FEATURES
71
Hire or buy?
Equipment rental( also called plant hire in some countries) is a service industry providing machinery, equipment, and tools of all kinds and sizes( from earthmoving to powered access, from power generation to hand-held tools) for a limited period to final users, mainly being construction contractors, but also industry and the consumer DIY market.
By
Rory Macnamara
Plumbing is no exception, with a high percentage of both maintenance and construction plumbers hiring instead of owning. We discuss this aspect later in the article.
The equipment rental industry that first developed in Anglo-Saxon countries has become wellestablished, especially in South Africa where hire companies range from being nationally based to regionally based. The American Rental Association was founded as early as 1955, and the first waves of consolidation took place as early as in the 1970s in North America, leading to the creation of companies with nationwide operations.
South Africa has the Contractors Plant Hire Association( CPHA), where some of the major tool and equipment hirers are members. Sadly, at the time of going to print, we never received a reply to our question regarding a code of ethics.
The main reasons for the industry’ s overall development are:
• Capital release: In times where they have to demonstrate high levels of profit compared to invested capital, contractors are increasingly eager to rent equipment, as it allows them to minimise the size of their equipment fleet. Less immobilised capital allows for improved cost control, lower maintenance costs, as well as for a reduction in transportation fleets. Renting equipment with operators even allows for optimising staff costs.
• Range of recent equipment available: Some rental companies have fleet inventories reaching up to the hundreds of thousands of pieces of equipment, while others are very specialised in only a few specific products. They can thus supply the most comprehensive range of state-of-the-art equipment— with or without qualified operators— as and when contractors / customers need it.
• Maintenance, compliance with standards and regulations: Rental companies bear the responsibility for ensuring that the equipment they rent out complies with all applicable regulations. Safety checks are performed before each delivery.
Colin du Plessis, managing director of Talisman, concurs and adds another element, which is storage. Du Plessis, when asked to rate the importance of quality, service level agreements( SLAs), delivery, fast turnaround, and price on a scale of one to five with five being low, rated quality, delivery, and turnaround as most important( one), with SLAs and price being least important( four).
Gregg Phillips of Independent Plant Hire( IPH) agrees that quality rates number one, followed by price( two), and turnaround at three.
Bear in mind the rating was to identify the main aspect of hire, to handle a specific situation in the quickest and most economical way.
The hirer has a huge responsibility, rated a one by Du Plessis as the most important criteria, in that he / she must handle the tools / equipment in the correct manner, as well as have someone qualified to work with that tool. The hirer also has the responsibility to ensure the goods are returned in the same condition as provided.
Phillips rates the correct handling of tools as number one and having knowledgeable people working with the tools and return time as a two, underlining the importance of these two aspects.
IPH offers training sessions on most items hired, which may include a video explanation.
Du Plessis makes the point that in the case of loss of hired items,“ We invoice the customer for replacement value or agreed value. If a customer cannot pay, we claim from insurance, but then the insurance will recoup from the customer. We are currently piloting insurance or loss cover in a few stores, which will give the customer a loss cover option at a certain percentage of the hire charge.” Phillips, however, states,“ The insurance falls under the hiree whilst in their possession.”
The European rental industry, through its representative association ERA, has published a Manifesto for the promotion of the sustainable benefits of the rental concept. The motivation for the manifesto comes from the five principles used in the rental business: 1. Shared usage: The construction companies can access equipment when required. The centralised ownership leads to a more frequent and, therefore, more efficient use of the equipment.
2. Reparability: The rental companies contribute to a product design facilitating maintenance and repair activities. The rental companies focus on spare parts management and ask for increased information on product repair from the equipment manufacturers.
Continued on page 73 >>
Pixabay www. plumbingafrica. co. za April 2017 Volume 23 I Number 2