Building a different rental model

Willy Schlacks, president of EquipmentShare

There are thousands of equipment rental companies out there, but possibly just one that is measuring its impact not in terms of fleet size or utilization, but on how it is improving construction productivity.

EquipmentShare, based in Columbia, MO, is differentiating itself from its competitors by putting connected technology – telematics – at the core of its offer to contractors.

Willy Schlacks, EquipmentShare’s president and co-founder, reinforces the ‘we are different’ message right-off in the interview by saying that “the world does not need another rental company – we have no interest in that.”

“The industry does need a solution, which is digitizing the construction environment. There is an opportunity and a need – construction sites are chaotic and transitory, it’s a unique environment. It’s an ecosystem play – to build a rental company is not the reason, that’s not the future.”

Contracting background
The productivity goal is one that he has shared with his brother and co-founder, Jabbok, who is the company’s CEO, since the pair ran their own contracting business. It was during those two decades that they grew increasingly frustrated with equipment downtime.

What this means in practice is offering contractors a rental fleet that is fully telematics-enabled as well as fitting a contractor-owned fleet with its Track technology.

Initially, the Schlacks’ aim was to sell telematics-enabled equipment directly to contractors, but the strategy has for the past few years focused on creating its own connected rental fleet and also integrating its Track technology into a contractor’s fleet.

It has been successful. Around 60,000 machines are now connected to its technology, of which around 45% are owned directly by EquipmentShare. The online platform, which is OEM-agnostic, provides contractors with information on equipment usage, operating hours – the usual telematics tool-kit – but also smart alerts on downtime, under-usage and more, allowing contractors to manage their fleets more efficiently.

“If you rent from EquipmentShare, only with equipment, it comes with technology that gives you real financial visibility – cost, utilization, accuracy, who can use machines,” says Schlacks.

He says that no other company in the market has the same “ecosystem” approach, arguing that existing major rental

Aerial platforms are a significant component of EquipmentShare’s fleet

players are focused on distribution or equipment and commoditizing rental.

“There is no need for EquipmentShare unless we are driving value,” says Schlacks, “If they are using us then they are finding value.” He says the growth of the business – typically doubling every year – has depended on “customers finding value in the product.”

The goal is to ‘shift the dial’ on construction productivity; “We don’t see our business having 500 locations and $4 billion in revenues,” he says, “That’s just too small. We have to do far more for our customers.”

$1 billion revenues
Schlacks, who says the business is already on track for revenues of $1 billion this year, explains; “For construction, we want to see a meaningful increase in output per labor hours, an increase of over 2%. Then we would feel we have achieved some success long-term.”

To do that, he says, “we have to have $20 billion running through our platform.” That scale, he points out, would still represent a very small proportion of total construction.

“If contractors can actively increase productivity, we will support companies in that objective. We invite them to adopt that vision.”

And the vision extends beyond pure equipment to encompass construction materials as well as labor. The ‘ecosystem’ vision is to have the material supply-chain digitized in the same way as with equipment, and to collect data on the workforce as well; “We will digitize across all the assets – machines, people, materials.”

Not ‘Big brother’ tracking
In terms of staff, he’s not interested in ‘big brother’ tracking of workers, but instead a “democratized” data environment where information on a worker’s activities creates data on things like machine maintenance times as well as on an individual’s actual experience, feeding into a “granular resume.”

“I’m against the 1984 scenario, about tracking everyone,” says Schlacks, “It’s not about tracking people on site… If the platform is about watching every move you made, then you will struggle with adoption.”

Of course, the extension of digital technology into the full supply chain will take time, and the focus has initially been on equipment – which is why, to many, EquipmentShare is simply a rental company making a technology play.

A delivery ready to go from one of EquipmentShare’s 60 locations in the U.S.

But it is a measure of the company’s divergence from the rental norm that its progress will be viewed not only in the context of fleet rental size or value, but in how successful it has been in digitinzig construction.

Schlacks does not downplay the scale of the task; “There is always the North Star – you never reach it, but the scenery is always changing. Our vision is increasing productivity.”

Impact on the ground
If EquipmentShare is rather short on financial details – the $1 billion revenue figure he offers is to give people a sense of the scale reached – it has been investing heavily in its fleet and is making an impact on the ground. It now has 60 locations in 25 States – up from just 25 locations in mid-2019.

That impact was made tangible in October when Las Vegas-based Ahern Rentals – owned by Don Ahern – filed a technology patent infringement lawsuit against the EquipmentShare, in which it also claimed that the company had poached Ahern employees.

EquipmentShare countered that it had not used Ahern’s technology and that it was proud of its ability to attract employees “by offering a superior working environment.”

Global strategy
Whatever the results of the lawsuit, it shows that having a wider vision does not place the company outside the realities of a highly competitive rental marketplace.

There is also a global component to its strategy, with the company looking to partner with rental companies, contractors, or OEMs outside of North America to use its Track telematics platform. It has a team working on this based in New Zealand.

So as 2021 progresses, there will be a lot going on at EquipmentShare, not least the challenge of sustaining its record of growth. Has he been surprised by that growth? Schlacks says not, but neither is he satisfied; “We always feel that we’re well behind our dreams.”