The compact equipment market is one of the construction equipment industry’s hottest. Eleven compact equipment experts — representing nine manufacturers and one industry publication — recently gave RER their thoughts on market growth, technology trends and high fuel prices. This is the third in our three-part series of market insights published in RER Reports. 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
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.