Making it easy
11 April 2008
The days when rental companies were secretly happy when a customer forgot about the equipment they had on rent – with the result that rental charges steadily mounted up – should be long gone. At least, they are when it comes to the more forward thinking, sophisticated rental companies.
Nowadays, rental suppliers talk about having genuine partnerships with their customers. This means providing 'mission critical' equipment, 'real-time' information about what's on rent, and other support services that are designed to make it as easy as possible for a customer to deal with the rental company, allowing it to focus on its core activities.
This new approach to the business of rental takes many forms, but all have at their heart the recognition by the bigger rental companies that one of their key opportunities is to win enormous and long-running 'preferred supplier' agreements with the largest contractors. Treat your customer right in Berlin and they will want you to supply them in Munich as well, and also wherever they decide to work next.
So what is it that rental companies are offering their bigger clients? The key to these types of contracts is having the scale and the equipment to offer the service. If a rental company is partnering with a national contractor, it needs to be able to offer a national network of depots and a decent range of equipment at each.
This is one of the roots of the drive towards consolidation in the rental market in Europe, and which in recent months has seen many of the larger rental companies acquiring regional or even national competitors. For example, Speedy Hire recently added Hewden's Tool Hire business to its UK operation and aerial platform renter Lavendon has bought Danish company DK Rental.
Others making acquisitions in the past few months include Finnish rental giants Cramo and Ramirent, while in Spain it has been Euroloc and GAM who have been spending money on companies (in both cases boosting their aerial platform fleets with big deals). Loxam, the Paris-based company that is Europe's largest rental firm, has also this year added to its business with a first foray into the Scandinavian rental market by acquiring DNE/JJ of Denmark (a company that was itself the recent result of the merger between DNE and JJ.)
The recently announced merger between the world's two biggest portable accommodation rental businesses - US company Williams Scotsman and UK-owned, France-based Algeco – is another symptom of this, although on a global scale. One of the cited benefits of the deal is that it would give the enlarged group access to global rental supply contracts.
Such global agreements are still a thing of the future in Europe's equipment rental business, but more and more rental companies are trying to become either national or pan-European rental players.
So scale is one thing that is on offer. On a more operational level, rental companies are offering their clients technology that allows them to better plan their own activities and reduce their costs.
A good example of this comes from A-Plant in the UK (part of the Ashtead Group that also owns Sunbelt Rentals in the US). It has been reacting to the trend throughout the construction industry to reduce costs and eliminate wastage.
A-Plant says contracts are selecting suppliers based on their ability to provide 'key performance indicator' information on every aspect of their service, from deliveries, collections, response times and query resolution to health and safety practices and training regimes.
For one A-Plant customer, Holroyd Construction, based in West Yorkshire, UK, the key was the provision of fully integrated on-line services through an Extranet accessed via the A-Plant website.
Many of A-Plant's customers are already using the reporting capabilities available through the Extranet. Holroyd Construction wanted to extend this capability and has worked with A-Plant to develop a comprehensive on-line ordering system for equipment.
The company runs between 15 and 20 sites at any one time and site managers stipulate the equipment they need for each site and order the relevant equipment via simple drop-down lists accessed via the A-Plant Extranet.
Andy Allott, Holroyd's finance director, explained, “We have found the on-line ordering facility to be an excellent time-saving tool. The integrated solution offered by the A-Plant Extranet is simple to use and provides us with great benefits and points the way forward for construction companies like ourselves. It also sets the standard for the professionalism we expect of plant hire companies.”
To help ensure accuracy when a customer places an order, A-Plant sends an e-mail alert in reply, confirming the order and that the details are correct. Andy Wortley, director of operational applications at A-Plant, says that accuracy is a key advantage of the integrated system. “The customer inputs exactly what they want and is sent an e-mail confirmation. This saves time and ensures that disputes are kept to a minimum during the lifetime of the contract.”
Another check is provided by the handheld Personal Digital Assistant (PDA) computers used by A-Plant delivery drivers. To confirm that the appropriate equipment has been delivered to the right site, site personnel are required to sign on the pad of the PDA. The signature and acceptance form are immediately downloaded onto the Extranet and are available to view on-line.
Mr Wortley added, “The Extranet can log any contract that has been delivered using the PDAs, showing the time the equipment was delivered, as well as the signature captured by the driver. We believe we are the first in the industry to offer total integration of PDAs into its back office systems.”
Using the Extranet, customers can view statements, sales invoices and produce a range of reports indicating, for example, the customer site each piece of A-Plant equipment is at and which A-Plant depot it was rented from. A live hire report can be instantly produced, which details the range of equipment on hire, who it was rented by, when it was rented and the rate.
Holroyd's Mr Allott said, “An important feature is that we have not had to purchase or develop our own software for this purpose. The A-Plant Extranet generates a list of all the plant at all of our different sites, so we know exactly where all of our hire equipment should be located. The data on the Extranet logs the type of equipment we are hiring and for how long. We set reminders on the orders to ensure that we are not holding onto equipment longer than is necessary.
“It allows our senior management to check what is being kept on a site before they visit and ensure that equipment should be off-hired when certain parts of the projects have been finished. We can also use the list to do physical checks whenever we like.”
If that kind of IT development is helping contractors to communicate with their rental suppliers, there is another type of partnership, with a rental company committing to investing in the very particular type of equipment that a contractor needs for a specific task.
For example, again in the UK, HSS Hire – one of the biggest names in the rental industry – has partnered with lift installer Otis to supply it with all the equipment it needs to complete its lift installations, anywhere in the UK.
This an example of the kind of relationship that HSS's chief executive, Chris Davies, wants the company to focus on. “[We are] building long term relationships with key customers – becoming their logistical partners,” he said. The company has similar agreements in place with Tubelines, one of the contractors working on the London Underground network.
With agreements such as these, where the contractor has to have complete confidence that their rental supplier can be relied upon, it is sometimes necessary to use 'in-plants', or HSS staff working full-time within a customer's organisation making sure that critical equipment is delivered where it is needed and on time. HSS has seven or eight such staff working in the UK at the moment.
Rental companies are also increasingly offering a range of flexible rental options, and not just the common daily or weekly rentals that are the core of the market. Loxam in France, for instance, offers customers a Minilease programme covering rentals of one to three years duration, as well as Superlease, a similar offering for contracts of between three and five years.
It is clear from these kinds of agreements why some traditional equipment distributors fear the emergence of the all-powerful rental companies. If you are already renting equipment from a rental company for short and medium periods, why not also consider longer term contracts?
Rental companies are also partnering with other renters to offer customers a kind of one-stop-shop in rental, allowing contractors to rely on a smaller number of rental suppliers.
One recent case involved Cramo, the Finland-based renter which has rental operations now throughout the Nordic area as well as the Baltic States, Poland and Russia. It has entered a joint venture with Russian crane rental company ZAO Rentakran that will see Rentakran renting general construction equipment to its customers from its three existing branches in Moscow, Yekaterinburg and Krasnodar. The new company will be 75% owned by Cramo and 25% by ZAO Rentakran.
“Cramo has strong experience from Russia where it has been doing rental business successfully for a long time in St Petersburg”, said Cramo's senior vice president, Jarmo Laasanen, “Now we are taking a big step forward in expanding to new markets in Moscow and other major construction markets in Russia. Our strategic cooperation with Rentakran brings us new customers and already working relationships with the authorities of the new territories.”
There is another key area where rental can help contractors, and that is in the area of health and safety legislation. Issues that are coming increasingly under the spotlight include working at height, hand arm vibration (HAV) with power tools, and dust in the workplace.
Rental companies throughout Europe have already been promoting the use of modern, powered access equipment, but increasingly they are able to offer customers the reassurance that they are renting equipment that complies with the latest noise emission limits, that meet current engine emission requirements, and that will minimise the risks associated with HAV.
A good rental supplier will offer a contractor equipment that complies with the latest regulations as well as offer advice on how to minimise hazards (by advising on how to properly use equipment and on the rental of ancillary equipment such as dust extraction units).
If keeping abreast of all these differing requirements is an administrative burden for you, then why not transfer the load onto your rental supplier. And they won't mind – that's what they are there for.