A Businesses Case For Renting Underground Utility Equipment
At MineMaster we strive to provide our customers with groundbreaking solutions to their equipment needs no matter their situation and project requirements. Some of our customers debate as to whether they should purchase or rent equipment to satisfy their mobile equipment needs and we would like to provide some points to consider when evaluating a rental vs purchase of mobile equipment. Whether an operation needs a utility forklift, man carrier, underground tractor, or specialty equipment there is almost always an option to purchase or rent the piece of equipment.
The decision to buy vs rent can affect many aspects of an operation including operational requirements, maintenance, financials, and overall profitability of a project. Therefore, it is important to fully understand the impact of the decision on your business.
|Reasons To Rent||Reasons To Buy|
|Satisfy temporary demand for equipment No capital required, simple accounting Access specialty equipment at lower cost Reduce requirement for internal technicians Regular maintenance costs can be included in rental, surprise costs reduced||Maintain full control over the equipment If well maintained, heavy equipment retains value over time Economies of scale of maintenance when many machines are required and internal maintenance department exists|
We recommend performing a situation-specific cost-benefit analysis to aid in the decision-making process. When considering costs and benefits of each option be sure to consider operational and financial aspects, as well as future use of the equipment.
Operational aspects including project timeline, equipment utilization, maintenance is crucial to a successful industrial operation and the choice to rent or buy will have implications on these aspects of the operation. Project timeline could be affected as equipment is not always available from OEMs, equipment lead times can vary greatly however a rental operation will usually have extra equipment ready to be rented at a moments notice. Equipment utilization (hours used per day) is important to consider as well, if equipment will be constantly in use and downtime cannot be afforded a rented piece can usually be swapped out faster than a shop can perform extensive maintenance work. Finally, preventative maintenance costs are sometimes included in rental contracts which reduces unforeseen costs and ensures preventative maintenance is performed, keeping the equipment running at peak performance.
Another operational aspect of renting is support, when renting or purchasing equipment a plan should be put in place for maintenance and support. Who is going to be called if the equipment breaks down and needs to be fixed? Support is usually provided through dealers or rental companies and levels of support vary depending on the specific situation. Be sure to consider the distance between the dealer and operation, if emergency maintenance is required how quickly it will get serviced will be affected by how far the dealer needs to send a technician.
The financial aspects of renting come down to the effect on balance sheets and income statements. If additional capital expenditures are available and the operation wants assets on the balance sheet purchasing equipment can be most effective. When purchasing equipment be sure to research resale value and be realistic about the value of your piece at the end of its service life. Alternately, an operation that does not have available capital or would like to write off rental costs against income should consider renting since renting does not require keeping an expensive equipment asset on the balance sheet.
Finally, the future use of a piece of equipment is important to consider. If the project is short a one-off a rental could be effective. However, if the piece of equipment will be used for many years a purchase is likely the better option as the reoccurring costs will be kept low. An important aspect of reusability is the configurability of a machine. For example, the MineMaster MM430 utility forklift which can be retrofitted to be a loader, forklift, man-carrier, shotcreter, backhoe or more. Versatile equipment like this can perform multiple roles long after the intended job and owning a multi-use piece of mobile equipment is more attractive.
We hope this article can aid in the decision of buying vs renting heavy equipment. We would love to hear from you and help creating a solution that is right for your operation. Contact us do discuss your specific requirements and learn more about the sales and rental options available through MineMaster!