Times are tough. We haven’t seen local construction activity this slow for at least 20 years.

It wasn’t so long ago that things were very, very different.

It wasn’t so long ago that finance was cheap and plentiful.

And buy we did. There was a frenzy to buy new gear based on the cheap money in a post-Covid world. It all fitted quite nicely with our “more toys” kiwi psyche.

But as Billionaire investor Warren Buffet once said, “Only when the tide goes out do you discover who’s been swimming naked”. Those glory days of cheap money and easy credit are long gone. Those promises of “just 36 easy monthly payments” seemed believable at the time.

The feedback from the financial fraternity suggests that the smaller operators are getting by. Just.

It’s the medium sized trade businesses that are more likely to struggle. A handful of employees on the books, a couple of company vehicles and a trailer full of gear. Then Wham! A slow-down in business and suddenly those compulsory equipment repayments become tough. Real tough.

So how do you find the right balance between hiring a piece of equipment or buying it?

The American Rental Association (ARA) recently canvased some customers at its annual conference with the same question and came up with some really good guidance.

Rule #1:        200 Hours   

If you aren’t using a piece of equipment for at least 200 hours per year, then you’ve probably got too much money tied up in a lazy asset. It’s probably better to hire it when you need and go buy a Jetski (we added the Jetski bit).

Rule #2              Small consistent use.

If you aren’t using a piece of equipment as part of your regular routine then you are better off hiring it when you need it, rather than owning it.

Let’s not forget the other important factors such as the hassle of maintenance, reliability and certification. Cleaning and maintaining equipment takes a lot of work, which takes your attention away from the things that really matter and make you money. Hire companies focus on these mundane tasks so that customers don’t.

And most hire companies turn their machinery over very regularly. We upgrade our gear frequently to keep the cost of maintenance down and reduce the chance of breakdowns. We haven’t met a customer yet who didn’t like new gear.

We think the Americans came up with a couple of good rules. Problem is, no one’s going to remember them come the ‘boom’ part of the next cycle.