For every equipment rental, there are at least three major players involved. There is the manufacturer, the rental company and the end user. To be successful, each of these three must work in partnership and harmony, and each must get its needs met. Although a partnership approach is in everybody's best interests, every business must survive, which can be challenging even in good times, but especially so in times like these.
The cost of steel, copper, rubber for tires and numerous other components have, in the past year or two, faced double-digit increases and in the case of fuel, the increases have ventured into triple-digit territory. Manufacturers' margins have been seriously squeezed in recent years. At press time for this issue, CNH Global announced a 5-percent fuel surcharge. Other manufacturers have recently done the same and many more will raise prices to help defray their rising cost structure.
Rental companies understand these issues, but many still pressure manufacturers to avoid raising prices, or to give them better terms. Many rental companies would like to raise their rental rates, but with demand slowing down and too many machines in play for too few jobs, raising rates could risk losing customers. It's an endless circle and an uneasy partnership that must find a way to transcend the immediate price pressure and help one another to cut costs.
In the following pages, RER takes a look at the current cost environment and the strain it is putting on supply chain relationships.
About the Author
Michael Roth
Editor
Michael Roth has covered the equipment rental industry full time for RER since 1989 and has served as the magazine’s editor in chief since 1994. He has nearly 30 years experience as a professional journalist. Roth has visited hundreds of rental centers and industry manufacturers, written hundreds of feature stories for RER and thousands of news stories for the magazine and its electronic newsletter RER Reports. Roth has interviewed leading executives for most of the industry’s largest rental companies and manufacturers as well as hundreds of smaller independent companies. He has visited with and reported on rental companies and manufacturers in Europe, Central America and Asia as well as Mexico, Canada and the United States. Roth was co-founder of RER Reports, the industry’s first weekly newsletter, which began as a fax newsletter in 1996, and later became an online newsletter. Roth has spoken at conventions sponsored by the American Rental Association, Associated Equipment Distributors, California Rental Association and other industry events and has spoken before industry groups in several countries. He lives and works in Los Angeles when he’s not traveling to cover industry events.