16
WORLD RENTAL REPORT
IRN SEPTEMBER-OCTOBER 2013
JAPAN
There is no escaping the fact that the rebuilding and clean-up following the 2011 earthquake and tsunami
still dominate the Japanese rental market, and not just because of the direct works required.
“The current level of rental demand in Japan is good”, says a spokesman for Nishio Rent All Co Ltd, one
of the giants of Japan’s large rental sector, “And, for the future, demand is expected to continue to be
active [because of the] full scale reconstruction in the areas where earthquake and tsunami attacked,
[but] also in other areas, such as the nationwide inspection of public infrastructure such as bridges
and tunnels, and also fire-prevention and disaster-prevention jobs are increasing, which will result in
increased rental demand.” Depending on which government statistics you use, the Japanese rental sector
grew by between 13% and 16% in 2012.
The reconstruction continues to be challenging and will take years to complete; “Rental demand is large
due to the reconstruction jobs and decontamination work. Various reconstruction jobs will continued at
least to the year 2018, if we base it on the reconstruction work plans developed by municipal offices of
those areas.”
For Nishio, and its major competitors like Aktio, Nikken and Kanamoto, there are other challenges, one
being the prospect of a changed dynamic for used equipment sales. “In the past, used excavators and
wheel loaders, which are the main equipment in construction equipment rental, have been exported to
other Asian countries after rental use in Japan.
“By use of this rental equipment cycle, rental companies managed to make the rental business workable,
by adding the profit coming from sales of used equipment. [However], construction equipment to be
produced from November 2013 should meet Japanese exhaust emission control regulations equivalent to
Tier 4, and will use higher purity, light diesel fuel.
“The specifications of this equipment will not be suitable for other Asian market where lower grade
diesel fuel is used, and the [traditional] rental equipment cycle may not be maintained. As a result, a
change in the rental industry is foreseen, and the industry will need to cope with this change.” A look at
how it buys its equipment is one possible solution.
Nishio’s wider strategy is to continue to
internationalise its business, a process begun
as long ago as 1992 when it established a rental
business in Malaysia. Since then it has opened up
new businesses in Thailand and Singapore.
“We started our rental operations by servicing
major Japanese general contractors, and then,
gradually expanded to service local construction
companies”, says the spokesman, “We are going
to increase the types of equipment we offer for
rental, and aim to expand the business in these
companies”.
More recently the company established a local
corporation in Vietnam in April last year and then
in Hong Kong in October.
“For the overseas market, we will concentrate on
expansion of business in these countries [Malaysia,
Thailand, Singapore, Vietnam and Hong Kong].” An
intermediate target of Yen10 billion (€75 million)
has been set for revenues outside Japan.
of 2014, except at those locations that don’t have
sufficient space.
The CPER story is partly that of a strategy that
was well planned and executed, and partly one of
good timing. Having successfully tested the rental
of trailer towable equipment - such as the Boxer
range of mini tool carriers - at a number of Home
Depot locations, the company has been repeating
the model throughout the Home Depot network,
equipping each store with a start up fleet of between
five and 10 machines, with the largest operations
having around 30 units. These fleets now stock
Kubota and Terex mini excavators, Toro trenchers
and stump grinders and Altec chippers, alongside
the core Boxer range of mini tool carriers.
The good timing comes in with the recession,
and Roger Braswell’s firm belief that the slowdown
pushed the focus from ownership of equipment
towards rental; “It was underway before the
recession, but the recession has underscored the
value of rental. I’m convinced that has happened.”
He adds that the economic troubles “caused a
good number of companies to fail and out of these
came start-up companies, created by former owners
and employees, and these start-ups recognise the
need to conserve capital.”
The growth of CPER in Home Depot – which will see
significant investment for another five years as the
fleets are expanded at each location – also reflects
a broadening of the customer base for rental; “Quite
often our customers were going to do a job by hand,
then they see our equipment and decide to rent
something”, says Mr Braswell, “We have broadened
the market and brought new people to rental.”
Read the Compact Power story and you start to
better understand the confident growth predictions
for the US rental market being made by the
American Rental Association (ARA).
He acknowledges some surprise that the plan and
the forecasts for the business have been so close
to the reality. “I started selling equipment to Home
Depot in 2001 and servicing it in 2002, so I was very
close to what happened at store level, at customer
level. We could see the need for what we were
doing”, he tells
IRN
, “To be able to execute on your
idea - I’m thankful as a business partner and as an
entrepreneur to have had that opportunity.”
Going forward, Mr Braswell shares wider concerns
about the impact of the withdrawal of Federal
‘quantitative easing’ support for the US economy.
He supports its phased withdrawal, and hopes it
won’t have too big an impact; “My hope is that we
won’t see brakes put on the economy. It may not
continue to expand, but I’m hopeful we won’t see a
return to the conditions of 2008 and 2009.”
■
Compact Power Equipment Rentals stocks towable equipment, like
this Boxer tool carrier, at more than 900 Home Depot stores in
North America.
A Nishio Rent All branch in Japan. The company hopes to grow
its rental business in South East Asia.
Nishio Rent All says new engine emission regulations will
complicate the Japanese rental model, which places a large
emphasis on exporting used machines to Asia.
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