Josh Nickell grew up as the son and grandson of equipment rental store owners. Initially, he was determined to chart his own course, perhaps as a restaurateur or even a traveling magician. Then, after an internship experiencing the complexity of growing a small business — abracadabra — his career ambitions changed.
Long story short, Nickell is vice president of the American Rental Association, an organization dedicated to advancing the equipment and event rental industry.
“I swore I was not going to be in equipment rental, and yet, here I am,” Nickell said. “Turns out, it’s a really cool place to be. It’s a unique and complex field.”
After years of running his own rental company, Nickell now keeps tabs on the needs of contractors nationwide to determine how the rental industry can best serve them. That makes him the perfect guide for identifying current trends in rental construction equipment.
Back in March 2022, the U.S. Federal Reserve’s benchmark interest rate ranged from zero to 0.25%. One year and nine hikes later, the rate ranged from 4.75-5% — its highest point since 2007.
The scales of renting versus buying generally tip in favor of renting during periods of high interest rates.
“One of the things that’s difficult for contractors is economic uncertainty,” Nickell said. “It looks like a lot of government work and large jobs are starting to move forward, but we’ve also had the collapse of the Silicon Valley Bank and more rate increases. I think it creates some discomfort in the market. When you’re uncomfortable, it can be a good time to rent versus buy because it eliminates some of the risk and leverage. It doesn’t mean you can’t do just as much work and take just as many jobs, but it gives you more flexibility and more safety in case your area of the country starts to suffer. When you rent, you have access to tens of millions of dollars of fleet when you need it, and you don’t have to pay anything when you don’t need it.”
A long-term rental trend is the turn to smaller, specialized equipment — such as mini excavators and mini skid steers — versus larger, more versatile equipment.
“When you’re a contractor and you own equipment, you want to own equipment that does everything, but that doesn’t mean it does everything really well,” Nickell said. “I think back 20 years ago, the full-size backhoe was one of the most important pieces of equipment on a jobsite, because it did everything with the big loader on the front and the excavator on the back. But when you’re renting equipment and you’re not owning equipment, you don’t need a piece of equipment that does everything. You can get a mini excavator and a skid steer loader, so now you can do both jobs at once, and excavating with a mini excavator is far faster than with a full-size backhoe.
“More than 50% of equipment on a construction jobsite is rented versus owned, so contractors aren’t having to buy do-it-all equipment. A contractor can say, ‘On this job, I need an electrified mini skid steer that can fit through a 30-inch door and work inside at a plant. On this job, I need a full-size skid steer. And on this one, I need tracks because it’s been raining recently.’ It gives them flexibility for unexpected things — unexpected jobs, unexpected weather or unexpected requests from the customer.”
Smaller machines can be easier for inexperienced operators to use, which is a major benefit because of another trend — a shortage of skilled construction workers.
At the recent CONEXPO-CON/AGG 2023 trade show, equipment manufacturers showed off their new electric heavy machinery. There’s little doubt construction equipment of the future will run on something other than fossil fuels, but Nickell said there are still barriers to widespread adoption of electric equipment.
“Vehicle manufacturers are doing a great job of building out technology and standards that can sustain electrification long term, but in construction, if you’re on a jobsite and you’ve got 20 pieces of heavy equipment that need to be supercharged, the infrastructure is just not there yet,” he said. “I think it’s going to be a slow roll on specific types of equipment or specific types of jobs where it’s a little more important.”
Nickell said one of the American Rental Association’s goals is to encourage manufacturers to standardize the charging systems for their electric equipment and ideally adopt the same charging systems electric vehicles use.
“We understand the need for OEMs to differentiate themselves based on their technology, but we don’t want it to be on how it charges,” he said. “It can be the speed in which it charges, the capacity of the battery, the life of the battery — but just like electric vehicles, we want to see them be able to plug in to the standard plugs anywhere. That will make it a lot easier for the general population, which has mixed fleet.”
By necessity, many contractors began renting equipment online during the height of the COVID-19 pandemic. That was a break from the traditional model of in-person or phone interaction with a salesperson. The trend has continued even after the masks came off.
“The construction industry is still an in-person business, and I don’t think that is going to change anytime soon, but 2020 and those following years of complex in-person business really started to change that mindset,” Nickell said. “What we’ve seen in surveys and from talking to contractors is that they still want to have that in-person relationship — because in rental, there’s got to be relationships and trust — but they also want efficiency.
“You had a lot of contractors who were laying in bed at night in 2020 or 2021 and thinking, ‘I need a cutoff saw to pick up first thing in the morning for a job, and I forgot to order it.’ They don’t want to have to text or call a salesperson or hope there’s one there in the morning. They want to hop online or on a mobile app and see if they can order it, check some specs on a machine. We’re seeing that continue to increase.”
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