The New Year is Upon Us in Construction Equipment Rental

With the changing of the calendar we have officially entered the doldrums for our contsruction equipment rental business in our area. For the next 8 weeks getting a chance to even go bid a job seems like a Christmas all over again. That may be a slight exaggeration, but only slightly. I will put together a couple mailer campaigns, but the only person that will be busy for the next few weeks is the tax accountant.

I do keep a minimal crew on for these months. It is for the odd jobs we have lined up for garage and attic remodels, and a couple basement rec-rooms of course, but also for any complaints and repairs from last year’s work. If an ice dam causes a roof issue or somebody declares a window install to be faulty out of the blue.

I have found still answering the phone and being able to send somebody out in these months while it cost money and nearly always really is not our fault at all will pay off in the long run with repeat business. Our last call wanted us to replace all of the security latches on a window replacement job we had done last fall because the latches that came on the windows were not the kind she liked. I did charge materials on that one since she had in fact chosen the windows originally but turns out the trip paid off handsomely.

While there doing the exchange on window hardware, the homeowner was complaining about cleaning snow from their car. Four hours later, the latches were done and I had a deposit for an early spring new garage addition. That is why we try to make sure to follow up with our clients this time of year, because it is now that the heating bills are reminding them they need better windows and insulation (or a new garage).

I am looking forward to this year and hopefully our business will continue to grow. Also wishing success in the New Year to all the other contractors and builders (that work outside our immediate area at least) a successful and prosperous New Year! 

- See more at: http://www.contractortalk.com/blogs/the-new-year-is-upon-us#sthash.uTNhEBzi.dpuf

Construction Equipment Forecast Says 48% Expect Volume Growth in 2015

Construction Equipment magazine reports that nearly half of the nation's construction professionals have bumped up expectations for this year, with 48 percent expecting growth in contract volume compared to 2014. Construction Equipment is publishing its Annual Report & Forecast in the January 2015 issue.

This exclusive report has been considered an industry bellwether for more than 25 years and is the only subscriber-based survey that focuses on the entire footprint of the construction industry. The Annual Report & Forecast not only looks at the industry as a whole but also at individual markets to create a detailed picture of the coming year. Business expectations, volume revenue predictions, the current state of professionals' firms and more are analyzed.

Equipment Rental 2015 Trends

December Rental Sentiment Index survey results cap off a strong year for the North American equipment rental industry, with participants "looking forward to a substantial activity increase in early 2015" with a belief "that 2015 will be an improvement over 2014."

The Rental Sentiment Index, a partnership between Piper Jaffray and RER, remains strong despite concerns over oil prices. The RSI registered 6.2 in December, consistent with last month's 6.3 score and recent expansionary readings between 6 and 7.

While much of the country has celebrated lower prices at the pump, declining oil prices have created concerns over the potential impact to energy-related expenditures and local economies tied to oil. This month’s survey found, however, that these concerns are not reflected in overall equipment rental expectations for the next 12 months in North America.

Survey participants acknowledge declining oil prices can have an impact on upstream oil construction at some point in the future, but overall rental demand remains "strong" with expectations of a "substantial activity increase early in 2015," survey participants said. Some even note rental activity in December is unusually strong for what is normally a slow month. In fact, lower oil prices are usually an intriguing potential source of economic stimulus for overall construction and associated equipment rental activity, according to survey participants.

As the year comes to an end, overall sentiment in the equipment rental

industry continues to show positive momentum, with 60 percent of survey participants indicating their industry growth outlook for the next 12 months is "slightly improved" or "significantly improved" compared to November. Survey participants also indicate that they are expecting higher rental volume growth of 5.3 percent over the next 12 months compared to 4.6 percent growth expectations last month. Time utilization projections also ticked up from 49.2 percent to 53.0 percent, indicating improved fleet efficiencies and expected equipment demand.

In a period of typical seasonal slowdown, the survey indicates "rental rates are still holding strong" and there is "continued development" in real estate.

Secular trends continue to play out with "small contractors staying busy, but not yet buying new equipment," while cyclical trends look to provide persistent and healthy growth, with participants "preparing for double-digit growth for the next 3-4 years."

Within the equipment categories, there is "high demand in telehandlers, excavation equipment, traffic safety, as well as air compressors and generators." These insights reinforce analysts’ projections that the industry is in the early innings of a multi-year expansion cycle for equipment rentals. Some survey participants note concerns that Tier 4 emission engines will add significant cost to capex in a rate environment some still see as weak.

The RSI is based on a 10-point scale, where readings above 5.0 indicate expansion, and is derived from expectations for North American commercial and industrial construction equipment rental revenues, volumes, rates, time utilization and capex. A 6.2 reading indicates moderate rental expansion, which industry experts consider to be the optimal growth environment for equipment rental companies. Moderate industry growth encourages the ongoing secular-penetration of rentals and mitigates against over-investment in the rental fleet.

Piper Jaffray is an investment bank and asset management firm, serving the needs of corporations, private equity groups, public entities, non-profit entities and institutional investors since 1895. It is headquartered in Minneapolis.

RER has covered the equipment rental industry since 1957, providing its readers with a mix of news, features and product information.