchase a completely different attachment at a reasonably low acquisition cost and get into an entirely different line of work, such as recycling, building, underground or landscaping.
Ross: We estimate the market grew 25 to 30 percent in 2005. This year we expect the market to grow about 20 to 25 percent.
Are there any major trends or changes in technology that you're seeing?
Vargason: Joystick-style controls and systems that require less effort from the operator are hot items now. The transition from hand-foot to these joystick systems follows an overall trend toward operator comfort and efficiency. Rental inventory purchasers want machine components that differentiate their fleet from the competition. And while components like joystick controls or other creature comforts like suspension seats or air-conditioning may not demand a higher rate, they will inspire customer loyalty by giving the operator a much more enjoyable experience.
GPS tracking systems are also in demand, particularly for rental fleets. Preventing theft is the main objective for these systems. Monitoring systems and automatic shut-downs are also popular, as owners are attracted to equipment that helps protect itself from damage or catastrophic failure.
Dahlgren: A lot of new technologies are available, but unfortunately, they are not cost effective. Basically, the expense of some of the new technologies doesn’t make it justifiable to implement at this time. What has been very effective is the work we’ve done improving our pins, bushings, seals and other components. These may seem like small refinements, but added up all together, the improvements will make the machine perform at its peak for a longer time.
Lawrence: Store owners seeing success with their rental fleet will continue to replace less versatile, single-purpose machines with a broader array of loader attachment offerings to capture additional ROI. We know of one rental store owner who makes the Dingo TX 413 machine, attachments and a trailer available in a single package that benefits his customers while boosting his bottom line. His standard machine rental price includes the Dingo compact utility loader unit and bucket. However, when a customer picks up the machine, it’s loaded on the trailer with not only the bucket, but all of the unit’s other attachments, including an auger power head and two-foot trencher. A specially printed tag has been placed on each attachment’s latch pin. If a customer desires to use an attachment other than the bucket they’ve rented, they simply break off the tag and are charged for the use of the additional attachment when they return the unit. Having all the attachments available to use often inspires users to not only complete the project for which the unit was rented, but also take on additional tasks that may not have been considered initially.
Hughes/Wolf: There is a movement toward making the machines more efficient and the operators more comfortable because a comfortable operator is a productive operator and that means more money in the rental company’s pocket. Things like A/C and heat, suspension seat, ride control (which acts like a shock absorber by cushioning the loader arms from the jolts of rough terrain, eliminating the front-to-rear rocking motion that equipment experiences under load), hydraulic couplers, auxiliary hydraulics, switches on the control levers and accessory outlets (for cell phones and CD players, for example) are a few ergonomic improvements Case offers that are designed specifically for operator comfort. Not only that, but Case has improved operator visibility to make the machines easier, safer and more productive to operate.
Gearhart: We have sold compact excavators in many applications that in the past would have been done with a conventional backhoe. We have also seen increased interest in compact tractor loader backhoes like our recently introduced CBL40. It is designed as a small, but heavy-duty piece of construction equipment rather than designed as an agricultural tractor with loader and backhoe attachments added.
Zupancic: We see customers requesting more creature comfort features inside the operator station of the equipment we manufacture. John Deere provides standard and optional equipment, such as a suspension seat, cushioned boom cylinders and a 12-volt receptacle for charging cell phones, using laptops or air pumps. In addition, a two-speed transmission, cab enclosure, heater/defroster, air conditioning, powered in-cab Quik-Tatch and high-flow hydraulics continue to be available as productivity enhancement options.
An optional four-season cab enclosure, which features air-conditioning and a heater/defroster to allow the operator to control temperature and humidity, has been enhanced to provide more than 30 percent more airflow. All air-conditioning components are easily accessed for maintenance or service.
Ross: More and more customers are requesting pilot-operated joystick controls. Foot pedals for operating the boom and bucket functions are becoming a thing of the past.
Stout: Hydrostatic drive systems are becoming more popular in compact machines because it allows more flexibility in the design of the machine. Placement of major components within the design of the machine can be maximized. For example, Terex compact wheel loaders have the engines placed transverse at the rear of the machine so that the weight of the engine adds to the stability of the machine.
Gribbins: Two of the major trends we see are attachments and tracks.
Attachments and machines called “tool carriers” are very much on the rise. What manufacturers and customers want are what are called “utility machines.” These are pieces of equipment that can do a myriad of tasks on a jobsite — dig holes, grade, load, seed, haul — through the use of attachments or implements. Skid steers started this trend, but in the 90s and 00s, tool carrier machines exploded, including compact utility loaders and compact excavators. The idea is having one machine that can do just about anything on the jobsite. The attachment industry has also seen enormous growth, as well as consolidation (just look at Paladin). Making machines as versatile as possible has been one of the biggest trends.
Tracks have been huge — especially compact track loaders. Rubber track loaders, all-terrain loaders or compact track loaders have been the biggest growth market in compact machinery. These are skid-steer type machines that use the same attachment plate as skid steers, but with a dedicated track undercarriage instead of wheels. These machines have been around for years (since the late 80s), but in the last four years the market has had explosive growth. Since 2000, Caterpillar, Bobcat, Case, New Holland, Komatsu, and John Deere have all entered the compact track loader market. And pioneers ASV and Takeuchi have only expanded their product lines.
What do you predict for the next year in the market? Trends, growth, technology.
Vargason: Skilled operators are becoming harder to find, so anything that will attract and retain these workers will be popular. In addition to the increase in attention paid to comfort and monitoring systems, equipment buyers will look for components that keep a machine running as long, and as efficiently, as possible. Rental fleet buyers will add creature comforts to fill the demand of long-term rentals. Attachments will continue to be popular in the rental industry as rental houses aim to increase the versatility and seasonality of their compact units.
Lawrence: These machines are becoming more and more of a staple item in rental stores. Store owners are asking themselves, “Why would I buy a dedicated machine and limit my options when, for similar dollars, I could invest in a multi-use platform?”
Hughes/Wolf: You are going to see more trends that support operator comfort and productivity. Features you see in larger equipment like laser/GPS systems, dig guidance systems, cab convenience features are going to make their way into the compact equipment markets. Emission regulations will require new engine technology to be implemented to meet certifications.
Gearhart: I expect the compact equipment market to continue its expansion. Advancing technology is a big part of making compact equipment highly productive yet able to operate in constricted spaces. One example of innovative technology is the hydro-mechanical transmission in our CBL40. Our hydro-mechanical transmission is a blend of hydrostatic and mechanical transmission technology that takes advantage of the best of both systems while minimizing their disadvantages.
Zupancic: Customers are asking for things like fuel efficiency, lower noise and better overall operational experience in the compact equipment they purchase. This is why, starting in 2007, the John Deere skid steers and compact track loader lines will come standard with the all-new CoolPower fan technology that provides better fuel efficiency, more efficient cooling and less jobsite noise by rotating only as fast as necessary to keep the machine productive and cool. Deere is working on many more items of this nature to help provide needed solutions for purchasers of compact equipment.
Ross: Better creature comforts, suspension seats and air conditioning.
Stout: Operator comfort continues to be an important feature on all construction machines. However, it is more difficult to achieve on compact machines because of size constraints. The operator space is one of the largest items to incorporate into the machine’s design and, therefore, you are going to see more effort put into reducing the size of other components to allow more operator space. Terex, for example, continues to incorporate full-width cabs on mini-excavators in an effort to give the operator more comfort.
Gribbins: I see continual growth for the compact equipment market. We’ll see more consolidation in the attachment industry. I expect bigger growth numbers for compact track loaders and compact utility loaders. I see skid steer and mini excavator sales staying steady (with not too much growth). We’ll see Tier 3 engine regulations beginning to come into play, with engines in general being the focus for many manufacturers (especially with growing fuel costs). I think we’ll see more growth in the private user markets, as big boxes like Lowe’s and Home Depot begin to sell and rent compact machinery.
How have high gas prices affected the market?
Vargason: Maybe to some degree, but not in any sort of way that we’ve felt it. My hunch is that contractors are reacting to the fuel prices the same way they are reacting to gas prices. Consumer media continue to report that high gas prices are not stopping — or even altering — the family vacation. We believe the same is true for contractors and their use of equipment.
When Mustang built its first skid-steer loader 40 years ago, rental wasn’t considered the business strategy it is today. People spent their time and dollars on machine rebuilds and new purchases. Today’s contractor has figured out that a good balance between compact equipment rental and ownership will have the best impact on their bottom line. There is a time to rent and a time to own, and compact equipment fits in with this philosophy perfectly.
Dahlgren: Despite the effect of rising gas prices on the nation as a whole, it’s not an issue I’ve heard brought up in this market. Since TLBs and other compact tractors are quite fuel efficient, I don’t foresee this becoming a major concern.
Pellegrini: Fuel cost has impacted the whole economy, and leads to more cost efficient ways of completing jobs. This is where compact equipment can help contractors save money when the cost of fuel increases. These machines have lower horsepower and utilize hydraulic systems to make the job more productive. Caterpillar hydraulic systems allow the operator to work at low idle while maintaining machine torque. Therefore, maximizing fuel cost and increasing your bottom line.
Lawrence: In our opinion, the demand for these machines has not decreased — we have not seen a negative impact from high gas prices.
Hughes/Wolf: High gas prices have not adversely affected the market to date, but that will probably change. Customers will be looking for the best combination of performance, operator comfort, serviceability and fuel efficiency in new equipment.
Gearhart: I think that higher fuel prices have had a positive effect on the compact equipment market. Many contractors have figured out that their total input costs are less with compact equipment for some jobs even if larger equipment will fit on the jobsite.
Zupancic: We see our customers asking for more fuel efficient features and information prior to the sale of the equipment they purchase.
Ross: High fuel prices make compact equipment even more attractive because you're not wasting fuel to power a machine that is much too big for the job.
Stout: Gas prices have made contractors more aware and concerned about fuel consumption. If a compact machine can perform the same task that a larger machine can, then it may make sense to utilize a compact machine and save on fuel.
Is there anything new on the attachment front? Are there attachments that are more popular on smaller equipment versus large equipment?
Vargason: The increasing number of attachments available for compact equipment owners continues to drive the popularity of compact units. Attachments formerly available only on larger pieces of equipment are today being designed for the compact market, and that’s driving awareness of compacts’ potential. Today’s contractors and equipment owners appreciate versatility, and that’s precisely what a compact model — which can go just about anywhere you need it to — equipped with multiple attachments can offer. Take the example of a dedicated crawler. An owner of this unit will be able to perform one task with it on a very wide-open jobsite. Swap that crawler for a track loader with a dozer blade (and a bucket, a broom and an auger just waiting to be attached), and you’ll accomplish the same job with the potential to do more work on varying jobsites later in the week. Convenience features improving productivity are very important. For example, a power hitch that allows an operator to remain in the cab while changing from one attachment to the other is a hugely popular item.
Lawrence: Attachments are what make compact utility loaders the versatile, hard-working machines they are. The most popular attachments (for Toro compact utility loaders) beyond the bucket, which goes out on every machine, are a leveler, adjustable forks, a trencher, an auger, and a soil-conditioning tool (typically one of three — soil cultivator, power box rake or tiller). We are always looking for new ways we can provide equipment solutions to our customers and help rental stores maximize each unit’s rental potential. Earlier this year, Toro introduced a new trench filler attachment, making it possible to fill a trench faster than it can be dug. It’s a great complement to our popular high-torque and high-speed trencher attachments.
Hughes/Wolf: There aren’t necessarily new attachments that are changing the way compact equipment is being used, but more and more crews are discovering that the existing attachments can help them be more productive at the jobsite. Not only that, but the attachments are becoming more compatible across product lines. For example, Case compact wheel loaders are now available with a skid-steer compatible coupler, meaning that the attachments that fit on a skid steer and compact track loader are now compatible with a compact wheel loader. That makes the attachments and the machines even more productive.
Ross: On the compact excavators, hydraulic thumbs and quick coupler buckets are becoming very popular.
Stout: There are always new attachments being developed for the industry. However, the popular ones continue to be those that have proven themselves to be both cost effective and productive. Attachments like thumbs, hammers, compactors, brooms, forks, various styles of buckets and quick couplers serve the compact market well. Smaller equipment in general utilizes more attachments than larger equipment because they are seen as more versatile and contractors own more attachments per machine. With quick couplers they can change attachments fast and therefore give them the capability of using their machines for more than one type of job.
What should rental companies look for when buying their compact equipment?
Vargason: Simplicity is key. Buyers should look for machines that offer easy maintenance. Time is money, and a four-hour fix that can be done in two hours on a different unit will demand a higher price and provide a better return on investment.
In terms of the marketability of some of the creature comforts, there is one sure way to find out — ask. Talk to every one of your customers. Encourage them to tell you what they are looking for and what they are willing to pay.
The compact equipment industry is fluid and the best way to prevent yourself from maintaining the status quo is to challenge what you’ve always considered true. A unit that was popular last year may not necessarily rent well this year. Talk to people, and you’ll get a better fix on where the trends are headed.
Dahlgren: These customers should consider the quality of the product they’re buying, the performance they can expect, the support they will receive from the manufacturer, and the overall customer satisfaction with said product.
Lawrence: When making a purchasing decision, rental companies need to pay attention to a machine’s potential return on investment and the versatility of each machine they stock in their rental yard. Those two things go hand in hand. The more applications a machine can be used for, the more likely it will be out on rent — maximizing ROI. Consider carefully the product support and training available from the manufacturer, which will help rental houses maximize their rental revenue.
Hughes/Wolf: Rental markets should consider productivity, reliability, ease of daily service and routine maintenance. Rental machines don’t make any money when sitting in the rental yard. They make money when they are out on the jobsite.
Gearhart: I think that their primary concern should be total cost of ownership rather than initial purchase price. If they buy equipment that needs constant repair or adjustment, their return on investment will be lower. If they purchase more reliable equipment, it will have less downtime, less expenses and a higher return on investment.
Ross: The number one consideration is durability — rental applications are among the toughest around. Many compact machines offer a rubber track undercarriage. There are good durable undercarriages out there, but beware of those that can’t handle the tough construction jobsite debris. Downtime is a killer for your profitability and your customer’s ability to get the job done.
Stout: The same considerations will apply to compact equipment as other construction equipment. Local market research is important to determine what size machines are most popular as well as what attachments are being utilized. On compact machines, universal quick couplers can make these machines more versatile and help increase the machine’s utilization.
Gribbins: They probably want machines that can be as versatile as possible, so they can expand their customer base into new markets. Skid steers, compact track loaders, mini-excavators, compact utility loaders — all of these machines give rental companies “tool carrying” capabilities, so that one machine can do a plethora of jobsite applications. Along with these tool-carrying machines, rental companies should expand their attachment lines, which will make their compact machines even more versatile and flexible. Even after contractors buy a machine, they still often rent those hard-to-find implements.
Also, keep an eye on new machines that are hot — compact track loaders and compact utility loaders. Contractors will want to rent and try these machines out before they expect to buy.
On top of that — just the basics, finding a quality product that’s supported by the manufacturer. Often rental companies are locked into distribution arrangements with brands already, but when choosing a new brand it’s always important to do your homework. Find out the core competency of each brand, test and weigh the qualities of their products, make sure they have a market presence with support and ensure that they are innovating and coming out with new pieces of equipment each and every year.