State of the Rental Industry
As both President of Takeuchi US and past board member of the American Rental Association (ARA), I attended The Rental Show back in February, and like many others, I was met with wave after wave of cautious optimism.
While the economy is crawling towards recovery, many contractors in the construction industry are unable or unwilling to invest working capital in equipment, so renting is simply the right choice for a lot of folks right now. The people I met with and the conversations I had at this year’s Rental Show reflected this sentiment, and my attitude on the rental market in 2012 remains bullish.
This attitude is not unfounded — the rental industry as a whole outperformed nearly every industry it served in 2011, and the momentum is expected to carry well into 2012 and beyond. According to the newest data from ARA, the equipment rental industry’s forecasted revenue growth in 2012 is expected to increase by more than 6%. That’s more than three times the growth forecasted for GDP for the United States in 2012!
There are a lot of benefits to renting for contractors. Most rental houses have an entire fleet of modern, reliable equipment that is readily available, and renting eliminates maintenance and storage costs for contractors. Also, with no capital investment and no depreciation concerns, companies are free from the costs associated with equipment ownership, so they are able to apply the money saved with rentals towards other business expenses. On top of that, I would say that the most important benefit to renting would be that it can actually increase a company’s borrowing power. Rented equipment is not listed as a liability on a balance sheet, so renting can improve one’s ratio of assets to liabilities.
In this economic climate, with more and more contractors realizing the benefits of renting, equipment rental houses have a unique opportunity to grow their businesses. Now is the time, as an industry, to push for growth and help our customer bases succeed. The equipment rental industry is playing an extremely important role in the recovery of our economy, and I look forward to seeing continued growth through 2012 and onward.