What are the top challenges facing the rental industry in the next year?
Whenever I ask Rental readers what keeps them up at night, the answer invariably turns to the labor shortage. It’s getting increasingly difficult to find qualified job candidates who want to work with equipment. Contributing factors include a school system that almost exclusively promotes a four-year college education at the expense of technical and vocational training; a younger generation that’s been influenced to prefer white-collar fields to getting their hands dirty turning a wrench; and now a political climate that threatens to diminish the immigrant workforce, which in some areas, is quite significant.
Also challenging is the growing presence of online marketplace rental outfits. These companies, which don’t own equipment themselves but act as a middle man between customers and the rental companies that serve them, have the potential to transform the way we think about equipment. On the bright side, it could permanently cement end users’ reliance on renting as a means of equipment acquisition, which stands to benefit all rental companies, but it could also threaten the foothold that smaller rental companies are clinging to as corporate chains and marketplace outfits gain ground. One thing seems certain, and it’s that all rental companies must become active marketers of their brands and must do so in the way that younger generations expect to receive the message. Effective online and social media promotion are now a must, not an option.
Effective online and social media promotion are now a must, not an option [for rental companies].
In terms of the next year specifically, rental companies will continue to watch as the Trump administration begins to make its mark on American business. Many have pinned high hopes on increased infrastructure spending and a more business-friendly corporate tax code, but so far there’s been little change of any consequence. Meanwhile, the challenge will be in balancing the desire to be ready in the event increased funding creates more work and more equipment rentals and the need to conserve enough resources in the event the economy does not grow as expected. Right now, it’s still anybody’s guess which way it will go.
Heading into 2017, what are the top trends you’re seeing across the construction industry?
Overall, the outlook for construction looks positive. Prior to the election, the forecast was for overall slow and steady growth, with particular optimism for the housing and private nonresidential markets. Now that the election is over, we’re hearing that many in the construction industry are pleased with the results and are looking forward to President-elect Donald Trump’s ambitious $1-trillion infrastructure proposal that he claims will be funded by private investments. Some see this as a potential shot in the arm for the U.S. economy, and when coupled with the prospect of fewer governmental regulations that the Republican ticket has promoted, people in construction seem to be optimistic for the future right now.
Meanwhile, technology is changing the way construction is done. Every day, advancements such as drones, GPS, laser-guided equipment, wearable technology and 3-D printing are becoming more common, pushing the industry toward a much more sophisticated future that’s a far cry from its humble beginnings. You can see this is in every facet of the construction process, from design to the materials being used to the equipment being operated and everything in between.
Every day, advancements such as drones, GPS, laser-guided equipment, wearable technology and 3-D printing are becoming more common, pushing the industry toward a much more sophisticated future...
While the construction process gets more sophisticated, so too are the people getting the job done. Today’s contractors have become very savvy when it comes to their equipment acquisition strategies. More than ever before, they’re turning to rental as a productive and profitable means of completing their work. They no longer view a yard full of big iron as proof of their success. Instead they want a clean balance sheet with fewer hassles related to equipment maintenance, insurance and transport, so they’re renting instead of buying in a lot of cases. Currently, 53% of equipment on U.S. job sites is rented, and experts predict this number will continue to rise. In good economic times or bad, renting is a smart means of equipment acquisition, and contractors are realizing this more with each passing year.
What challenges or opportunities are associated with these trends?
The biggest and most dire challenge that threatens to obstruct future advancement and growth in construction is the growing shortage of workers. The construction trades have been dealing with this problem for decades, partly due to a reluctance among those in younger generations to pursue a career that requires them to get their hands dirty. The growing sophistication of construction processes could potentially offset this trend, but the industry needs to continue to get better at promoting itself as a lucrative and rewarding career choice.
Since the election, however, the prospect of alleviating the labor shortage crisis looks a whole lot less hopeful in light of Trump’s well-known opinions on immigration policies. Much of today’s construction workforce—and tomorrow’s potential workforce—is made up of immigrants. If Trump’s policies succeed in draining this particular pool of potential workers, it won’t matter if his infrastructure plan is financially feasible or not because there won’t be anyone to build the roads and bridges we so badly need in this country.
On the bright side, President-elect Trump has so far indicated a strong commitment to rebuilding American infrastructure. If he can maintain this commitment, it could have real and significant effects on the U.S. economy and the construction industry. But it’s going to take an equal commitment to education in order to realize the long-term potential of this opportunity. To keep up with the breakneck pace of technological advancement, and to stay competitive with our peers abroad, we need to boost educational resources and make post-graduate education—whether it’s four-year college or vocational school—more accessible to everyone.