Survey: Strong Rentals and Equipment Acquisitions

A larger percentage of executives (63%) said they expect activity levels in nonresidential construction to increase in 2015 compared with 55% who expected it to increase in 2014. Other highlight include:

Equipment Rental Remains Strong

The multiyear trend in equipment rental growth is set to continue in 2015. The majority (62%) of responding equipment distributors and rental companies said they are renting more equipment to contractors than a year ago, and 60% said they plan to increase the size of their rental fleet in 2015. Contractors who said they rented heavy construction equipment in 2014 said they would increase rental activity in 2015. Thirty-seven percent said they would rent more than last year, compared with 17% who said they would rent less. Contractors cited the need for project-specific equipment most frequently (70%) as the reason why they choose to rent rather than buy.

Equipment Acquisitions Expected to Increase

Ninety-two percent of contractors surveyed said they purchased new and/or used equipment in 2014. Ninety-two percent said they plan to purchase in 2015. More contractors than a year ago say they will increase new and used equipment acquisitions. Thirty-four percent of contractors said they plan to increase new equipment purchases this year, up from 26% in 2014. In addition, 30% of contractors said they plan to increase used equipment purchases this year, up from 22% in 2014.

Distributors are more optimistic about sales increases in new and used categories than in either of the previous two years. Most (70%) distributors said they expect new equipment sales to increase compared with 2014 and 73% of distributors expect their used equipment sales to increase compared with 2014.

Cost Concerns

Contractors and distributors were asked what their top three concerns were among several cost categories. Contractors said they are most concerned with Employee Wages and Benefits (69%) followed by Healthcare Costs (58%) and Taxes (53%). Distributors are most concerned with Healthcare Costs (68%), Equipment Costs (67%) and Employee Wages and Benefits (59%).

Conclusion

The 2015 survey marks the 39th year in which Wells Fargo Equipment Finance and its predecessors have published primary research findings for the infrastructure construction industry. Conducted between Jan. 8 and Jan. 30, 2015, the survey includes responses from 413 construction industry executives from across the U.S. The full survey may be accessed at http://tinyurl.com/pv5acjg.

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According to Wells Fargo Equipment Finance's 2015 Construction Industry Forecast, contractors and equipment distributors remain optimistic regarding the prospects of local, nonresidential construction activity this year and respondents expect a strong rental market and increasing equipment acquisitions. The survey uses an Optimism Quotient (OQ) as its primary benchmark for measuring construction industry contractor and equipment distributor sentiment. This year's OQ reached an historic high of 130, up six points from 124 in 2014 and up considerably from the survey low of 42 in 2009.

This year's increase in the OQ marks the third time in four years that it has reached a new high, which signals confidence that growth has been accelerating over that time.

The positive survey results were seen as particularly good news considering that they coincided with a period of sharp decline in crude oil prices at the beginning of 2015. According to John Crum, senior vice president and national sales manager of the Construction Group at Wells Fargo Equipment Finance, “We thought the predictions of lower capital expenditure related to construction in the energy sector might impact more of our survey population and dampen enthusiasm about the year ahead, yet contractors and equipment distributors indicated that the trajectory of the broader construction industry is still going in the right direction: up.”

A larger percentage of executives (63%) said they expect activity levels in nonresidential construction to increase in 2015 compared with 55% who expected it to increase in 2014. Other highlight include:

Equipment Rental Remains Strong

The multiyear trend in equipment rental growth is set to continue in 2015. The majority (62%) of responding equipment distributors and rental companies said they are renting more equipment to contractors than a year ago, and 60% said they plan to increase the size of their rental fleet in 2015. Contractors who said they rented heavy construction equipment in 2014 said they would increase rental activity in 2015. Thirty-seven percent said they would rent more than last year, compared with 17% who said they would rent less. Contractors cited the need for project-specific equipment most frequently (70%) as the reason why they choose to rent rather than buy.

Equipment Acquisitions Expected to Increase

Ninety-two percent of contractors surveyed said they purchased new and/or used equipment in 2014. Ninety-two percent said they plan to purchase in 2015. More contractors than a year ago say they will increase new and used equipment acquisitions. Thirty-four percent of contractors said they plan to increase new equipment purchases this year, up from 26% in 2014. In addition, 30% of contractors said they plan to increase used equipment purchases this year, up from 22% in 2014.

Distributors are more optimistic about sales increases in new and used categories than in either of the previous two years. Most (70%) distributors said they expect new equipment sales to increase compared with 2014 and 73% of distributors expect their used equipment sales to increase compared with 2014.

Cost Concerns

Contractors and distributors were asked what their top three concerns were among several cost categories. Contractors said they are most concerned with Employee Wages and Benefits (69%) followed by Healthcare Costs (58%) and Taxes (53%). Distributors are most concerned with Healthcare Costs (68%), Equipment Costs (67%) and Employee Wages and Benefits (59%).

Conclusion

The 2015 survey marks the 39th year in which Wells Fargo Equipment Finance and its predecessors have published primary research findings for the infrastructure construction industry. Conducted between Jan. 8 and Jan. 30, 2015, the survey includes responses from 413 construction industry executives from across the U.S. The full survey may be accessed at http://tinyurl.com/pv5acjg.

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