US stimulus yet to have an impact on rental says ARA

By Murray Pollok04 December 2009

John McClelland, ARA's vice president of governmental affairs, speaking at the DLR meeting in Paris.

John McClelland, ARA's vice president of governmental affairs, speaking at the DLR meeting in Paris.

The US stimulus package has yet to have had any impact on the US rental industry, according to the American Rental Association's John McClelland, vice president of government affairs.

Mr McClelland, addressing an audience of over 200 French rental managers at the DLR's annual rental meeting in Paris on 3 December, said the Reinvestment Act would see around US$125 billion allocated to construction and infrastructure projects, but than little of that has yet reached the rental sector.

"Many of the initial projects were things like street repairs that don't create a high demand for rental equipment", said Mr McClelland, "We think many of the benefits the industry will see have not yet come into the market place."

The ARA estimates that stimulus projects will eventually contribute around $5.5 billion in additional rental revenues between 2009 and 2019, with the main projects being in highways and streets, transportation, power and communications, water and sewage and government spending.

These revenues will play a significant part in the recovery of the US rental sector. The ARA is forecasting that US rental revenues will fall around 8% to $27.5 billion in 2010 before starting to recover in 2011, but only approaching 2007/8 levels by 2013. The association says the biggest part of the market, construction and industrial rentals, will see a 10% fall in 2010 after a 20% fall this year, recovering to 4% growth in 2011.

"The rental industry has had a deeper recession than the general economy in North America", said Mr McClelland. "The downturn has been deep and prolonged....and we will have a very slow turnaround even in 2011."

Mr McClelland said capital expenditure on construction and industrial rental equipment by US rental companies would remain low at less than $3 billion in 2010 from a high of $10 billion in 2006. ARA is forecasting that US spending will recover in 2011 - reaching around $3.5 billion - before increasing rapidly thereafter.

ARA's figures also reveal that the US party and events sector has been far more robust, with revenues falling only slightly in 2009 before growth resumes next year.

"[Some independents] have been able to use party and events to mitigate [the impact of recession in construction], and generate cash as construction and tool rentals falls off. That's been a bright spot in the US rental industry", said Mr McClelland.

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