Re-rental Solutions

July 7, 2004 - In an exclusive interview, Woody Weld, president of Acme Lift Company, Phoenix , Ariz. , recently shared insight into the high-reach aerial lift re-rental business with Lift and Access 360 Editor Tracy Bennett. Acme Lift's fleet, available nationwide, includes 80- to 150-foot self-propelled aerial work platforms and truck-mounted units with platform heights from 170 to 236 feet. Over the years, Weld has been involved in both sales and rental of aerial and crane equipment, spending most of the 1990s representing ICM/ACM in New Mexico and Arizona . Prior to joining Acme Lift in 2001, Weld was the general manager for a Link-Belt and Manitex crane dealer.

360 : Describe Acme Lift's mission.

WW : Acme Lift provides increased profitability and quick solutions for our customers when they require additional equipment due to fleet utilization and/or budgetary constraints. In short, our mission is to solve our customer's problems.

360 : What makes your re-rental business unique?

WW : We view our relationship with our customers as a partnership. While we provide them with the latest model, most-advanced equipment available for both long-and short-term rentals, they agree to provide the maintenance and repair work (reimbursed by us) needed to keep the equipment operating.

Additionally, Acme Lift tracks 100% of its fleet by Qualcomm satellite for current location and hours of operation and integrates that information with Wynne Rentalman ASP operational software. This tracking system and software set-up, along with our partnership with customers for maintaining the equipment, makes it possible for us to move equipment around the country without it ever coming home. We don't have a yard-the equipment is always on the go.

Since 2001, Acme Lift's fleet has doubled in size. Last year we added four high-reach truck-mounted units to the fleet. Our 236-foot Bronto is the tallest unit in North America . Prior to our acquisition of the Bronto S236-HLA, it had never been used west of the Mississippi River .

360 : Who are your customers?

WW : Acme Lift was founded on the premise of providing late model, specialized aerial equipment to other rental companies. We have never and will not ever rent direct. With that said, our customers are among the largest national rental chains, but we also serve a variety of independent rental stores, many of them aerial specialists.

360 : National rental chains? I thought those companies tended to swap equipment from branch to branch as needed.

WW : Sometimes it's just not economically feasible to do so if the equipment that is needed isn't available within the geographic area. But re-renting equipment often makes sense for a bigger reason than that. Each branch is responsible for its own profit and loss. Unless the branch has proven high utilization for a piece of high-reach equipment, that inventory can become a financial liability if it's not consistently on rent. Say Branch #1 owns a 150-foot boom lift that is currently off rent. If Branch #2 needs it for a one-week rental, the manager at Branch #2 knows that once his job is done, he now has the hot potato sitting in his yard. Who knows how long it may sit there? It is often better for Branch #2 to rent that 150-boom lift from us where the costs are defined.

360 : When else does it make sense for a company to re-rent equipment?

WW : By its very nature, high-reach aerial equipment has a lower utilization rate than aerial work platforms in the 60-foot and under platform height classes. So re-rental makes sense for any company that can't justify the cost of the equipment versus the utilization rates.

Re-rental also makes sense as a defensive move. Say your rental company has an order for 12 80-foot boom lifts on a long-term job, but you only have six units available. Re-rental enables you to keep your competition out and your customer happy. Even if you only break-even on the rental of those six extra units, over the long-term you have maintained the relationship with your customer. We don't decal our equipment-in fact some of our customers put their own stickers on our equipment-so the end-user doesn't ever know that the equipment came from us.

Additionally, geographic availability and seasonality also contribute to a decision to re-rent. Even if a large company owns the unit needed, getting it from Point A to Point B can be cost-prohibitive. Consider that freight costs to transport a big boom lift range from $2-5 per mile. For those companies serving regions with lengthy winters, it may be a better allocation of capital investment dollars to re-rent certain models during the busy season rather than have it sit in the yard all winter long.

Re-rental is also a way to increase your profitability. Generally, the less utilization a piece of equipment has the more specialized it is, which translates into higher than average rates. Our new Bronto S236-HLA, for example, commands a whopping $49,000 retail rental rate per month in markets where the machine has not typically been used. Rental companies who want to help their customers creatively solve problems are the niche builders. Really good money often comes from serving a niche. But you have to use your brain to build that market, whatever it might be.

360 : How does re-rental fit into a business plan?

WW : Most of all, I want to emphasize that companies re-rent equipment for more than specific jobs. They re-rent when they want to try a new class of equipment, to test out a new market, or to open a new store. This is a great way to take advantage of a new market while evaluating whether the capital investment is worth it.

It's one thing to ask an end-customer, 'If I had a (fill in the blank) in my fleet, would you rent it?' But it's something completely different to be ready with the equipment in your yard. When the customer sees it 'in-the-iron,' not just on a product brochure, there's a lot better chance he will envision ways he could use it.

Bottom-line: Re-rental is a tool that rental companies can use to be better problem solvers for their customers.