Portable Market Revolutionized Through Rental Agreements
‘Unique’ Ability to Rent Helps Consumers in Need
When portable heating and cooling began to take off, it wasn’t because a new product came along and revolutionized the market, nor because the products received grand publicity for something. It was because manufacturers and distributors evolved the market.
By deciding to offer portable heating and cooling units for rent, the market expanded and continues to grow to the popularity it holds today.
Once strictly deemed as people-cooling devices in Japan, portable cooling solutions are now utilized for a number of rental applications worldwide.
“Without the rental market, most of these distributors wouldn’t be around as full-service distributors,” said Garth Tagge, national sales manager, Spot Coolers. “If you look at the beginning of the rental market, the early distributors were promoting this product as a solution and a people cooler, because that’s what it was designed for. But when that hit a brick wall, because companies weren’t going to spend that much money to cool American workers, in the process of promoting the end users, a lot of people would tell us, ‘I can use it, but I only need it for a week, and I’m not going to buy it for that,’ and that created the rental market for distributors. Instead of foregoing the potential to generate any revenue from it, I’ll rent it. And as we went forward from that, we started promoting the equipment as a sale and/or rental item.”
Tagge said a big factor in creating the rental market was born out of how distributors tried to introduce the product.
“In the beginning, the product had a known market in Japan, but wasn’t available in the U.S. We tried to get people to demo the product. We would have 10-12 units out of boxes at different facilities, hoping people would give them a try,” Tagge said. “So now we had units out of boxes, and when somebody came and said they could use one for a month, but didn’t want to buy it, we’d give them one of those, and that helped lend itself to the rental market, as well.”
Clark Michel, vice president, Atlas Sales and Rentals Inc., said the rental market really gave the product the exposure it needed in order to grow, because renting products was not traditional in the HVAC sales cycle.
“In the early days, you’d mention portable air conditioning to somebody, even contractors, and they’d ask what it was,” Michel said. “They’d never seen one. Now, everybody has seen one and most contractors could probably tell you a success story about how they’ve saved them from a problem. Portable helped bridge the gap when they were stuck waiting to get a system back online.
“We had a quality product and the people who rented it, liked it. It’s not like they rented it and it broke down. They rented it and it worked well, and they used it again,” said Michel. “After a couple of rentals, a lot of people just figured they should buy one. Once they’ve used it, they start to see more and more places where they can use it and they fully understand how often it comes in handy.”
Dennis Haller, vice president, North American sales and marketing, Aggreko LLC, said the rental market was created based on industry demand.
“A chiller, for example, is a mechanical piece of equipment, and when it breaks, a facility may not be able to function without cooling,” he said. “So there was a part of the market that simply drove rental equipment from that type of emergency need. Over time, what the industry has found is that utilizing temporary utilities offsets other costs that come into play when doing a retrofit or change-out, while also enhancing production capabilities and further justifying the spend.”
Leon Aldridge, director of marketing, Port-A-Cool LLC, said the company encourages distributors to rent, especially if they are inclined to do so or have a market for it.
Fred Robanser Jr., president, ABCO Mechanical Contractors Inc., San Francisco, has benefited from the rental market for several years. In fact, ABCO operates its own rental division, offering much more than just portable cooling solutions. It started with the United States Postal Service, which requested an air conditioner for a week. That transaction ultimately stretched out to two years. He’s since rented more than 95 units to one Palo Alto, Calif., job site alone.
He said the rental market is certainly very unique for the HVAC industry.
“Back when I first started, there were very few people, very few contractors, who would even consider doing this,” Robanser said. “They’re thinking more along the lines of installing something, but when it came to shutting a server room or large area down, they’d come to us and rent the equipment. Eventually, they got smart and asked, ‘Why pay ABCO? We’ll just buy some of these on our own.’ And that’s what’s transpired over the years. But, my mindset has been geared up to renting all sorts of equipment.”
Rentals are enticing for users because they often do not require as great of a capital investment as purchasing and installing a new system.
“You have lifecycles of capital-invested equipment that clearly necessitates new heating and cooling systems. However, economic conditions hinder capital spending on this type of equipment, and in the interim, between an event, breakdown, or need for additional capacity, there is a continuous need for rental service,” Haller said. “For example, a big part of our business is in the industrial market where cooling is not only needed to keep people cool, but to produce a product by a specific timeline. There are also special events, like music festivals or sporting events, where attendees expect a quality experience, and specialized rental equipment is needed to serve unique HVAC requirements.”
Publication date: 7/1/2013