Posted December 26, 2018

Positioned for GROWTH

Capital City Equipment’s rental division aims to stay on the growth track as concrete, excavation and landscaping contractors take advantage of the active construction market.

Sixteen years ago, Capital City Equipment got serious about equipment rentals. The dealership, which opened in 1976 by Bill Kruse, focused on selling and servicing Bobcat equipment in the greater Des Moines, Iowa area. His son, Mark, purchased the company in 1997, and today, his two sons, Jake and Jarad, also work in the business.

Joe Cox, Capital City Equipment
Capital City Equipment’s rental center sits between its Bobcat and Kubota dealerships in Des Moines, Iowa. It also has rental and sales branches in Boone, Ames and Bevington, Iowa. Joe Cox is the rental center manager.
Crew at Capital City Equipment Rental Division
The sales and support team at Capital City Equipment Rentals: Top row, from left: Joe Cox, Nick Cunningham, Marko Ivusic. Middle row: John Coady, Chris Bundridge. Bottom row: Mark Stoneking, Michael Greene.
Delivery vehicles
Although most customers are capable of picking up their rentals, Capital City Equipment also runs two flatbeds and one truck/trailer combination to make drop-offs and pick-ups of equipment.
Barreto trenchers
Barreto tracked trenchers are popular with excavation contractors.
Capital city Equipment Co. rental lot
Canycom equipment at Capital City Equipment
Rubber-tracked Canycom concrete buggies are a popular rental item, especially for landscape and concrete contractors.

Just two doors up from the original Bobcat dealership, the Kruses also own Capital City Kubota; and the rental store sits between the two dealerships, which is operated by Joe Cox, rental manager.

Cox was the rental center’s first employee when it opened and today, he manages the rental operations in the Des Moines location and the company’s three remote locations at Bobcat of Ames, Iowa; Boone Rental in Boone, Iowa and Sundown Equipment in Bevington, Iowa.

“Before we opened the rental store, we did some rentals but weren’t very disciplined about it. When the owner saw rental as an opportunity, I was put in charge of it. When I was hired, we had probably just 15 pieces for rent. I worked more in parts and service than I did in rental, but as the years have gone by, we’ve grown quite a bit. Between skid loaders and excavators, we have more than 100 units in the rental fleet and probably another 80 attachments or so. While we don’t concentrate on lifts, we have some models and in total, have more than 250 units available for rent,” he says. Rental inventory averages between $5 and $7 million and annual rental revenue is $3.5 to $4 million. The company employs 58 people across the organization.

Growth, growth, growth
Capital City’s rental revenue mirrors what other rental centers are experiencing in North America, seeing healthy growth over the last five years. “I see it going up, up, and up. It seems like there’s more building going on and the economy’s doing well. In this area, we have seen couple buildings going up for Facebook, and Google just came into town with rumors of another building for them. It’s been really good for us,” he says.

“We’re averaging between 7 and 8 percent revenue growth per year. We’ve had as much as 12 percent, but on average, it has been 7 to 8 percent. The year of 12 percent growth was at a time when things were getting a little tougher and people decided to rent equipment instead of buying it,” he says.

“We serve mostly construction contractors. We have a good variety of equipment for a variety of excavation jobs. We serve a lot of concrete guys and we have a bunch of landscapers as well. I would say 70 percent of our customers have an in-house charge account. So, for them, it’s just as easy, instead of calling one of the other companies, to say, ‘Capital City’s got it. Just get it from them.’”

Although most customers are capable of picking up and dropping off excavation equipment, the Capital City Rental staff runs two roll-back trucks a third truck and trailer for deliveries.

Bigger, better, faster
Cox sees a trend toward contractors wanting bigger equipment that can do jobs more efficiently. “Everybody’s wanting something bigger, faster, stronger. Five years ago, people laughed at the need for hydraulic-powered quick-attach units on skid steer loaders to change out buckets or attachments. People were laughing at it like, ‘What lazy guy’s going to buy this?!’ Now, I don’t think we sell one without it. It’s the convenience factor. You don’t have to get off the equipment to change attachments. It’s just little things like that,” he says.

The weather in 2018 has spurred interest in more efficient equipment, Cox says. “On top of there being quite a bit of work, we had extremely wet weather that took days out of the season. There is more interest in attachments that can help contractors complete jobs faster or better,” he says.

A good example of that is the Eco 250 Ecolawn applicator. Cox added this top-dressing unit to the rental fleet in 2018. “We are the only rental outfit in town that has a top dresser. It’s a fast, easy way to put a fine layer or dirt or fertilizer on quickly,” he says. Another tool that’s been very popular with contractors, especially landscapers, is a tree spade. “Again, we’re the only place around that offers one for rent.”

“Contractors are figuring that a job should take four hours, but with a nice, efficient machine, they can get it done in two and a half hours. They’re all for it. They don’t mind spending a little extra money for a bigger machine. Then they don’t need to pay the workers an extra hour and a half, or they can go to another job and get it rolling,” he says.

Availability drives rentals
Customers cite equipment availability as one of the top reasons to rent from Capital City Equipment. “We have a very large fleet and can almost always take care of everybody’s needs. We have six locations, so we can pull from a few different locations here and there, depending on how soon someone needs a unit,” he says.

Cox says demand for equipment varies greatly across the locations. “It’s crazy how 30 miles in distance makes in what customers want to rent. For example, our Boone branch, which we opened in 2006, has steady sewer snake rentals and related tools because it’s an older town and tree roots are getting into the sewer lines. In Des Moines, we rent a sewer snake maybe once a month at best, but in Boone, they’re easily renting them three or four times a week.

“Our Ames location, which we opened in 2000, rents quite a bit of sanding and floor-polishing equipment, where we don’t do much of that out of our Des Moines store. They have five of those units up there that they keep busy.

“Sundown Equipment, in Bevington, Iowa, which opened in 2009, rents an equipment profile more similar to the Des Moines store, which caters mainly to excavation, concrete and landscape contractors,” he says.

Equipment preferences
Cox says he sees a growing preference for pilot controls on equipment. “I estimate 50 percent or more of our machines we rent and sell have pilot controls, and it seems to help unit resale. Pilot controls are ergonomically so much better for the operator when compared with foot controls. The new generation of operators are into video games and they’re used to using their hands for everything. They don’t even hesitate. They all want the pilot controls.”

Cox says his rental staff works well with the Bobcat equipment sales team to the south of the Des Moines rental center and with the Kubota sales team just to the north. “If there’s something I’m seeing getting some hours on that I’d like to sell, I let them know. The sales people put out their feelers; there’s always someone looking. We generally will hang on to equipment until it starts costing us more to maintain and then we let the sales force know and they sell it. We try not to keep skid steers and track loaders any longer than 1,500 hours. Right now, everyone is looking for is 400- to 600-hour machines and we aren’t anywhere near that window. We have either new machines or 1,000-hour machines. After 1,000 hours, you start looking at the need for new tracks or some roller maintenance. The nice part about buying from the rental fleet is there is an accurate record of everything that’s ever been done to that machine,” he says.

Winter strategy
With an extensive customer base who are landscapers, Cox and his crew have an excellent opportunity to keep Capital City’s skid steer and track loader fleet working through the winter months for snow removal.

“We actually rent out all of our wheel machines and a few of our track machines for snow removal. We have a winter program that is good for us and the customer, where they’re billed a low base rate for the machine that includes at least 20 hours per month. When they hit the 20-hour limit, they pay a fee per hour after that, per month. That way, they’re not spending a bunch of money, but they have access to a dependable machine. They just figure that into their base and makes bidding easier for them,” he says.

The snow removal rental units are usually fitted with an oversized bucket. “For example, a Bobcat S650 skid steer is 72 inches wide and we outfit it with an 80-inch bucket. We usually don’t outfit them with snow blowers or blades because of their cost. Most renters figure they could buy the attachment over one winter for what it costs to rent it.”

The rest of the rental fleet undergoes extensive maintenance during the winter months. “We go through all of our equipment. It takes us almost all winter to go through every piece. Then about that time, we start getting all of our winter rental units back and then we go through them. The maintenance that we do over the winter pays for itself ten-fold during the busy season,” he says.

The maintenance team uses Bobcat inspection checklists in their winter maintenance procedures. “Bobcat supplies helpful maintenance checklists for skid steers, excavators and other pieces of equipment it offers. The inspection lists come in pads and they help us do thorough inspections,’’ he says.

Capital City Rentals’ maintenance shop is open from 7 a.m. to 5 p.m. “Our techs can work on everything we have and then some. We do some on-site repairs. We have a 24/7 service truck, which is especially helpful in the winter. We try not to send it out when temperatures go well-below zero because at those temperatures, some equipment just doesn’t start. But still, things break and we understand they need to move snow no matter how cold it is. We’ve been pretty good about putting block heaters on everything, making it easier for our customer. It makes it better for us, too,” he says.

The most recent Bobcat models entering the rental fleet have telematics systems that Cox believes is a game-changer. “It is wonderful for us. Now we can see if that machine was started. We can see if it coded. If it codes, it automatically sends us a message that can alert us if there is a mechanical problem. It will tell us if it had a low voltage spike, which means the operator likely kept cranking the engine to get it started, which is a sign of another problem.”

“The rental division finally started getting units with telematics in August and it’s very new to us, but the response we’ve gotten from our techs and from our customers is, ‘Wow! It’s that instant, you can find that out.’ We can get a code, then call the customer who wasn’t aware of any problem because they weren’t on the job site where the unit coded. We think it helps put us ahead of the downtime game. We’re proactive and everybody appreciates that,” he says.

The transition to telematics alerts has been easy, Cox says. “It’s friendly enough, it comes up in an e-mail, sharing that the piece of equipment coded this at this time. It will also tell you if it coded again or did something else. It’s very user friendly.”

2019 challenges
While the rental environment has been good in central Iowa, Cox and others at Capital City Equipment aren’t taking it in stride. “Our challenge is going be to keep going like we have been. We’ve been very fortunate as far as our growth and it will be a challenge to keep putting one foot in front of the other to build on that growth. After the first of the year, we plan to get our store managers together to brainstorm. We want to identify if there’s anything out there that we’re missing out on, or if there are ways to generate a little more from every rental.

“I think 2019 is going to be better than this year because there’s still so much work out there waiting to be done. We have some customers who are three or four months behind because we had such bad weather.”

With that projected demand, the Capital City Equipment rental operation will continue to add units to its fleet. “We are seeing more and more contractors choosing to rent. Not everybody wants, for that four or five months to get caught up, to buy a machine. They’d rather just rent one.”

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