As a vertically-oriented business, the answer to the question is up, we go up. In 2008 and 2009, there was a massive grounding of construction rental equipment in response to a nationwide residential, commercial, and industrial construction downturn. The downturn hit hard and fast. No geographical location was spared; for sure, some fared worse than others, but everyone and every fleet felt the pain of this catastrophic depression in the construction equipment industry.
We’ve tip-toed around that word “depression,” perhaps afraid that by simply saying it may send another wave of canceled or postponed jobs our way—a prospect no elevator rental fleet owner would encourage, welcome, or possibly withstand. The harsh economic times of the past several years have forced us to lower rental rates to a level not seen since the 1980s, with the actual dollar amounts of the 1980s not adjusted for inflation. While reluctant to participate in this massive slashing of rates, at some point we’ve all made that decision to get the jobs, regardless of the rates, in order to cover our operational expenses.
General contractors have enjoyed these low rates in this competitive hoist market to help lower their job costs as they compete for work. They have been well-educated in the benefits of utilizing a construction hoist on even a lowrise commercial job. It is the accepted practice to use these machines on most projects, as the value of an elevator on a job site far exceeds the rental cost. The bottom line is our businesses cannot continue to operate on these extremely low rates. Now that we are seeing the beginnings of a correction of the marketplace, should we hope that our rates return to where they were in 2007? Unfortunately, hope does not affect construction hoist rental rates.
As an industry, we are holding ourselves hostage with these extremely low rates. We have an educated customer base that fully understands the benefits of the products we offer; we have an accelerated demand over a 12-month period, and yet we continue to offer our equipment at depression-era rates. Can we really blame the general contractors for taking advantage of the competitive market? We need to move away from the artificially low rates and re-establish ones that sustain our businesses and protect our industry.
With the access industry living on OSHA’s top 10 most-cited list, the significance of a piece of access equipment that promotes a safe and effective workplace can or should become invaluable. If we are forced to cut corners by maintaining low rental rates, what will we have to cut to preserve margins that allow us to sustain our businesses? Shall we participate in a movement that lowers the potential for safety at a time when the construction market is ready to accept a more reasonable rate?
Perhaps the silver lining of the economic crisis is that end- users and general contractors are clearer on the features and benefits of our equipment than ever before. Elevators are now seen as a necessary tool that increases everyday safety and productivity while reducing overall job cost.
Now is the time for the industry to make the effort to re-establish rental rates to a level that reflects the true value of the equipment and allows us to safely operate our businesses while delivering a service that is most definitely in demand.