August 2015, Vol. 70, No.8



Matt Cadnum, Atlas Copco VP of salesAtlas Copco names new VP of sales for its rental channel
Atlas Copco appointed Matt Cadnum as vice president of sales for its rental channel where he will grow its breadth of products and services for rental centers across the U.S. Cadnum. Formerly Atlas Copco Construction Equipment’s aftermarket vice president, he is also responsible for leading the current rental service team and ensuring that the team provides quality support for rental centers.

“Rental centers have always been an important part of our business because they offer end-users a cost-effective alternative to owning equipment,” said Erik Sparby, Atlas Copco Construction Equipment president and general manager. “Matt’s previous success with developing service operations, customer support teams and logistics will translate well in his new role, supporting an industry that thrives on products that have high utilization rates. And his excellent relationship with many rental centers makes him an excellent fit for his new role.”

Cadnum, from Cleveland, brings more than 20 years of experience in the construction equipment industry — more than half of which is with Atlas Copco. This experience gives him insight on finding innovative equipment- and service-based solutions, as well as focusing on key issues within the rental industry, such as cost of ownership and fleet utilization.
Prior to the new appointment, Cadnum was Atlas Copco vice president, aftermarket for more than six years. He contributed to building a strong service network with seven service centers across the U.S. and developed a robust logistics system to ensure spare parts and consumables were readily available for customers.

Steady growth expected for equipment rental revenue
The equipment rental industry stands poised to set an industry record for revenues in 2015 according to the latest updated industry forecast from the American Rental Association (ARA), despite reduced demand for equipment in oil patch drilling sites.

Rental companies historically are able to adapt to changing market conditions, shifting inventory and moving equipment to where demand is greater. Today is no exception as lower oil prices are leading to greater consumer spending and fueling increased activity in construction, as well as party and event market segments, offsetting the decline in opening new sites for drilling.

The new quarterly ARA forecast, from its ARA Rental Market Monitor subscription service, has been modified slightly from February and the numbers remain very positive with total revenue growth of 7.9 percent expected in 2015 to reach a record $38.5 billion in the U.S., including all three industry segments – construction/industrial, general tool, and party and event.

ARA’s current five-year forecast calls for steady growth of 7.2 percent in 2016, 8 percent in 2017, 7.9 percent in 2018 and 6.8 percent in 2019 to reach $51.3 billion.
“Those in the rental industry have learned how to thrive in different economies and customers continue to learn that renting equipment is a smart move as market conditions today can change rapidly,” says Christine Wehrman, ARA’s executive vice president and CEO.

“Even as several forces, including harsh weather, held back U.S. economic growth in gross domestic product (GDP) to 0.2 percent in the first quarter, total rental revenue was up 4.9 percent in the same time period and is expected to exceed 9 percent in the second half of the year,” Wehrman says.

Construction/industrial rental revenue is now forecast to increase 8.2 percent in 2015 to $25.9 billion, with general tool projected to grow 7.9 percent to $9.8 billion this year and party event to show a 4.7 percent increase to $2.7 billion.
“The equipment rental industry will achieve its new peak level as the result of a prolonged gradual improvement in the economy as a whole, and construction, industrial and consumer markets in particular,” says Scott Hazelton, managing director, IHS Economics and Country Risk, the respected global forecasting firm that compiles data for the ARA Rental Market Monitor.

“There also was some lift from energy markets, which are slowing, but the majority of the growth has come from solid fundamentals. Given a current level of activity based on solid ground, an economy that continues to improve will lead to rental revenues that are achievable and lasting,” Hazelton says.

“The significant price reductions in oil are over and they will likely drift upwards over the year. Major cuts in new well drilling already have occurred and production will begin to taper off soon. We made the adjustments to the rental outlook for energy prices in February and we have not made any further adjustments as events are playing out approximately as anticipated,” Hazelton says.

“While low oil prices have reduced growth prospects in the oil and gas area, that situation affects primarily production at this point. We still are seeing strong growth in downstream facilities, such as refineries and petrochemical processing plants. However, low oil prices have increased demand for other goods. For example, the U.S. is expected to demand 200,000 more light motor vehicles than previously expected, which creates rental opportunity within auto plants,” Hazelton says.

“Lower energy costs also translate into improved consumer spending power and corporate profits, so the party and event sector also gets a boost,” he says.

Caterpillar invests in peer-to peer equipment rental start-up company
To help customers maximize the use and productivity of their owned equipment, Caterpillar Inc. is entering an agreement with Yard Club, a startup company that has developed an online peer-to-peer equipment rental platform. Caterpillar has provided strategic financing to Yard Club, based in San Francisco, CA, and will launch the online ordering platform in specific metropolitan markets in conjunction with U.S. and Canadian Caterpillar dealers. The peer-to-peer rental platform will include both Cat products and non-Cat branded products.

“Peer-to-peer technology has changed other industries like transportation and lodging, and Yard Club has developed an innovative solution initially for the construction equipment industry,” said Phil Kelliher, Caterpillar’s vice president with responsibility for Americas Distribution Services Division. “Using this platform, a contractor can rent an excavator that’s in between jobs to another contractor who needs that machine. The Cat dealer will use this tool as another avenue to strengthen customer relationships by increasing the utilization rates of heavy equipment and lowering the total cost of equipment ownership.”

Since its founding in 2013, Yard Club has focused on construction contractors in the San Francisco area. With Caterpillar’s investment, Yard Club will further develop the platform and expand club member coverage.

“The sharing economy is changing the way entire industries operate,” said Colin Evran, founder and CEO of Yard Club. “Our platform is at the forefront of that innovation in the equipment rental industry.”

Yard Club is the latest example of the emerging technologies that Caterpillar is actively embracing as part of its efforts to
continue capitalizing on innovation to support customers.

Morain to become rental house for McElroy
McElroy has announced the addition of a new rental partner, Morain Sales & Service, which will offer a full line of polypropylene pipe fusion products. The Mineral Ridge, OH-based company will rent fusion tools and accessories primarily to McElroy’s polypropylene distributors in the United States.

“Our new innovations in polypropylene pipe fusion equipment play a key role in the highest-quality indoor piping systems being built today,” said McElroy President Chip McElroy. “We applaud Morain for taking a leading role in ensuring that the best tools possible are readily available through our distributors.”

Morain has had a long relationship with McElroy having specialized for more than 26 years in McElroy products for polyethylene pipe used widely in water and natural gas distribution systems. Morain is a Certified McElroy Rental and Authorized Service Center with certified McElroy mechanics for which staff provides the best customer service possible.
“This is a new and exciting opportunity for Morain to enter the polypropylene industry and to help support and promote it throughout McElroy’s distributor network,” said Morain President Jeff Hattendorf. “Customers know they can count on McElroy fusion equipment. We are extremely optimistic that our full-house offering of polypropylene-specific machines is the solution needed for distributors to be successful in this progressive market.”

Morain will provide full customer support and training for polypropylene distributors in the northeastern U.S. states while McElroy will aid in the support functions elsewhere. Morain is eager to support all polypropylene distributors regardless of the pipe brand.

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