| Participants: |
RER: What are the latest technological developments in your line of generators?
Meyer: This year, the EPA's Phase 3 evaporative emissions regulations went into effect for small, spark-ignition engines smaller than 225cc. According to the EPA, small engines will emit about one-third fewer hydrocarbons under the new standards. While the regulations are focused on engines, the equipment those engines power is also affected. So our most recent advancements to our generators have been updates to the design and components to ensure compliance with the new EPA regulations.
Every gas-powered Subaru generator includes a Subaru engine, allowing us to better integrate our technologies between the two. We were aware of the regulations, and planned ahead by modifying our generators' designs. Our generators now include components like low-permeation fuel hoses, vented fuel caps and carbon canisters. All of our gas-powered generators — our Industrial, Commercial and Inverter lines — are compliant with the new regulations.
I do want to point out though, it's still very important rental center operators understand the regulations and how they're different. And why you can't, for example, take a three-year-old fuel cap and put it on a new, compliant generator.
Froland: End users look for improvements that will make mobile generators easy to use; technicians seek improvements in ease of serviceability. While these needs can be considered mutually exclusive, Magnum has been very successful in implementing both. Currently Magnum is working to tailor its user interface even further so that it's as easy as possible for both the user and the technician to use.
Cold weather operation is another area where Magnum has made great strides. Clutch fans that help to regulate engine temperature more efficiently, improved intake ducting, heated components, and more precise fuel metering have made Magnum mobile generators extremely reliable in frigid conditions.
Sahani: MMD Equipment has developed our Hybrid Dual Fuel generator that has the ability to operate on 50-percent diesel fuel and 50-percent natural gas, thereby providing the opportunity for significant fuel (financial) savings coupled with reduced emissions. The MMD Hybrid Dual Fuel generator offers the same high levels of performance and reliability as the PowerPro generator product line.
In response to specific customer needs, MMD Equipment designed the PowerPro line to be the quietest of any generator manufacturer, which allows our equipment to work in specialty applications such as movie and television production, and special events. Our variable-speed generators, otherwise known as inverter style, maximize fuel efficiency and have a verified voltage regulation of zero.
RER: What trends do you expect to see in generator manufacturing in the coming years?
Meyer: This is another area I expect where engines will play the greatest role in generator manufacturing trends. Because of the ever-rising prices of gas, I feel we're going to see a lot of focus placed on advancements to engines for greater fuel efficiency. On a jobsite, a generator often runs all day, every day. Certainly, fuel efficiency is incredibly important, and that all starts and ends with the engine. Again, with Subaru being an engine manufacturer, we understand how important the engine is to the equipment it's powering, so we're very focused on technology and advancements to engines. Our engines are already designed to be fuel efficient, but we're always looking for ways to improve on those designs. With that, alternative fuels are going to play an increasingly larger role in design trends too. We offer an LP/NG engine, so we've been exploring alternative fuel engines for a few years now. I think we'll be seeing others begin to offer more options there as well.
Really, what we're focusing on at this time is an expected growth in rental business. All accounts are forecasting growth in the rental market over the next few years, and we expect generators to be a piece of equipment included in that growing demand. Our efforts will be focused on ensuring we're ready to meet the demand.
Froland: Two key trends concern the generator's engine. The transition to Tier 4 emissions requirements will require additional emissions components that will add cost to the generator. These engines are also running hotter, and will require larger, more costly cooling systems. As a result, generator manufacturers will be looking elsewhere for ways to reduce costs, maintain reliability, and improve ROI for rental companies.
Sahani: MMD Equipment sees a need to provide niche market solutions and to respond quickly to customer demands. MMD Equipment is able to provide premium features as standard equipment on our PowerPro generators. With customer needs at the center of everything we do, MMD PowerPro generators are designed to run 24/7 at prime power, which allows our rental market customers to command double and triple shift rates. Maximizing customer profitability is a timeless value, which is why MMD generators are built to the highest standards and provide the highest ROI of any product in the rental fleet along with some of the lowest maintenance costs in the industry.
RER: More rental companies than ever are getting involved in the generator rental market with large rental companies getting more involved in offering standby power and more rental companies offering specialty generator rental services. What do you think is fueling this trend and do you think it will continue to grow (and why?)
Meyer: Yes, I definitely think it's a trend that's here to stay, and will keep growing.
It has been happening for the past couple years now, but there has really been a dramatic rise in the awareness of natural disasters, and how crucial it can be to have a backup generator on hand. It's year-round, whether a flood in the spring, ice storm in the winter, or high winds — even a tornado — in the summer. There really is no “off-season” for natural disasters. Also, there's usually not much warning before one strikes, so a rental center that's fully stocked won't have to scramble last minute to try and bring in enough product to meet demand. I think the amount of natural disasters and increase in news coverage they've received in recent years makes people realize how important power is.
Another major player driving generator growth in the rental market is the aging power grid, and our increased dependency on it only fuels the possibility of major failure. When the majority of the U.S.' grid was built several years back, we weren't using nearly as much electricity as we do now. Now there are computers running throughout the workday; cell phones charging every night; and households having two, three or even four TVs. It's all playing a role, and we've seen major power interruptions as a result. Last summer, about 6 million people in California, Arizona and Mexico were without power after a major grid failure. It goes to show how dependent we are on power, both in our professional and personal lives, and how detrimental it can be when there's an unexpected loss. Most consumers still aren't at the point where they're ready to purchase a backup generator, so rental is often the first and best option.
Froland: At the heart of this trend is our country's aging power grid, which has become inefficient and susceptible to weather, surging demand, and even terrorist attack. Power quality has been declining steadily since 1990. By contrast, demand for power has increased 25 percent, while the transmission infrastructure has increased by a mere 7 percent. We've become a digital society saddled with an analog power grid.
And fixing the grid is neither simple nor inexpensive. The best estimates put the price tag for a new grid at $2 trillion dollars, or about 14 percent of our current gross domestic product. There is no legitimate national plan to create a new grid, nor are there public funds available to fix the grid we have.
There are also the needs of companies in areas not served by the grid, such as cell towers and gas fields. For them, the demand for reliable power still exists and continues to grow. All of this is causing rental companies to offer more mobile generator solutions.
Sahani: Diversification and innovation are keys to overcoming the fragmented qualities that continually drive equipment manufacturers to commoditize equipment. Companies that have strong leadership are focusing their resources — human and capital — on niche markets. Niche markets require innovative, value-added solutions and, as such, generator rental companies are working with equipment manufacturers to address these very needs in markets like oil and gas, mining, dewatering and military applications. Today's ROI is driven as much by environmental regulations as rental rates, which simply haven't kept up with environmental regulations.
RER: How can rental companies increase their knowledge about how to provide power rental services?
Meyer: Speaking on behalf of Subaru, and small, portable generators, we have a lot of resources to help rental centers better understand options, and how to assist customers with a decision. We author articles that explain different types of portable generators, ones that lead rental center operators through the decision-making process and what a customer needs to know, even basics on preventative maintenance to ensure the generator fleet is always primed for deployment.
Froland: Routinely asking customers about their needs is the first order of business. That voice of the customer will provide them with a wealth of information. Rental companies can also contact us at Magnum, and we would be happy to discuss their market and how we can help equip them with a power rental income stream.
Sahani: Rental companies have tremendous knowledge of market trends and customers' needs, and MMD Equipment is ready to provide training and support of our PowerPro and Hybrid Dual Fuel generators as another means to meet those demands. MMD Equipment has several ways to increase the product knowledge of rental companies, whether by telephone, field demonstrations, instructional sessions (our place or yours), or printed or online manuals. Sales, service and parts support staff, are also partners in providing rental companies the information that develops confidence to successfully cultivate relationships and provide successful and profitable power rental services.
