The road to profits

If you are stuck in traffic behind road construction and you see one of the drivers smiling, chances are he is a rental operator. Equipment rentals to road construction crews are a huge source of revenue for the Canadian rental industry, and some stores even focus on them exclusively.

No operator required. The Brokk 160 is the lighter-weight replacement of the Brokk 180 (pictured). The unit is powered by a 25-horsepower electric motor and features a reach of 15.8 feet with the included SB202 breaker. The Brokk 160 is compact and low profile enough to work in the tightest, most restricted areas.

And there is growth on the horizon. A 2011 report by construction industry consultants PWC predicts Canada’s construction sector will rise from seventh largest in the world to fifth by 2020. “Over the next decade, we expect infrastructure to be the fastest growing end-market in Canada and housing to be the slowest,” says the report. The Construction Sector Council predicts Canada will need 319,000 new construction workers by 2020. Unlike housing, road-building is resistant to recession because it is a favourite target for government stimulus spending. If you are not already renting equipment to road-building crews, here are some tips on how you can get in on the action.

A concrete job in the road-building market involves many layers of work from roadside safety and traffic management to breaking up old roads and recycling the concrete and from installing new rebar to repairing bridges and medians. Each job either requires specialized equipment or could be done much more efficiently with it. And for contractors who bid on work outside their normal areas of expertise, renting specialized equipment is one way to make the numbers pencil out. Understanding how to build the right fleet to serve these contractors is key to success in this market.

Remote-controlled demolition machines made by Brokk are an example of unconventional rental equipment that can be just right for certain demolition or construction projects. At sizes as small as two feet wide by 37 inches high, the compact, electric-powered machines are small enough to move freely in confined spaces, yet powerful enough (5.5 kW up to 45 kW in larger models) to effectively break through concrete and other reinforced materials. They’re used in a wide range of projects and industries, from construction to demolition and other specialty applications.

Take, for example, a road construction or bridge repair project where a contractor might run into several issues that align perfectly with a Brokk’s capabilities. The company might be working in the confined space between the embankment and the underside of a bridge. It could be performing concrete crushing, breaking or digging from dangerous positions such as beneath the bridge or near the edges. Or maybe work needs to be done next to active traffic in a narrow, six-foot lane where manoeuvrability is an issue. In these situations, a mini excavator can put operators in danger because it is too big or not powerful enough. But with its impressive power-to-weight ratio, a Brokk matches up well to the task.

“Contractors may not encounter these circumstances every day, but when they do, it’s a huge benefit to be able to rent a Brokk for a week or two and get the job done in the most efficient, safest way possible,” says Peter Bigwood, vice-president of sales and marketing at Brokk. “Some jobs shouldn’t be done any other way.”

Other specialized products fit the bill in the concrete, demolition and recycling applications. According to Sean Donaghy, national sales manager at Irock Crushers, “Nearly 100 per cent of the business that Irock’s dealers are currently doing with the screening and crushing business starts with rental.”

Irock’s RDS-20 unit, a closed-circuit crushing and screening plant, is one of the most common products rented, usually by companies that need to complete asphalt or concrete recycling. Other contractors rent the company’s Wheeled Jaw Crusher-2844 and pair it with a screener sized appropriately to the operation.

Donaghy says rentals of Irock equipment are on the rise and the machines are routinely in use. In fact, one of Irock’s current dealers has 14 machines consistently out on rental jobs. And while the machines occasionally go out to the smaller contractor or road construction crew, they often land in the hands of a quarry owner or recycling operator who wants to try the machines before committing to a purchase.

The same can be said for E-Z Drill, a company whose horizontal concrete drills are designed to meet the strict highway specifications for standard spacing of dowel bars. Drilling these holes by hand with a rotary drill is a long process, not to mention physically demanding and risky.

“For a contractor that lands a job that requires many holes to drill, E-Z Drills are a faster and safer alternative, and they never get tired,” says Randy Stevens, vice-president of sales at E-Z Drill. “Our drills do the work just as fast and accurately at 8 p.m. as they do at 8 a.m.”

Stevens says dealers and rental centres usually carry E-Z Drill’s single model drills because they are affordable, lightweight and portable (they fit in the back of a pickup truck). The single drills are fully pneumatic and can drill holes from 5/8 inch to 2½ inches in diameter and to depths up to 18 inches.

Purchasing an optimized, specialty product for an atypical project rarely makes fiscal sense, hence the booming rental market for specialized concrete equipment. The short-term benefit for dealers and rental centres is obvious. But the representatives of these three companies agree there’s a long-term play, as well: allowing customers to rent often serves as a solid segue to sales.

E-Z Drill’s program is a great example. The company’s multi-gang drills are generally not readily available through a dealer or specialty rental house, so E-Z Drill periodically leases them to a dealer that, in turn, rents them to customers. End users frequently make use of the rent-to-own program, which gives contractors an incentive to try one of E-Z Drill’s pneumatic drills. Later, they can apply previous rental costs to the purchase of the drill.

“This is a win-win-win situation because of the big demand for used equipment,” Stevens says. “Most of those machines don’t come back to the dealer anyway. Instead, they are purchased at a reduced price since they are used.”

Irock dealers run a similar show with its Rental Purchase Option program, in which 70 per cent of rentals convert to purchases. After the equipment has worked for two or three years, it’s time to sell it, Donaghy says, noting that it usually sells before the end of its third working year.

“Giving customers the flexibility to rent the equipment gives them a feel for the machine and an idea of the impact it has on their production,” Donaghy says. This way, customers who truly need a short-term rental can get their job done, and those interested in investing in a unit can demo the equipment and possibly purchase it at a reduced price.

Bigwood says renting is the perfect solution for contractors on occasional tricky projects. “A lot of rentals go to contractors who already own a Brokk,” says Bigwood. “Sometimes they either need a different size for a job or temporarily need a backup on a bigger project.”

Brokk recently launched a rental program with Creighton Rock Drill, which serves the greater Toronto area. Scott Creighton, CRD marketing co-ordinator, says the B100 in the specialty rental centre’s fleet has been out on rental jobs since the purchase several months ago. “We’ve already seen a dramatic increase of interest and demand in the Brokk,” Creighton says. “We’re looking to keep up with the demand and ideally add another unit in the upcoming months.”

The most common reservations for dealers and rental centres are maintenance and training for their staff and customers. Most road-building equipment manufacturers provide training to pass on to the end user. And while rental can be tough on equipment, working with reputable manufacturers that build durable, reliable products and stand behind them can address that concern.

E-Z Drill is an excellent example. The company’s drills are relatively easy to maintain just by tightening bolts, putting oil in the oiler and keeping them clean. Certainly, operation can be tricky – it is essential that the controls be used in proper sequence, for example, and operators must know how to set up the drilling level and depth and establish the right pressure. E-Z Drill offers onsite training for its multi-gang units and can offer training on the single drills upon request to demonstrate proper operation to dealers and their salespeople.

Other units require more frequent maintenance. Donaghy notes rental is tough on Irock machines if contractors don’t understand the rules of crushing or screening, or if they don’t perform the necessary daily maintenance. “We have our dealers go over what their customers can and cannot put in the machine, and remind them that daily maintenance is the key to keeping the equipment going,” he says. “Our machines are tough and durable, and training can counterbalance any inexperience.” Irock sends a sales associate or service technician to set up the machine, and teach the personnel proper use. Newer clients get more frequent visits to be sure the equipment is well cared for during a rental job, which can last anywhere from a few weeks to, most often, more than a year.

As for Brokks, Bigwood says while they are unconventional machines, the controls are similar to traditional excavators and other construction equipment. He adds that with some simple training, operating one is really quite straightforward. “As with anything, if an operator doesn’t perform the basics correctly, there will be problems, but we make sure the rental centres know how to train the end users,” Bigwood says. “Brokk machines have a quick learning curve, and most operators take to them naturally. We love the rental concept because it allows more people to experience the unique capabilities of these versatile machines.”

Specialized road construction rentals are just that – special. When a contractor needs an ultra-specific, highly efficient piece of equipment for an out-of-the-ordinary road project or unusually challenging task, there’s opportunity. For dealers or rental centres that fill the void, there’s profit, as well.