Rental survives in a market in crisis

Executives of the industry carry out a market analysis and suggest measures to allow companies to overcome this turbulent moment

One of the areas that had more impact in the recent crisis was rental, mainly companies that rent equipment for civil construction. Studies developed byAnaloc – AssociaçãoNacional dos Sindileq´s e das entidadesestaduais dos locadores de equipamentos (national entity of rental company unions) show the existence of 10,000 rental companies: 6500 of light equipment, 2500 of the yellow line and 1000 of cranes, platforms and power generators.

According to Renato Botelho, president ofOrguel Group, the crisis trapped the companies as occurred in all areas of Brazilian economy. This situation forced the companies to reinvent themselves.For him, unstable moments such as these are good opportunities to carry out internal structural changes that were already necessary, but that did not receive the right importance in periods of growth.

As occurred in all markets, rental also suffered the impactof Brazilian economy recession. And as occurred in all markets, players need to reinvent themselves. Unstable moments such as the current are good opportunities to carry out internalstructural changes that were already necessary, but that would not be relevant in periods of growth.  “It is difficult to quantify how many companies closed but we know that this occurred. Companies which arestill in the market had to adjust themselves to the new realities, reviewing their territorial coverage, reducing costs, looking for new markets and carrying out different strategies to maintain or even increase their share”, highlightsBotelho.

The executive believes that to look for new niches of work became a necessity and a surviving strategy. “Our strategy is based on these premises. During the last years, the Orguel Group was passing by a huge transformation that ensured its survival till the current days and that will place the company as the best rental company of the country till 2020. In this context, some actions which are being carried out are far beyond the simple practice of a new policy of prices. Among these practices are the opening to foreign capital, the strong movement of integration of the companies of the Group in a sole brand, the unification of the sales portfolio to increase market share, the opening of new markets and the segmentation of action in the areas of building,infrastructure andindustry”, saysBotelho.

To take advantage of idle assets to open new markets is a good measure to reverse their condition of idleness and is also an opportunity to analyze the portfolio and—when it is the case—to sell some machines. “This is an alternative of additional income that may help to relieve the teller in short term”, says him, being optimistic about market recovering. “We know that the crisis will end. We do not know how or when but a company with long-life expectation such as ours cannot let the crisis become a determining factor. As the saying goes “we have to make a lemonade from the lemon”. The target of the Orguel 2020 Group Project is more than double the company’s billing in the next five years”, informs him.

Advantages of rental

InovarLocações—a network of machine and equipment rental for civil construction—carried out a survey which shows that equipment rental may generate an economy of more than 12 percent in the cost of a project. According to Mauricio Crivelin, president of the network,“in a Project of low or medium size, with approximately 500 sq.mt., the cost of rented equipment for construction represents less than one percent of the total cost. When buying equipment, this cost may become 12 times higher”.