The rental air conditioning business and your company
If you are capable of working on all types of commercial equipment, you certainly have the ability to provide rental equipment. Your first reaction is likely to be, “No way, I have problems keeping up with the needs of my service customers now. I just don’t have enough service technicians available. I don’t need anymore headaches.”
This reaction is reasonable and one that all service contractors can make.
However, before you completely reject the idea, it might be beneficial to read further and consider how the rental business could affect you.
Keep in mind that the rental business is here to stay; you must deal with it one way or another.
Our company, Entech Sales and Service, is a commercial service company that got into the rental business several years ago. We have made some observations over the years, which may be helpful to you in deciding how you will deal with the rental business.
Who needs itThe rental business involves providing air conditioning that is packaged in such a way that it can be easily shipped to a job location and quickly installed on a temporary basis. Some common applications for rental equipment are:
Cooling while repairs or replacements are taking place in an existing building — Most large buildings rely completely on the mechanical air conditioning system for cooling. When a failure occurs, it’s nearly always impossible to open windows for relief. This often means shutting down a building and sending people home.
Many owners are now buying insurance that allows them to rent cooling on an emergency basis. Therefore, from a financial standpoint, the expense of providing temporary cooling becomes less of a burden for the owner.
Planned shutdowns for equipment repairs or replacements — Often contractors must work around long delivery and installation times for new equipment. Temporary cooling can be used to allow the contractor ample time to install or modify equipment as needed.
Cooling for special events — Trade shows, sporting events, and meetings are often held in tents or unconditioned spaces like warehouses. Today there is a demand to provide cooling for these events.
Process cooling application — Manufacturers use temporary cooling for experimental or short-run production processes.
What contractors should considerThere are some fundamental considerations or obstacles to deal with to determine if a rental business makes sense for your company:
- Market area — A good local market area makes it much easier to start. However, providing rental equipment outside your immediate service area isn’t as difficult as you may think. Entech and other rental companies started out on a national basis. Advertising and promotion are important.
- Labor — Adding a rental business will strain an existing service business. For the most part, temporary cooling is a seasonal business, peaking at the same time as the service business.
The rental business requires versatile and talented service technicians to install and commission equipment once it has been installed — exactly the same people needed to make your service business successful. Staffing to handle both businesses can be a problem, but remember, it’s also an opportunity.
At some point, vital accessories such as pumps, hoses, and flexible duct must be added to the inventory. However, this is a business that can be grown slowly.
Not many independent contractors can make an initial investment that would immediately put them into the rental business. You could spend millions of dollars and still not have enough equipment.
A contractor’s ability to compete with manufacturers may be enhanced if they, too, provide rental equipment.
Many plusesAs a contractor, you are going to see more jobs that require rental equipment. If you don’t intend to start your own rental business, then you should seek a good working relationship with a rental provider so you can compete on jobs specifying rentals.
We at Entech have found that the rental business brings us some unexpected benefits and has made us a stronger organization.
The challenges of rental jobs has brought out the best in some of our technicians. Most rental jobs are performed on an emergency basis and require creative ideas and teamwork.
The rental team is usually on stage performing under the watchful but appreciative eye of a customer whose business has been seriously affected by the loss of cooling. Customers are quick to express their praise and appreciation for the efforts of the crews working tirelessly to get cooling back online. These jobs often end up being a morale booster.
Rental jobs also provide a change of pace and can be fun. On other jobs, technicians tend to work alone and seldom have a chance to confer with their colleagues. Rental jobs often bring crews together. They share job pressures and help each other with decisions and ideas.
Some jobs require travel to another area of the country and allow technicians to see and do things that are not available locally. If possible, we allow the employee’s family to travel along. This can be like a mini-vacation and is appreciated by all.
Keeping the rental fleet in good working order has provided an excellent means to train inexperienced technicians. A technician can test and troubleshoot equipment in the shop without the pressure of a customer looking over his shoulder.
The variety of equipment available has been a real asset to our framing efforts. We not only train our own people, but provide training for other contractors throughout the nation.
Some interesting rental jobs we have worked on recently include:
- Cooling a warehouse in Ft. Worth, Texas that was stacked to the ceiling with chocolate candy during the months of July, August, and September; this building was 80,000 sq ft with a 20-ft ceiling. We used more than 400 tons of air-cooled chillers and air handlers, with power provided by a generator.
- Providing temporary cooling to a brewery for its curing vats while repairs were being made to the building, which was damaged in an explosion;
- Providing cooling for a pharmaceutical company for a year while a new product was tested;
- Cooling an attic during the heat of the summer while a film crew made a commercial; and
- Cooling a 100,000-sq-ft tent for a trade show.
The rental business has headaches and problems, but we feel it has made us a better organization. But I wouldn’t recommend this business for every service contractor. The major stumbling blocks for most contractors are the investment necessary to establish an inventory, and the space required for storing equipment.
We have outgrown our space at our present location, which consists of three acres of concrete storage, and we will be moving to a seven-acre facility next year.
Entech got into the rental business about 10 years ago. We started by buying and selling used or surplus equipment, and we are still doing this. The inventory of used equipment made it easy for us to provide units for rentals.
Today we have more than a million dollars of rental and used equipment and still sometimes don’t have the right equipment for a job. Our return on investment is adequate, with profits running about the same as our service business.