Heavy equipment: Why buy when you can hire?

Regardless of whether you hire it or buy it, heavy equipment is a big investment and a major cost component of any project. There are many factors to consider and many questions to ask in finding the best equipment approach for your business, including:

 

• How will you achieve the greatest cost efficiencies?

• Does buying or hiring present the lowest risk?

• What breadth of specialist equipment do you need?

• Does your solution need the newest technology and innovation?

• Will access to heavy equipment expertise enhance your project outcomes?

 

For some businesses, buying equipment is a good investment, but there are often as many, if not more reasons to hire. Here we uncover our top five reasons to rent.

Cost

  

Many factors affect the true cost of investing in construction equipment. 

• Purchase price: Costs vary greatly, but some of the larger and more specialised equipment – like super booms and monster earth movers – require major investment.

• Interest: When loans are required, interest repayments will increase total expenditure.

• Maintenance: The cost of ongoing preventative maintenance (like regular servicing, safety checks, fine-tuning and tyre replacement) can quickly add up.

• Registration and insurance: Requirements vary from state to state, but some construction and agricultural vehicles (like forklifts and tractors) require conditional registration for travelling on roads. Insurance also increases ongoing costs.

• Depreciation: Heavy equipment is a depreciating asset, so if you’re looking for an investment that holds its value, construction equipment may not be it.

 

Risk mitigation

  

Heavy equipment comes with many inherent risk factors. Hiring allows businesses to mitigate some of the commercial risk and occupational health and safety (OHS) risk that come with owning it.

Arguably the riskiest part of owning heavy equipment is transporting it. Load restraint and the Chain of Responsibility are vital to protecting your business, and the consequences of non-adherence are severe. Hiring equipment means the complicated transport, unloading and load restraint factors are managed for you. 
 
As employers we are all responsible for ensuring the safe access to and operation of heavy equipment. However, when purchasing equipment we also take on responsibility for mechanical safety and maintenance. Hiring heavy equipment provides businesses with the same assurance of equipment that is rigorously tested and serviced, without bearing this additional cost and responsibility.
 
There is also heightened commercial risk in committing to large capital expenditure on heavy equipment, to service volatile sectors like mining, construction and agriculture.

Sustainability 

With many Australian businesses, including Coates, setting net-zero greenhouse gas emissions targets, sustainability is an increasingly important consideration when it comes to deciding whether to buy or hire. Hiring heavy equipment is typically a more sustainable choice than buying outright for a number of reasons:

• Circularity: Equipment hire companies are natural participants in the circular economy by encouraging recyclability and reuse, optimising longevity and efficiency through repairs and maintenance, and upgrading heavy equipment fleet. The circular economy concept is based on the principles of designing out waste and pollution, keeping products in use and regenerating natural systems. 

• Technology: Hiring equipment fitted with the latest technology, such as telemetry, emissions filters and electric motors, can help reduce your carbon footprint. You can also choose greener alternatives, such as hybrid, hydrogen, solar, battery or electric models, including heavy equipment capable of running on biofuel.

• Eco-efficiency: When you hire, you utilise the equipment only for as long as your project requires. There are no ongoing fuel costs or carbon emissions for your business, allowing you to efficiently deliver on your sustainability targets. Temporary equipment solutions avoid costly capital outlay and reduce overall equipment purchases or manufacture for your business.  Ultimately, reducing negative impacts.

Flexibility

  

The best option for accessing heavy equipment will also depend on the diversity of tasks you will undertake and how frequently equipment will be used. In many cases, utilisation rates of 60% (or more) are the tipping point for purchasing becoming a viable option. However, there is much more to consider than just utilisation.
 
Hire equipment gives you the flexibility of always having the right machines (and the right advice to help you find them) for any job. This may not be the case if you rely solely on equipment you own. Hiring also allows businesses to keep their options open and “try before they buy”.

 

Technology and innovation

  

As is true of most industries, the technology that underpins construction equipment is always changing and evolving. If you own construction equipment, you are limited to the state of technology at the time of your purchase. In contrast, by hiring construction equipment your business will always have access to the very latest in technology and innovation.
 
Working alongside an equipment hire specialist is also a great way of keeping abreast of industry developments, as they occur. Experienced hire specialists can share quality advice and industry best practice that will help you maximise the performance, safety, productivity, cost-efficiency and sustainability of your projects.
 
Given the many benefits and the high demand for heavy equipment rentals, it comes as little surprise that the hire and rental industry continues to grow, locally and internationally. In Australia this sector currently employs over 16,000¹ people and is estimated to be worth over AUD$5Bn. Globally, the construction equipment rental market is predicted to grow to USD$230Bn² by 2025.
 
How does your business decide which equipment to hire and what to buy? Which equipment makes the best investment for your business? Please share your thoughts and comments with us via LinkedIn.
 
Alternatively, please contact a member of the Coates team on 13 15 52.
 
 
Sources:

1 - https://www.grandviewresearch.com/press-release/global-construction-equipment-rental-market