Editor’s note: As 2013 draws to a close, the equipment rental industry revenue forecasts for 2014 and 2015 feature strong growth with the American Rental Association (ARA) providing support, expanding products and services, and further developing The Rental Show, the world’s largest rental-specific convention and trade show next scheduled for Feb. 9-12, 2014, in Orlando, Fla. Christine Wehrman, ARA’s executive vice president and CEO, sees a very positive future ahead for the industry as well as the association. An edited version of her conversation with Rental Management about the state of the industry and the association follows.
RM: The state of the overall economy remains in flux with a slow rate of growth, yet the equipment rental industry’s recent results and forecasts for the future are very positive for revenue growth. Why?
Christine Wehrman: Over the years, people have gained a greater appreciation for the value of renting equipment versus buying. Our members have done an excellent job of creating a positive customer experience that highlights the benefits of renting equipment and eliminates the hassles of ownership. Rental has become a preferred option as there are no capital expenditure issues, productivity is maximized and the problems of long-term maintenance and storage of the equipment are removed from the equation. All of this translates into strong growth projections for our industry in the short and long term.
RM: The American Rental Association (ARA) and most equipment rental companies have done a good job in showing the benefits of renting versus buying equipment. That message resonated well with equipment rental customers during tougher times over the past few years. How do you see that playing out as the economy recovers?
Wehrman: We have seen a secular shift toward the equipment rental industry over the past few years. ARA tracks the market via IHS Global Insight data and reports it through the ARA Rental Market Monitor™. The data shows that our industry continues to outpace GDP [gross domestic product] by four times and the projections of 9.2 percent and 12.9 percent growth in 2014 and 2015 respectively, continue this trend.
Simply put, people have recognized the benefits and value of equipment rental. The economic data in the past and future is indicative of a secular market shift toward rental rather than just a short-term solution to an economic problem.
RM: Some of the national equipment rental companies have started to expand again through limited acquisitions, opening new branches or finding opportunities with specialty rental stores that focus on things like pump and power, HVAC, lift equipment and more. What does this tell you about the industry today?
Wehrman: Equipment rental is a solutions-based industry. A key success factor in rental is being able to provide the right equipment, at the right time, when and where the customer needs it. Our members pay very close attention to the markets they serve. Specialty rental stores are on the rise to meet customer demand. The construction and industrial segment, which covers the specialty stores you’ve mentioned, is projected to grow at 9.8 percent in 2014, nearly five times the general economy. It’s no surprise that our industry is seeking innovative rental solutions to meet that demand.
RM: What do you consider to be the state of the ARA today?
Wehrman: ARA is in an excellent position to contribute to the success of our members and advance the equipment rental industry. We’ve hit a new high in circulation for Rental Management magazine, demand for ARA Insurance remains very strong and The Rental Show continues to be a must attend event. Serving the industry by providing business tools, insightful information, advocacy, education and networking opportunities is essential to industry growth and providing member value. We continually listen to our members and develop products and services to meet their ever-changing business needs.
RM: The Rental Show is growing at a fast pace. The exhibit floor for the trade show in 2014 in Orlando, Fla., sold out sooner than usual. Registration for the Feb. 9-12, 2014, show is pacing well. Why do you think this is happening?
Wehrman: The growth of the equipment rental industry itself plays a part, but the key factor is that our members continue to see The Rental Show as highly relevant to the success of their businesses. It’s the one time of year when the industry gathers to buy and sell equipment, receive rental-specific education, take advantage of Show-Only specials and network at all The Rental Show events. It’s a show for people serious about profit and truly a celebration of our industry.
RM: The association also has evolved over the last few years to continue to meet member needs. What do you consider to be the association’s most significant accomplishments in 2013?
Wehrman: Choosing one is challenging, but I would have to say the release of the ARA Rental Penetration Index™. Industry market research is an ARA cornerstone. The penetration index gives us another scientific measure and methodology to quantify our industry, in addition to the ARA Rental Market Monitor and ARA Rental Market Metrics™. Our initial results indicate that rental penetration has grown to just over 50 percent, which is up from 39.7 percent in 2005. The equipment rental industry has made significant progress over the past decade.
RM: What do you expect the association to focus on in 2014?
Wehrman: The development of products and services and delivering member value is a constant area of focus for ARA. Expect continued growth in educational opportunities, risk management solutions and rental-specific industry news. One area I will highlight is the ARA Government Affairs program. ARA is focused upon representing members and keeping them well-informed on issues pertinent to their businesses. We also want members to engage with us in these issues and participate in the political process. Mid-term elections occur in 2014 and we will continue our strong efforts to educate legislators and candidates on issues that directly affect our industry. Supporting candidates who support a healthy pro-business environment is essential to each and every one of our members.