C O M PACT E XCAVAT O R S | By Becky Schultz
COMPACT EXCAVATOR Acquisition is No Small Choice When it comes to compact excavators, the decision to buy, rent or lease calls for more than comparing costs.
˜ No long-term commitment:
Rental gives you the ability to use a specific machine to complete a job without making a long-term commitment to a specific size class. You can determine and acquire the best machine for each job — whether it’s a 1.5-ton unit on one project or a 4-ton machine on the next. ˜ Rental limits maintenance exposure: If the rental equipment breaks down or fails to work properly, the cost of maintenance, repairs and equipment downtime fall to the rental company. You can simply return it and obtain a comparable replacement. ˜ Tax benefits: With rental, you pay the bill, charge it to the job and you can later deduct it as a cost of doing business. You don’t have to worry about depreciation, interest allocation or insurance. “Another benefit of infusing rental equipment into a fleet strategy is the access to newer and more advanced fleets. Rental companies upgrade their fleets on a regular basis, giving contractors access to the most advanced gear and latest in control and operational technologies,” says Craig Schmidt, vice president, United Rentals.
United Rentals
A MATTER OF UTILIZATION
Renting a compact excavator provides flexibility in terms of how long you hold onto the equipment, plus lets you select the machine size and configuration best suited for the application.
T
he uneven recovery in construction activity coupled with uncertainty about equipment availability and prospects for future work make for tough choices when it comes to acquiring equipment. The investment in even a smaller machine such as a compact excavator becomes a major decision. The question becomes whether it’s more practical to buy the unit and have it on hand when and where it’s needed, or
32 EQUIPMEN T TOD AY | August 2021
if it’s better to rent until you know you have both the project backlog and mix to justify the purchase. Leasing throws yet another potential acquisition option into the equation. There can be benefits to each, but they depend largely on the situation and equipment utilization.
RENTAL’S REWARDS Compact excavators have grown to become a high-volume
rental item. A number of factors have driven this trend. ˜ Availability of capital: Renting can help to maintain financial fluidity during times of uncertainty such as we saw throughout much of 2020 and into 2021. As a generalization, a longer-term rental over multiple months will typically run 4% to 5% of the cost to purchase, plus you avoid the sales tax required with outright acquisition.
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Of course, rental is not a onesize-fits-all solution. You need to look at all of the factors that can influence the most cost-effective way to obtain a compact excavator. They can include: ˜ the number of hours put on the machine annually; ˜ how long you intend to keep the equipment; ˜ maintenance costs required for the equipment each year; ˜ financing programs available when purchasing the machine; ˜ and the type of cash flow you are looking to obtain. Of these, expected utilization typically tops the list. “The ‘buy’ conclusion has to be based on future utilization,” says Garry Bartecki, managing member of GB Financial Services LLP, and a consultant to the Independent Equipment Dealers Association. “Because you are committing to at least a 60- to 72-month financing payment cycle, you
