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Rental Lifeline

"We don't survive if our guys aren't working"

By David Wolff

Superintendents Dale Franklin, left, and John Weber, with AMS president Brenda Stephenson. The company typically has 60 projects going at any time.

It’s 7 a.m., the beginning of another day for Cincinnati, Ohio, underground utility contractor AMS Construction. A two-person crew pulls out to repair a utility gas line – an urgent project - when an air hose fails on their truck’s brakes. There are no backup vehicles available and all the company’s technicians are busy. AMS superintendent John Weber takes the issue in stride, calling Rick Boone, his sales rep at Art’s Rental Equipment & Supply.

“The job was critical, and we needed a truck in a hurry,” Weber says. “By 9 a.m., Rick has us back on the road with another truck. That’s key. We don’t survive if our guys aren’t working. We have to keep our crews up and running all the time.”

AMS Construction was started by Kim and Brenda Stephenson in 1991 due to a dream. Utility work was already in Kim’s blood when the company started with just six employees. Kim works side-by-side with his fellow team members installing the underground utility lines, as well as functions as the CEO. Brenda handles the administrative duties, along with being active in the company growth and safety culture.

“I started with Kim and Brenda,” Weber says. “They are down-to-earth people. They are hands on, and that makes a big difference. We don’t have a lot of turnover. Our profits go back into the company and to the employees. We’re like a family.”

AMS has 230 employees and subcontracts with utility companies in the tri-state area of southeast Indiana, southwest Ohio and northern Kentucky. For large utility customers, AMS supplements the utility’s crews, performs contract work and responds to emergencies. They typically have about 60 projects going at one time, ranging from a 20-person job installing 50 miles of fiber optic cable to one person painting a light pole.

Optimizing equipment rentals
AMS owns a large fleet of pickups, trucks and specialty units. The standard crew configuration is a dump truck, trailer, mini-excavator and two workers. The company also owns seven horizontal directional drilling rigs. Equipment needs have grown
with AMS’ business growth, but the company finds it’s not always cost-effective to buy more equipment. Too often, a project’s longevity is unpredictable.

“A job that is scheduled for two months might stretch into eight months,” Weber says. But whether two months or eight, “if we buy a backhoe, we bought it forever. On the other hand, if we rent one for a job that might last two months, when it’s finished the machine goes back to Art’s Rental and sits on their lot depreciating, not on ours. We’re not making payments or maintaining them.”

Maintenance, repairs and fleet size all can represent additional costs to AMS. Rental has advantages – as long as it helps reduce downtime as well as cost. It puts pressure on the rental center, but Boone understands what AMS needs. So, if a crew calls Weber and reports a blown hydraulic hose on rented equipment, that message is passed along to Boone at Art’s Rental Equipment. Usually within a few hours there is another piece of equipment on the job site and the disabled unit is on its way back to the rental store. Other times, Art’s sends out a mechanic to resolve the issue.

“We try to do whatever is fastest for the customer,” Boone says. “If there is a major breakdown, we bring out a new piece of equipment. It’s our job to get the customer back up and running. They can’t afford downtime.”

Renting makes sense not only to supplement the fleet, but also to meet the immediate needs for a specific project. “We rent a lot of backhoes because they come in many sizes and have a variety of attachments,” Weber says. “Art’s has an extensive inventory. If we buy a backhoe, we’re limited in size and options. For a special need, we call them. Their pricing is very good. We have gotten away from purchasing because it just isn’t efficient for us.”

Brenda adds, “Depending on time of the year or terrain, we might need an excavator instead of a backhoe. Or, if we’re working in Kentucky where it’s rockier, we might need a breaker attachment. It’s easier for us just to call Rick and let him get us the exact machine we need.”

There’s another financial nuance that makes renting a better choice. Often, AMS’ rates are set by contract terms, and unexpected terrain or soil conditions can make a significant impact. “This happens a lot in joint trench projects,” Weber says. “We have a contract and a set rate, but when we get into rock, the situation changes because the job will take more time. I can’t have a four-man crew standing around with the wrong piece of equipment, because we’re only getting paid
per-foot. They’re standing around waiting for a different machine, and we’re losing money. I can call Rick, and an hour later he’s got a machine that can dig through rock and the crew can keep working. That’s worth gold to us. It doesn’t work for us to have to take equipment off other jobs. The crew might be down for an entire day using that method. With Art’s, I know they will respond quickly, and 90 percent of the time they get us exactly what we need. With so many stores, often they’re only 15 minutes away, and that makes a big difference, too.”

AMS could purchase 10 or 15 generators and think they’re set, only to discover in two weeks that they need more equipment. “Art’s has just about everything we could need on a moment’s notice,” Weber says. “We can solve a dynamic situation with a simple phone call. Rick has opened stores for us in the middle of the night and given us the keys without a contract or anything. We use the equipment and take care of the details the next day.”

Long-term relationship
AMS has been working with Art’s Rental for more than 20 years. “We also deal with two major rental chains in the Cincinnati area,” Weber says. “When we call them it’s like calling your brother or cousin and saying, ‘I’m moving this weekend,
can you come and help me?’ They may not want to, but they’ll do it. They tell us they might have a truck, and they’ll get back to us. They just don’t react quickly.

“We depend on immediate response. Art’s is right here; they’re hometown.” Reliability is important to Dale Franklin, also a superintendent for AMS. “The only time we use another company is when Art’s doesn’t have something we need, and that’s pretty rare,” he says.

Each month, Boone and Art’s Rental vice president Mark Arlinghaus sit down with AMS upper management to discuss future projects and head off any potential problems. If AMS identifies a specific need, Art’s makes arrangements to have the equipment available.

“Most of the excavators we use have steel tracks,” Weber says, “but we had a need for a rubber-tracked model. Art’s went out and bought several of these machines basically for us to rent. Rental is a major part of our business plan. Without Art’s, we wouldn’t be as profitable as we are today. Every bid we make takes into account whether we’re using owned or rented equipment. Rental is a big factor in every job we bid.”

AMS continues to be known for completing quality work. “If a job needs to be done, we’ll give the customer our best price, top-notch performance and complete the work on time and on budget,” Brenda Stephenson says. “Our business plan includes expanding beyond the 100-mile circle we operate in now, but only if we can complete the work in a timely manner.”

Originally published in the May/June 2014 issue of Pro Contractor Rentals. Copyright 2014 Direct Business Media.

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