Fleet managers look at renting equipment

More than 100 equipment manufacturers recently learned what they can expect from fleet managers in the upcoming year, and the news favors rentals rather than purchases.

Fleet and equipment managers from three prominent construction companies told the gathering at a Construction Industry Manufacturers Association Advanced Management Council seminar that companies are looking at equipment that may not be less expensive at the outset but is cost-effective over the long haul. “We look at prior experience and cost data,” notes Peter

Higgins, general equipment manager at Salt Lake City, Utah-based Gibbons & Reed. “We want to know what’s the most economical type of equipment to run. Purchase price is important but not decisive.” Higgins agrees with Bill Bedford, equipment manager for Peter Kiewit & Sons, Omaha, Neb., and Bill Wagy, equipment manager for Granite Construction, Watsonville, Calif., that lifecycle cost analyses are becoming more important to fleet and equipment managers.

The three note that today’s contractors are taking on an increasing number of smaller construction projects that are shorter in length and thus favor rentals. “Lack of money in the private arena has pushed us into the public arena,” says Wagy. “That means tighter margins and smaller return on assets. That favors rentals.”

Technology is also a factor in the purchase/lease decision, according to Bedford. “If the technology is new and not completely proven, we are more likely to lease,” he says. “[That is also true] if it’s a fast-changing technology, like the recent hydraulic drill market.”

Wagy, whose company operates primarily in the West, points out that a lack of “large dirt jobs” has pushed Granite into the leasing market. “The infrastructure has largely been completed in the West,” he says, “so we are working on smaller jobs. Because of that, we channeled our major investments into plant equipment. Now we would probably rent or sub if we were bidding for a large dirt job.”

Granite has nearly doubled its rental activity since the ’80s, Wagy says. “Our earth-moving fleet has seen a major decline as far as acquisition goes,” he says. “Paving activity has been picking up, but acquisition has still been flat. We’re getting more production out of existing pieces of equipment.”

Higgins notes that, when purchasing fleet equipment, Gibbons & Reed looks at specific criteria, as well as operator preference. “We look at dealer support, parts and service availability, whether specific training is necessary,” he says. “We ask, `Can the equipment be serviced in any environment? Are specific lubricants required? Is the machine compatible with the rest of the fleet?'”

Last year, Higgins says, most of the purchasing action was in construction crushing equipment — excavators, pickups, mixer trucks, rubber-tired loaders, maintenance trucks and road reclaimers.

This year, he sees a market for articulated trucks, loader backhoes, bulldozers, motor graders, scrapers and asphalt pavers and rollers and excavators.