Galen Wickstrom - National Accounts Manager
Mar 30, 2017, 03:00 AM
Managing the Age of Your Equipment Fleet
Rental fleet managers work hard to find the precise balance between a machine’s age, hours, maintenance and depreciation expenses to determine the optimum time to retire or replace a machine. The process is influenced by the economy, the number of construction projects currently happening and the opportunities to increase the rental store's profits.
From time-to-time, a rental store may decide to push its equipment beyond that optimum replacement period out of financial need or because of changing goals. For rental stores with an older fleet of equipment, there are things to bear in mind:
Older equipment doesn’t necessarily mean its unreliable. Routine maintenance, frequently replacing wear parts and performing major overhauls, like repowering when needed, will certainly extend the life of any older, high-hour machines. Staying on top of an aging fleet requires an extremely proactive maintenance approach. The maintenance department needs to inspect every machine before and after it goes out on rent, and then they need to address any potential issues before a machine’s in the hands of the customer.
A machine’s cosmetics matter to contractors. Even if an older machine performs as good as a brand new one, the looks of a machine matters to the operator. Given a choice, everyone will choose the newer looking machine. That’s why it’s important to keep older machines looking new by keeping them clean and the paint fresh.
Rental rates are affected by the age and condition of the equipment. To pay for new equipment, rental rates have to be set at a certain level. Some fleet managers will reason that if they have an older, paid for fleet, they can reduce those rental rates and undercut the competition. This strategy may work in the short-term. However, be aware that the lower the machine rents for, the less the money a store has to set aside for needed repairs and to eventually replace it. This could create a cycle of needing to replace equipment but lacking the resources to be able to do so.
It is important for fleet managers to know every detail about every machine in the rental store’s fleet, and they should look at the outliers on the average fleet age. Typically for aerial equipment, the sweet spot is between 36-48 months. When machines are within that sweet spot, maintenance and repair is pretty predictable. If a rental fleet has too many machines outside of the sweet spot, those expenses are more unpredictable and could start to cut into profits.
Those are just a few things rental fleet managers should think about when evaluating the age of a store’s equipment fleet. More than anything else, it’s important for them to use a commonsense approach. If rental store has a great service department with capacity to inspect, maintain and repair mature equipment, extending the working life of a fleet is possible and likely profitable.