The capital cost of acquiring heavy equipment is a large outlay that many smaller companies cannot afford. Such companies, while being able to trade successfully in a healthy market, operate on very small margins and are often struggling to maintain cash flow. As the owners of the machines, they are also responsible for maintenance and other running costs such as fuel, insurance and registration.
Doing Small Construction Work in a Cost-Effective Way
When their machines are not actually working, they are also not generating income, so large amounts of money are effectively sitting idle. Typically, they also employ machine operators, so wages and employment on-costs must still be covered while the equipment that makes the money is slumbering through the night. Is it any wonder that specialist companies have sprung up to do the smaller jobs that are not cost effective for large construction businesses?
Dee Gees Bobcats started out over twenty years ago with just this type of situation in mind. From small beginnings of a truck and one bobcat to where we are now has been the perfect illustration of the benefits of hiring equipment rather than buying it. We are now in a position where we can offer our clients the best of both worlds. We can provide our equipment with an experienced operator, or just hire out what the client needs for the time it is needed.
Hiring and Rental Industry a Major Contributor to the Economy
We are now operating successfully in the hiring and rental industry, which in Australia is now worth more than $5 billion. The mining and construction industries are the two major contributors to this growth. With mining on a recovery trajectory and the construction industry enjoying a robust period, especially in the area where we operate, the future looks bright.
Smaller, Modern Equipment Creates Flexibility
The type of equipment now available has also had a big impact on the industry from the perspective of the small operator. Once machines only came in one size – big. Now, however, there are excavators in a range of sizes to suit small jobs such as trenching and drainage work, under-house and swimming pool excavations. These machines also come with a range of task-specific attachments that create flexibility.
Heavy Equipment Hard to Liquidate in a Falling Market
The old idea that hiring was wasting money that could be better spent on owning a piece of equipment is disappearing. Many businesses go under in a falling market when too much money is tied up in assets like heavy equipment that are not easily liquidated. Astute business owners are looking for a consistent return on their investment, so unless they are in the business of hiring out equipment to others, there are much more lucrative ways to get their funds working.