Ten industry experts weigh in on how the past few years have changed generator rentals and the trends they see powering up the future.

By Erin Whitehead, RER

Whether the cause is a thunderstorm that takes out a neighborhood’s power or a hurricane that nearly wipes out a city, when the power goes out, one of the primary goals is to get the electricity flowing again. Backup generators can not only prevent the inconvenience of power outages to homeowners, but also provide power in emergency situations to hospitals, gas stations and other critical applications. Top generator experts weigh in on the rental market, trends of the future and the importance of after-market support.
The panel of experts includes John Raber, generators regional sales manager, Baldor; David Brown, vice president, MQ Power; Jeff Moureau, general manager, rental division, Miller Electric Mfg.; Kristen Delaney, manager of marketing and product planning, American Honda Motor Co.; Al Rodriguez, emerging markets business development manager, Makita USA; Pam Meyer, equipment sales manager, Robin America; Marc Leupi, utility product manager, Wacker; Todd Howe, generator product marketing manager, Ingersoll Rand; Rodney Givler, product specialist, Godwin Pumps; and Mike Joseph, national sales manager, and Dave McAllister, manufacturing engineer, Magnum Products.

RER: Describe the current conditions in the generator rental market.

Baldor/Raber: We’ve seen steady growth in the market this year although the construction market seems to be slowing. The energy market has been particularly busy, as has the telecommunication market.

MQ Power/Brown: From our perspective, the generator rental market is strong. Demand is high, and our customers are forecasting steady growth. Many tell us they are planning to open new branch operations across the country.

Miller Electric/Moureau: I’ve seen two trends occurring in the rental market over the past year. The first is an ongoing transition toward powering multiple inverter-based systems with a single, high-powered generator. While there are definitely cost savings realized by this approach (as much as $2,500 or more per month) most of our customers say they’re doing it because they need to squeeze a lot of arcs into a small, oftentimes confined area — something they’re not able to do with multiple generators.

The other trend I’ve noticed is a significant surge in rentals of diesel-powered welding generators, primarily for infrastructure repair and maintenance projects. As the recent pipeline rupture in Alaska has shown, the uncertain economic climate over the past several years has caused infrastructure maintenance to languish in many sectors. Having regained some economic stability, many corporations and governments are now taking on those infrastructure maintenance projects that have been sitting on the backburner.

Honda/Delaney: The current rental market for generators appears to be strong and steady.

Makita/Rodriguez: The generator market is still growing due to the severe weather we’ve experienced in the last few years.

Subaru Robin/ Meyer: The generator market was strong for the first six months, but we have seen some softening in the third quarter. I expect the fourth quarter to be typical.

Wacker/Leupi: The current market is strong and is still experiencing occasional product supply shortages. Equipment prices have been increasing as OEMs are finally passing on some of the raw material, labor and other related cost increases as well as the increased costs associated with the new EPA emissions engines.

Ingersoll Rand/Howe: The generator market has shown strong growth over the past three years due to significant recapitalization of rental fleets fueled by a healthy economic climate as housing starts, non-residential construction spending, and infrastructure improvements have experienced growth in this time period. In addition, increased focus on disaster preparedness in the wake of 2005’s hurricane season has driven growth in the generator rental market as municipalities, government agencies, and businesses secure backup power as a fundamental component of their disaster readiness plans.

Godwin Pumps/Givler: The current trend seems to be geared toward construction and maintenance (upgrading).

Magnum/Joseph/McAllister: Present market conditions are very positive with respect to generator sales. In addition to the normal demand from rental customers, there has been an emergence of demand for security, disaster preparedness and oil-field support.

Security concerns from the federal down to the local municipal level have increased the overall demand for generators. Power demands can range from powering a remote guard shack to having emergency power for lift stations.

Disaster preparedness and oil-field support have been the two largest contributors to the increased demand for mobile power generation. The hurricane activity over the past few years has exposed the tremendous deficiencies with utility infrastructures in the Southeast, and people have taken matters into their own hands. Generator sales to businesses, government and residences in the Southeast have exploded since 2004.

With oil prices as high as they have been for the past few years, the oil fields are drilling as fast as possible. This increased activity demands mobile power generation, and the increase is worldwide.

How does the market look for the future?

Baldor/Raber: This is a growing market, we estimate about 5 percent to 7 percent annually. As we become more dependent on electrical energy the opportunities for generator rentals continue to grow. We’ve seen a real increase in our customers’ long-term rents, in terms of months and even years. This is a growing market that we’re excited to be a part of.

MQ Power/Brown: We are forecasting continued strong demand for rental power through 2007.

Miller Electric/Moureau: The research we’ve conducted over the past year indicates that we can expect sustained growth in the generator rental market, due in large part to the many infrastructure projects being initiated now that the economy has regained some momentum. We expect that trend to continue for at least the next several years.

Honda/Delaney: All indications are that the outlook for the future appears to be promising for generator rentals.

Makita/Rodriguez: The future of the market depends on a number of factors, including the construction industry, natural disasters, new technology in battery power, and alternative energy sources.

Subaru Robin/Meyer: Generators will continue to be a dominant product. I think we will see many generator manufacturers trying to reduce their inventories in the fourth quarter because of the lack of storms this summer.

Wacker/Leupi: The market appears fairly strong but is dependent on the strength of the overall economy, especially the construction sector. Prices will likely increase in the future as OEMs try to pass on the hefty cost increases of the upcoming Tier 3 engines.

Ingersoll Rand/Howe: I see the market softening just slightly in 2007 as large rental companies pull back on capital spending and begin to age the equipment they have acquired over the past 24 to 36 months. However, both the economy and the rental industry are strong and still growing, just not at the rate experienced in 2005 and 2006, so I don’t foresee a dramatic slowdown on the near- or medium-term horizon.

Godwin Pumps/Givler: If it is anything like the past, it should remain positive.

Magnum/Joseph/McAllister: With the continued need to support security, disaster preparedness, oil field and rental fleet needs, the immediate future for mobile power generation appears stable.

Has anything changed in the past few years regarding generators in terms of emergency preparedness or disaster preparation?

Baldor/Raber: Inventory levels are higher than they historically have been. Manufacturers also send teams into areas hit by disaster to help with power questions and problems.

MQ Power/Brown: The government, as well as business and property owners in areas prone to hurricanes, has become increasingly aware of the impact that loss of power has on safety, security, and loss of data or revenue. In some regions, legislative bodies have passed laws requiring gas stations to have emergency standby generators. MQ Power has also seen an increase in demand from several grocery store chains.

Miller Electric/Moureau: We have always designed our welding generators with disaster relief work in mind. However, hurricane Katrina and other, more minor natural disasters have increased general awareness of welding generators as an alternative to a stand-alone generator or a stand-alone welder.

It can be very difficult to access a disaster site, so it’s important to be able to carry as much equipment on your truck as possible. Welder generators have grown in popularity because they free up space for other equipment to be transported to a disaster relief site, and because they are very cost competitive with generator-only units.