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Rental Roundtable Highlights
Coming soon? National CE Service Companies
 The
construction equipment market could soon see the emergence of companies focused solely on servicing all types of equipment, akin to a
"Jiffy Lube" for construction equipment, according to rental industry leaders.
Increased Customer Demand
These national service providers may develop to meet increasing customer demand for fleet service and management, as well as to provide
preventive maintenance contracts, according to roundtable participants.
The range of rental companies' product offerings is also expanding, often to include niche products that the rental company may not
currently have the expertise and resources to service in-house.
Financial Considerations
Another factor: Often it doesn't make financial sense for rental companies to maintain large parts inventories to support expansive
service offerings, according to Bud Howard, Senior Vice President of Sales and Marketing for RSC/Prime.
"Parts inventories tend to escalate," he says. "They are very hard to control, and you can get a lot of money tied up in
them across the country. We really aren't good at that; that's not probably where we need to be."
These market conditions lay the groundwork for what Consultant Dan Kaplan calls a "national Jiffy Lube" company that would
provide service and preventive maintenance across the equipment industry.
End users, as well as rental companies, could get all their equipment serviced through this single company, rather than using numerous
dealers for service.
Service: Competitive Advantage
Rental company leaders note the issue of current resources, that when the rental companies have the resources to meet customer needs,
service can be a profitable operation.
Service can also be a means for rental companies to differentiate themselves in the market, says Martin Moore, President of GE Energy
Rentals. "Industrial customers, oil and gas customers, are looking to my business to be able to provide full service, whether they
have the capability to do it or not," he says. Rental companies are, "going to have to offer full service as a way to add
value to differentiate themselves from the next guy, to be able to talk about rates."
Entrepreneurial Opportunity
But where rental companies aren't able to or interested in providing contractors with a full range of service, new companies will emerge
to meet the need. "There are a number of independent entrepreneurs working to structure that type of organization today,"
says Kaplan. "There are investment banking firms willing to back these people with significant funds."
These companies will emerge, manufacturer supported or not, and will provide service at a cost less than traditional dealers, according
to Kaplan. "The real issue is that, if the dealers don't provide the service, and if they're not selling the equipment because the
equipment is being sold directly to national accounts and the rental companies, how do the dealers survive?"
Such a national equipment service chain could render many dealers superfluous, depending on how much effort construction equipment
manufacturers devote to sustaining them, according to participants in the CIMA Rental Roundtable.
Manufacturer Input
"How manufacturers go forward in terms of their strategy could accelerate the emergence of a national service provider or could
block it," says Charles Snyder, President of AMECO.
"I think what manufacturers have to consider is whether the upside potential of supporting the infrastructure of a national service
provider (or a host of national service providers) is greater than the downside risk of cannibalizing the distribution channel that
currently exists," Snyder says.
"Those two issues have to be very carefully weighed. To the extent that a majority of manufacturers decide to lean one way or the
other will affect whether a national service provider emerges."
United's Milne points out that a national service company will not be able to meet all service needs, leaving opportunities for smaller,
niche service providers. "If you're an expert at rebuilding engines on large pieces of equipment, perhaps that's a niche that will
always remain separate, and the [national service provider] won't pick it up."
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