Manufacturers call for visibility

Attendees to the 7 June European Rental Association (ERA) annual convention heard senior industry figures call for increased visibility and cooperation between manufacturers and rental companies to better manage lead times and meet demand.

Michael Kneeland, CEO of United Rentals, and Alan Blake, CEO of JCB, joined senior representatives from Loxam, Manitou, Boels Verhuur, Haulotte, Volvo and Cramo to discuss the prospects for recovery in the manufacturing and rental sectors.

Mr Kneeland said United Rentals had seen the first signs of growth in the US in the second quarter of 2010 - a trend that has continued through to the first quarter of this year.

"We see people taking the risk away of buying equipment and shifting towards rental. We have been working very closely with our manufacturers to better understand how we can improve and to look at forecasting our needs so they can meet these needs for our customers," Mr Kneeland said.

And Vice President of Fleet Management at Cramo, Martin Holmgren, echoed this view, "Last Autumn, we caught up to fairly good levels again. Moving into 2011, we are expecting more growth and are prepared to move ahead into this upturn."

Supply chain issues

But the speakers were united that supply chain issues are affecting the industry as demand increases, with long lead times a reccurring theme.

Mr Blake said, "JCB is highly vertically integrated and lead times have been most affected by the contraction in the supply base, as many of these companies did not make it through the recession. This, in turn, is having an impact on lead times."

CEO of Manitou, Jean-Christophe Girou, said his company had introduced a two-speed manufacturing process to tackle the problem of long lead times. Customers can choose to wait up to 30 weeks for an individually configured machine, or could opt for delivery of a 'standard' model that is being more intensively produced within eight to 10 weeks.

The panellists called for greater visibility between rental companies and manufacturers to tackle the problem as demand increases. Mr Kneeland said United Rentals had changed tactics from being aggressive with manufacturers to seeing the scenario as more of a partnership.

"If we understand some of the challenges that they have, then they have to understand our challenges. We're working with manufacturers in thinking in terms of between 12 and 24 months ahead. We know our fleet is ageing, we know that there is going to be a certain period of placement."

Others reiterated this message for a new relationship between rental companies and manufacturers. Mr Girou said the situation was unstable for everyone, but a better understanding of volume forecasting, without necessarily placing firm orders and causing over-production, would benefit both sides.

"Today, our biggest problem as a manufacturer is to get the visibility from customers that we can pass on to our suppliers. I support the motion for better visibility for better from the rental sector," Mr Girou said.

Pricing

The issue of pricing in the rental market was also a hot topic at the ERA convention. Attendees agreed that pricing had slipped as a result of the recession, and it was proving difficult to push through increases.

From the manufacturers' point of view, Mr Blake highlighted the increased cost of the Tier IV Interim / Stage IIB emissions regulations in the US and Europe as a potential indirect driver of rental pricing.

"It's difficult for rental companies to get their rates up and therefore it is difficult for them to accept increased pricing from us. We could work together to help highlight that the latest machines for hire are much more fuel efficient, cleaner and have a smaller footprint. I do think there may be a more sophisticated way of selling the benefits of the products that are going on hire," Mr Blake said.

The full panel of senior industry figures consisted of Anders Barreng (VP Sales Europe, Volvo CE), Alan Blake (CEO, JCB), Pierre Boels (CEO, Boels Verhuur), Gérard Déprez (CEO, Loxam), Jean-Christophe Girou (CEO, Manitou), Martin Holmgren (VP Fleet Management, Cramo), Michael Kneeland (CEO, United Rentals) and Alexandre Saubot (CEO, Haulotte Group).