In 2008, the U.S. general tool rental market generated $8.4 billion in revenue, a decline of 3.8 percent on the back of a contracting construction market, after 3.2 percent growth in 2007, according to the 2008 State of Equipment Rental Industry report produced by IHS Global Insight, Lexington, Mass, for the American Rental Association (ARA) and RENTAL MANAGEMENT.

Growth of general tool rental revenue in Canada slowed significantly, but remained on an upward track by increasing 4 percent in 2008 to reach US$636 million. According to the report released earlier this year, the general tool segment in the U.S. averaged a compound annual growth rate (CAGR) of 9.4 percent between 1998 and 2008, while growth in Canada was an even stronger 12.1 percent.

However, the report forecasts more revenue declines in 2010 and 2011 before rebounding strongly in 2012 and 2013.

“The forecast period should be broken out into two segments — the downturn of 2009 and 2010 and the rebound through 2013,” the report states. “In the short term, economic pressures will limit consumer spending and residential construction. Due to lower overall construction demand, contractors are likely to restrict rental spending as limited work is available — much of which can be completed using existing equipment. This will result in a decline in general tool rental revenue that outpaces any drops in the overall construction market. In the longer term, this effect will speed up the market rebound, however.”

According to the report, U.S. rental revenues for general tool are expected to decline 9.9 percent in 2009 and 3.2 percent in 2010 followed by growth starting in 2011 with a CAGR of 8.9 percent for the segment from 2010 to 2013.

IHS Global Insight also estimates that during 2008-2013, investment in inventory by the general tool segment will grow at a CAGR of 4.6 percent. In the near term, however, investment is expected to contract by 26.6 percent in 2009 and 7.2 percent in 2010 as a direct result of the ongoing financial crisis, curtailed consumer spending impacting do-it-yourselfers, limited credit opportunities and the fall in both residential and nonresidential property values and construction activity. The report states that investment in general tool inventory will recover in 2011, growing by 7.9 percent, rising to 14.0 percent in 2012 and 9.9 percent in 2013.

Among the report’s other key findings for the general tool segment:

• The West South Central region saw double-digit growth in 2008 as hurricane recovery efforts required large amounts of tools. Continued rebuilding in 2009 will hold losses in this region well below the national average, but in the long run, the fastest growth will revert to the Pacific, Mountain and South Atlantic regions.



• The share of the market attributable to do-it-yourselfers fell from 47 percent in 2007 to 44 percent in 2008, as residential improvement activity lagged with falling home values and tighter credit.

The full report, priced at $495 for ARA members and $1,195 for prospective and nonmembers, offers buyers the most comprehensive look at the equipment rental industry to date and identifies the economic drivers for each industry segment. According to the report, the total size of the North American rental market was US$38.3 billion in 2008, including US$35.3 billion in the United States and US$3.0 billion in Canada.

Rental revenues in the United States fell 2.7 percent in 2008, but this performance was significantly better than the broad U.S. construction market. While the report states that further declines are likely in 2009 and 2010, it forecasts rental revenue growth in 2011 and total revenues in 2012 that equal or exceed the 2007 market peak.

The 2008 State of the Equipment Rental Industry report marks the fourth year ARA and IHS Global Insight have teamed together to produce this research document. The new report is unrivaled in both the scope and depth of its analysis of the underlying economic drivers shaping the rental industry today and serves as the industry benchmark. IHS Global Insight is the leading economic forecasting firm in the world with more than 3,800 clients in industry, finance and government. It has used its comprehensive econometric modeling to assess the rental industry through a range of different perspectives.

The 2008 report includes:

• Current and historical U.S. and Canadian equipment rental market size by segment — construction and industrial equipment, general tool, and party and event.



• The five-year revenue forecast for each market segment.



• An analysis of the financial indicators important to rental businesses.



• An evaluation of historical, current and future U.S. inventory levels, along with an analysis of what factors increase or decrease investment.



• Extended coverage of the top 10 rental products and emerging trends for each market segment.

Those who participated in the ARA/IHS Global Insight survey, used in the development of the report, can buy the report at a special rate of $295 for ARA members and $995 for nonmember survey participants.

Those who purchase the report also will be invited to special bonus webinars to be scheduled for later this year. The webinar updates are designed to help report buyers keep up to date with how economic changes are impacting the rental industry throughout the year.

For more information and to order the report, call ARA Member Services at 800-334-2177.