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Material Handling Wholesaler Cover
December 2017
Enjoy the December cover story as Dave Baiocchi helps you transition from supplier to strategic partner

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13 is over

Boy, 2013 went by in a blur. It seems we just started the year and here we are going on December as I write this. What do you think about 2013… me it was just plain confusing, and when working in a confusing environment, planning becomes very difficult to complete with any degree of satisfaction.

Do I expect anything different for 2014?  Not much.  I expect a slow economy, flat performance regarding the material handling markets, rising interest rates, changes to the tax code and the continuing mess surrounding healthcare.

I had Eli Lustgarten present his view of equipment markets at the CFO Conference I produce every year for AED. Eli is starting to see some pent up demand and thinks manufacturing may see resurgence as a result of the improvements made to the Panama Canal. Re-shoring as well as the ability to move more product and materials to both coasts would drive this improvement, and increase demand for material handling equipment and services.

Other topics of interest from the Conference relates to:

  • Tax planning for 2013 and 2014.
  • Tax benefits still available for 2013 (Bonus Depr and Sec 179 expensing)
  • Implementation of Obamacare.
  • The use of extended warranty contracts to control rental costs and as incentives when selling used equipment.
  • The complexity of the state and local tax arena.
  • A rental analytic service that tracks rental metrics for benchmarking purposes.

We have previously discussed most of the topics mentioned, but I found the rental metric data presentation most interesting. To cover this topic properly we divided the topic into two sections… that deals with the rental metric standards developed for the American Rental Association and a second session looking at how actual rental transactions can be used to gather data to benchmark rental billing, time utilization, dollar utilization and ROI results for each piece of rental equipment.

Not only can this data be compiled for the dealership or rental company, but also drilled down to Cat Class, brand, branch, sales person etc. In short, this program gathers up just about everything you need to know about your rental transactions and presents the results to you using benchmark reports that are easy to read and use.

Now for the best part. This company also is able to report benchmarking data for individual rental rates in your territory using a Federal Trade Commission approved method to share such data. The method requires a minimum amount of participants in the territory, and can only offer a rental comparison when five or more participants are renting the same Cat Class of equipment. The final criteria required to offer up this data is it has to be three months old.

The rate comparison is presented showing your average rate for the Cat Class against the average rate for the five or more participants renting the same type of units. After seeing this demo I said, “Who wouldn’t want to do this?”

Just so you don’t think some folks are submitting funny numbers for the comparison that is not an issue because the company pulls your ACTUAL rental contracts along with other data related to your rental transactions off your books daily. They slice it and dice it to fit the ARA rental metrics so that all participants receive apples to apples data.

Some of the other interesting data they provide has to do with the reasons rental revenue changes. Rental revenue goes up and it goes down, but why? Is it related to changes in the rental fleet, rate increases or changes in time utilization? Their reports tell you what changed your rental revenue. Additional interesting data is supplied by reports reflecting the rental metrics by branch, by sales person and by customer. Wouldn’t that be interesting to see every month?

I guess the real question here is why your system doesn’t provide this same information. A good chunk of them don’t. The data is in there but the reporting is not.  I have to tell you this was one of the most fascinating afternoons I have spent dealing with rental activity.

The company I am referring to is called Rouse Analytics. If you are in the construction equipment business you probably know them and have seen their monthly report. I am not sure what they do regarding material handling, but know that their monthly report covers industrial lift trucks. If you get a chance get a copy of their monthly report and study it. The data is presented using the ARS standard metric which may be different for how you calculate the same data. I find the report quite valuable and send it to my bankers every month to keep them abreast of what is happening in the rental world.

Spend an hour reading their report. You will enjoy it. I guarantee it.

Garry Bartecki is a CPA MBA with GB Financial Services LLC. E-mail to contact Garry.