Sometimes renting a paver makes more sense
By Jeff Winke
The construction equipment rental market has exhibited steady growth in recent years. It has reached record revenues of $93 billion in 2018 and is expected to reach $122 billion in 2024, according to MarketsandMarkets, Northbrook, Ill., a B2B market research company. Clearly, the construction equipment rental market, of which paving equipment rentals are included, are no small potatoes.
Add to that, a 2019 study by the American Rental Association (ARA) revealed renting equipment in the construction industry is at an all-time high. In fact, 93% of respondents reported having rented equipment in 2019. Of those who rented, 92% said they expect to rent at least as much in 2020, while 52% plan to rent even more.
To provide perspective, consider that pavers perform the essential function of laying asphalt on roadways, bridges, parking lots, driveways, pathways, and other surfaces. When there is the need to expand the fleet on a temporary basis or the need for an emergency replacement, renting equipment often provides the best value.
“Usually renting makes more sense if you are using the paver for a specific project over a short period of time,” stated Shane A. Sommers, sales consultant, with Hitek Equipment, Inc., Kenosha, Wis. “How long will the project last or, frequency of jobs would be a key factor. If the paver will be used over an extended period or, if it will be frequently used on different jobs, then purchasing would usually make more sense than renting.”
Equipment rental plays a role.
“We see contractors renting asphalt paving machines for a number of reasons,” reported Bryce L. Davis, general sales manager, North America, LeeBoy, Lincolnton, N.C. “Contractors will rent equipment if they picked up extra work for the short term, or have an odd type of paving opportunity, like utility cuts. Some jobs call for a backup paver to be on site or your machine is undergoing normal maintenance and or repairs. Sometimes a contractor picks up a job that’s way outside their normal travel zone, which can make it cheaper to rent a machine then deal with the long haul both ways. Or maybe a contractor just wants to try a different sized machine or model before buying it.”
Davis continued: “With any short term needs for an asphalt paver, renting is the way to go. Renting is also a good source for any asphalt firm to always have that second machine available, if or when needed, without owning it. Some contractors have found many benefits in renting an asphalt paver for a season, then purchasing it. This try-it-out approach helps to make sure your crew is productive with this paver. You get to test the machine for a season under your production requirements and market. You also get to test the service and parts at the dealership before buying. There’s also those who always want a new machine each paving season without the obligation and costs of ownership.”
Clearly, renting paving equipment helps meet contractor needs and provides business benefits.
“We typically see renting occur under three scenarios,” said Travis Colwell, marketing and communications coordinator with Carlson Paving Products, Tacoma, Wash. “First, we see customers that rent a paver when their machine is down or in the shop for repair. Rather than losing revenue and time, contractors without a backup machine will rent in order to finish projects and maintain consistent cash flow to their company.
“The second scenario is when a specialty project is bid and won. These projects typically are utility or pathways. Contractors will rent a specialty paver to complete these types of projects, as most do not have a pathway paver in their equipment fleet. The third scenario is municipal and governmental, where long term leases are a preferred method of machine ownership for large, lengthy public works departments and Departments of Transportation projects.”
The question paving contractors grapple with is when is it best to rent blacktop equipment versus adding a new machine to the fleet.
“There are upsides and drawbacks to renting or buying, but in the end the determining factor ought to be based on return on investment,” Colwell stated. “If you are a commercial contractor that predominantly paves large parking lots, but rarely paves pathways, it does not make much financial sense to invest in a pathway paver. Rather, renting a pathway paver for a unique project provides the contractor with the right machine without the significant investment required. On the other hand, if the contractor is looking to expand into golf course paving or more pathways for a local municipality, investing in a specialized paver for these projects would be in the company’s best interest. Investing in a specialized platform for the company’s growing requirements also allows for renting out that machine to other contractors for an additional source of income, when the machine is not being used.”
If renting paving equipment makes the most sense to meet the challenges at hand, then the question becomes where’s the best place to go?
The consensus among the experts seems to be that contractors should start with their local asphalt equipment dealer for rental, leases and purchases.
“Not many rental companies like to rent small machines, the margins are too slim and the cost of cleaning and maintaining the machine after the rental is too high,” said Sal Rizzo, president of Salsco, Inc., Cheshire, Conn. “Best to check with the company or dealer where you buy your equipment.”
In conclusion, a rental provides a fast solution for pursuing a project opportunity, temporarily replacing a machine that’s in the shop for repairs, or trying equipment with the most advanced technological features to boost productivity and operating efficiency to help in the decision of whether to invest in a purchase.
Jeff Winke is a business and construction writer based in Milwaukee, Wisconsin. He can be reached through firstname.lastname@example.org