RER recently spoke with Atlas Copco Construction Tools president Peter Bigwood about life-cycle management, ergonomic trends in equipment, consolidation among rental companies and manufacturers, and electronic commerce.
By Michael Roth, RER
RER: What trends do you expect to see in the rental industry in the coming years?
Bigwood: There will be increased focus on managing the life cycle of equipment in rental fleets. While this will not be applicable to all equipment classes, there will be more emphasis on extending the life of products through factory refurbishment and accompanying warranties, which will serve to lower the overall capital investment in the equipment and lead to improved cash flow and ROI. Manufacturers will in turn devote more resources to providing these services, thereby gaining control of the process and generating additional aftermarket income streams. This will lead to a virtuous circle whereby the larger and more sophisticated rental chains will factor these capabilities into their buying criteria and choose those vendors that can offer the complete package in the most efficient way.How about in equipment itself?
Ergonomic designs will finally become desirable features in rental equipment, giving rental companies that adopt them a competitive advantage in the marketplace. The United States will eventually fall into step with the European model, probably with some coaxing from legal quarters, and regulatory bodies will insist on far more stringent measures to reduce noise, vibration, and dust across a broad spectrum of tools and equipment.
Do you expect to see the consolidation trend continue?
Consolidation will continue its inexorable march, moving the rental industry, again, in the direction of the industry as it exists in some European countries.
There will be a commensurate consolidation among manufacturers, as their customer base becomes concentrated among fewer players. There is simply not enough room for thirty-plus brands of, for example, hydraulic breakers in the market. Recent developments have shown that this certainly applies to skid-steer loaders.
Do you expect to see e-commerce play a growing role in the industry?
Electronic commerce will increase to the point where the major rental companies will simply require their vendors to provide these capabilities as a prerequisite for doing business. We are practically there now.
The development and use of electronic “gadgetry” to improve efficiencies and security will accelerate as these technologies come down in price: GPS, hour meters, RFID and scanners — all will contribute to a more rigorous control of assets and lead to improved margins as it becomes easier to track and control inventory and the actual use of the equipment.
