Rental industry and Wall Street pundits are predicting an annual 20 percent growth rate for the equipment rental industry over the next several years. Growth won't come just from end-users discovering the benefits of renting equipment. It will require that rental equipment companies expand their level of service.
A growing field, corresponding to the outsourcing trend in today's business environment, is tool- and fleet-management services. It involves a more integrated approach to serving a customer and governs more than just what equipment will be rented on what job.
Fleet-management services can free customers from the burden of owning fleets. What fleet management does is look at every aspect of the way a company deals with equipment, including purchasing patterns, maintenance procedures and fleet disposition. Then the rental company offers an integrated approach toward developing a more efficient and profitable equipment policy. Fleet-management services include the procurement, evaluation, disposal and maintenance of equipment, parts management, operator training, application consulting, and cost analyses that can enable a customer to determine what makes better economic sense - the purchase or rental of equipment. The services can be applied to a start-to-finish management of a particular project, or be used as an ongoing solution at a permanent facility.
"The management of equipment, parts and tools is not a core skill for most of these businesses and locations," says Gary Bernardez, vice president of global business development for American Equipment Co., Greenville, S.C. "They're not dedicated to it in a market sense. It's a support function, and the attention and resources that management can devote to it are often quite limited."
Facilities in need of fleet management are often "over-fleeted" and lack a system for optimizing assets, says Bernardez. Fleets tend to not be standardized, representing multiple brands, often with old spare parts that don't correspond to the machines in the fleet.
"Typically, these companies have old fleet, often 15 to 20 years old, and haven't had the budget for modernization of their inventory," Bernardez says. "Their maintenance costs become an increasingly larger portion of their budget. And then there's the disposition issue - they don't have the resources to develop an efficient disposition system. So how do they standardize their fleet, how do they deploy it and keep it fit for the plants' use, and how do they dispose of it?"
Fleet management involves taking a customer's entire fleet philosophy - or what is often a lack of one - and organizing a plan whereby the company can upgrade and modernize its fleet, its parts department, and its service and maintenance capacity. The rental company studies the overall problem and then proposes a solution that may involve help in disposing of part of a fleet and conversion to rentals to reduce costs and overhead. It can even involve solutions as radical as buying the company's entire fleet and disposing it or rebuilding it for them.
"We'll take trades; we'll buy up fleets for a customer," says Tom Bennett, CEO of Houston-based Prime Equipment. "We'll go on-site and take him out of the ownership business, if that's what he wants, and bring the equipment to our rebuild center and then sell it. And then we'll supply his needs on a just-in-time basis."
These services demand highly skilled personnel to put together proposals. "We have a global business development group that is focused on more of an integrated approach than just promoting the rental of equipment," Bernardez says. "The decision-making process is much more complicated. You may be dealing with a chief financial officer who is promoting outsourcing within his company. You may be dealing with officials in charge of procurement, plant operations or corporate development, and you must address all the different levels of people in the decision-making process.
"At the same time, you have to plan for the risks and then sell it internally within your own company. You have to convince them you can provide more value than their current way of doing things does. You have to be able to get the contract and structure it so that it is beneficial for the customer and profitable for your own company."
It is far more complex than asking a client if he or she wants to rent a backhoe. Rental companies that work on this level of business need people who are familiar with engineering, procurement and industrial processes as well as the construction business; and who understand bidding, contracts, financing and commercial development.
While finding people with these skills may not be easy, the opportunity to build careers by helping to develop such sophisticated business models can attract a new generation of workers to the rental industry. And by freeing customers from the burden of equipment ownership, long-term rental relationships can be created and built upon.- MR
What fleet management does is look at every aspect of the way a company deals with equipment, including purchasing patterns, maintenance procedures and fleet disposition.
