The equipment rental segment continued to grow significantly in 2022 as many of the same growth drivers and challenges that we faced coming into the year have continued or increased heading into 2023. As we have progressed, the demand for construction equipment has far exceeded supply.
As we look forward, we are closely monitoring the impact an inflationary and expected recessionary economy will have on the equipment rental industry. Moving into November 2022, we had not seen a dip in customer demand, and we are spending a lot of time in the fourth quarter talking with customers and learning if, how or when their businesses are changing so we can continue to adapt.
While we aren’t recession-proof, there are plenty of reasons to remain bullish on the outlook for equipment rental in 2023. Our businesses are well positioned to provide solutions to contractors and industrial clients in times of increasing interest rates, higher equipment and labor costs, longer equipment lead times and parts shortages.
Consider the impact all these market forces will have on a company’s decision to buy or rent equipment. All these trends make equipment rental an even more economical, convenient and attractive choice.
Equipment rental businesses like ours are well positioned to help our customers access the high-quality equipment they need, when they need it, delivered to their job site so their crews can maximize their productivity. These benefits have only been heightened over the past three years, and I expect this trend will continue well into 2023 — if not for the whole year.
The demand surplus — due to supply chain challenges — for construction equipment in 2022 has allowed for very strong pricing, and we see that trend continuing in the new year. With funding from the federal infrastructure bill starting to have an impact on construction spending in 2023, it is reasonable to expect that construction industry growth will outpace the macroeconomy for years to come. There also are significant investments in manufacturing, distribution and technology that will drive demand for construction equipment.
As equipment rental businesses continue to grow, the needs for workforce development and talent acquisition, training and technology will continue to be key long-term priorities for the future of equipment rental. We need to continue to find ways to manage that growth, and each of these needs will help us rise to the challenge.
In workforce development, we have learned from the American Rental Association (ARA) team about career fairs in our local market to recruit and connect with qualified candidates. In July, we joined the ARA team at a Universal Technical Institute campus career fair. While representing ARA at that event as a member, it really opened my eyes to the opportunity we have as an industry and a local business to get more proactive and share the great career opportunities in equipment rental. I’m excited to continue to work with ARA on workforce development in our local and regional markets.
From a training perspective, I believe we have taken great strides as an industry and association with new certification programs, including mobile elevating work platform (MEWP) training and ARA Certified, that are off to a great start, creating a lot of value for equipment rental businesses. Our company will host two or three MEWP Train the Trainer events in 2022-23, and my safety and training specialists rave about the new MEWP Operator Training that all our new hires complete as part of their onboarding program. The content is great and I’m excited to expand these training courses within the industry and my business.
As it relates to technology, ARA is hosting Future of Equipment Rental on Feb. 11 in Orlando. This one-day education event specifically for those in equipment rental will help industry leaders learn from top experts and peers on how to utilize innovative ideas and technology to advance our businesses in the future. The equipment rental industry will be disrupted and advanced through technology necessary to improve operations and better serve customers.
As global uncertainty swirls around us, there is a great opportunity for the equipment rental industry to create value with contractors and industrial businesses. We aren’t immune to a recession, but we are better positioned than most to provide solutions, meet our customers’ needs and remain flexible enough to adapt if necessary.
John Jeanguenat is president of RentalMax, Carol Stream, Ill., and the American Rental Association (ARA) Equipment Rental Shared Interest Group co-chair.
Looking forward to a mixed bag of challenges and opportunities in equipment rental
By Robert H. Pedersen
Many equipment rental categories achieved record-breaking revenue in 2022 and as we move into 2023, the question is whether the results of the midterm elections will impact the equipment rental industry. Will Congress, both the House of Representatives and the Senate, continue to be polarized, divided on issues, or will they come together for the good of the country?
We saw a number of mergers and acquisitions happen in 2022, including the most recent move by United Rentals, Stamford, Conn., acquiring Ahern Rentals, Las Vegas, for $2 billion. This acquisition trend will continue, but perhaps at a slower pace in 2023 due to increased interest rates and inflationary pressures around the world.
The construction market will continue its growth as infrastructure projects on the books continue to receive funding on the federal, state and local levels. Housing construction, however, will see a bit of a slowdown as the cost of materials, labor and interest rates rise.
That means the general tool segment of the equipment rental market will be the first to feel the impact of the slowdown as construction companies begin cost-cutting measures with layoffs as cash reserves begin to dwindle. As interest rates rise, consumers also are less likely to refinance and use credit card debt to pay for projects around the house. The good news, however, is that construction companies and homeowners will be looking at renting tools and equipment instead of investing in assets due to the added cost.
The trend toward electrification of all types of equipment will continue to grow and, as the supply increases, the prices will drop making the next few years ripe for the equipment rental industry to take advantage of the situation.
In addition, consumers and contractors may not be willing to purchase the high-priced equipment though they may be mandated to use it. Many construction sites are now mandated to increase their “green” footprint by reducing carbon emissions and the use of electric-powered equipment can help them comply, creating another rental opportunity for those rental companies that have electric-powered fleet available.
Robert H. Pedersen is president, A Tool Shed, Santa Cruz, Calif., and the ARA Equipment Rental Shared Interest Group co-chair.