Time to Upgrade Tired Trucks or Worn-Out Restrooms?

A trends analysis predicts $1.6 trillion in equipment spending by US companies optimistic about economic growth in 2018.

Time to Upgrade Tired Trucks or Worn-Out Restrooms?

Jim Kneiszel

It looks like this may be the year you add new equipment or upgrade your existing fleet of service vehicles and portable sanitation inventory, so predicts the Equipment Leasing and Finance Association through its recent release of the Top 10 Equipment Trends for 2018.

You may have experienced a period of sluggish growth following the 2008 recession. While there has been a long, general rise in demand for restrooms and related site services since then, some contractors have let me know an improved economy hadn’t kicked in for them until the past several years.

And it’s true there is a lot of talk lately of acceleration in construction and an expectation of increased general consumer spending that should contribute to a sunnier outlook for portable sanitation providers working special events and parties. The economic climate is rosy today, according to the equipment-financing group, and they argue that will translate into you wanting to put new trucks and fresh new restrooms on the road during the upcoming busy season.

PENT-UP DEMAND

According to the Equipment Leasing and Finance Association, U.S. businesses, nonprofits and government agencies will combine to spend $1.6 trillion on capital goods this year. Among those purchases are the tools that keep your business humming along.

“These trends will impact a significant portion of the U.S. economy. Capital spending will have its strongest performance in six years. Higher business confidence, fewer regulations and an improved economy will drive equipment investment to grow 9.1 percent this year,” says Ralph Petta, president and CEO of the Equipment Leasing and Finance Association, in announcing the trends.

“Momentum to finance equipment acquisitions will strengthen (an anticipated $1 trillion of new borrowing). And tax reform will help unleash pent-up demand for new equipment,” Petta continues. “Recently enacted corporate tax cuts have businesses pulling the trigger in acquisitions they have put off.”

I would say the frenzied action at the Water & Wastewater Equipment, Treatment & Transport (WWETT) Show earlier this year is one sign of the interest contractors are showing in making upgrades. So are the photos I’ve been seeing come in for upcoming feature stories in PRO. Gone are the tired, drab service trucks in favor of those with shiny new tanks; sharp, creative graphics; and more creature comforts and service convenience features for the drivers.

Among economic indicators — mostly positive with a few lagging concerns — from the financing group:

  • A broad-based cyclical upturn in the economy is due in part to the strongest global economy in more than a decade. Healthy business investments should continue before potentially waning toward the end of the year.
  • Multiple measures of business confidence, including the Monthly Confidence Index for the equipment finance industry, increase the probability that optimistic forecasts will be met.
  • A rising interest rate environment won’t likely deter investment in key equipment. The Equipment Leasing and Finance Association does caution that an improving economy may bring along inflation and three to four Federal Reserve interest rate increases in 2018.
  • Look for new technology to be irresistible to businesses looking for ways to increase efficiency and profitability as new market opportunities emerge with a growing economy.
  • Residential housing may not get a hoped-for recovery in light of Fed rate increases and home prices rising faster than the incomes of potential buyers.
  • Major curbs on immigration could provide a headwind to growth through labor and skills shortages in a number of industries, including construction.

A BUYING FRENZY

It’s pretty clear that a fuse has been lit under the U.S. construction industry, and optimism for increased infrastructure spending may prove to be the dynamite at the end of the fuse. Commercial and residential construction projects are staples of the portable sanitation industry, but large commercial projects, in particular, can offer a huge boost to  your business. A factory or hospital expansion, for instance, can result in placing upward of 100 restrooms on a site for a year or two and those customers calling for daily service. That can provide a huge demand for additional equipment.

At the same time, as demand is growing, I still hear anecdotal stories from PROs who are running older trucks and eeking out a few extra years from their restroom inventory. Profitable customers won’t stand for old or unreliable equipment. They’ll want restrooms to be in tiptop shape and trucks that can respond to an elevated service protocol. With more units on the job, you can’t afford to be plagued by trucks that go offline to spend a few days in the garage for unanticipated repairs.

In a dynamic economy, it can be smarter to run with a little extra equipment capacity so you can scramble to serve new customers. I’ve heard it’s not a great feeling to be caught short of restrooms or service vehicles when a potential new client makes a surprise call. It doesn’t seem like a wise time to run leaner and meaner, but rather a time to take stock and stock up on inventory.

It might also be a good time to revisit and recalculate your equipment replacement schedule. If you are planning to run faster and harder with your equipment in the coming years, you might look to shorten the truck replacement cycle by a year or two. If you typically replace vehicles every seven years, consider the strategy of moving that up to five or six years. New trucks run more efficiently and present fewer maintenance headaches as your drivers pile up the miles.

A shorter sell-off date will also preserve some resale meat on the bone. Remember, even the companies that like to buy older trucks are going to see increased demand, so there will be a good market for used — but not used-up — rigs.

IMMIGRATION IMPACT

So keeping your fleet fresher will mean fewer breakdowns and better working conditions for your drivers. And that leads to my next point.

The trend story touches on the impact potential changes in immigration policy could have on companies like yours. Employee recruiting and retention is always a challenge, but the challenge will grow as wages for other types of work rise and unemployment levels reach record lows.

PRO drivers take pride in the equipment they use every day. Your best employees appreciate a new work truck, and it’s been shown that they will take ownership of that rig. They’ll wash it, vacuum it at the end of the day, perform daily inspections, and report issues as they arise. This is the kind of maintenance you want to encourage from your employees, and you’re likelier to get it by making sure they have an updated ride.

Don’t underestimate the job satisfaction that can come from having newer, cleaner and better equipment than the competitor down the road. The same holds true for your restroom inventory. Better restrooms and trailers are easier to keep clean, need fewer ticky-tacky repairs in the field, and garner better user reviews. Make no mistake: Your crew would rather work with great equipment that makes the customers happy and keeps the compliments coming for the service they provide.

HOW’S YOUR OUTLOOK?

It appears we are enjoying an upswing in the economy, and this summer holds promise for many in the portable sanitation industry. Are you riding a wave of prosperity mentioned through the Equipment Leasing and Finance Association trends? Are you hiring new workers, adding more restrooms, or looking to expand the scope of your site services offerings? Send me an email, and tell me your story. We can share it in the pages of PRO.



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