Acknowledging the True Global Economic Value of the Hire and Rental Industry

The true global economic value of the hire and rental industry is far more than just it's gross market turnover. The industry is an economic multiplier and one that is critical to driving the world economy out of recession.
By: Ron Neville
 
April 30, 2009 - PRLog -- The last 25 to 30 years have seen many economic changes in the World. However one very successful change has largely gone unrecognized.  That economic change is growth of the hire and rental market industry.

It may sound trite to associate hiring and renting with major global economic changes, but it’s true impact has been substantive and greatly under recognized.

To appreciate the true impact, it is worth reflecting back on the 1970’s and early 80’s.  During this period Corporations still had a desire to own assets rather than rent.  For example a construction company would purchase and maintain its own complete fleet of plant and equipment.  Or a corporation would purchase its own audio visual equipment (at the time usually a very clunky over head projector).  In fact even the people to operate and maintain equipment were employees of a company.

Ludicrous situations existed where major road construction equipment could sit idle for months.  The equipment worth hundred’s of thousands of dollars would still be incurring maintenance costs because it had a time based service schedule.  Why did corporations and even government hold such equipment – “just in case it was needed”.  There was also a market imperative relevant to the time – that the perceived size of the corporation mattered.

However during the 1980’s this attitude changed and Corporations and Government began to respond to increasing Global competition.  Their response was to begin to reduce costs, hence began the downsizing period.  

Downsizing over the 1980’s in the Western World not only released millions of talented people from corporations and governments it also released equipment.  But the release through downsizing created opportunities because the fundamental need for equipment and services was still needed.  

The hire and rental industry emerged to fill the needs left by downsizing, and in so doing actually validated the economic theory under-pinning a lot of the downsizing theory.  The hire and rental industry that emerged created the following major economic benefits:

Exchange Market:  Hire and rental companies effectively created exchange markets, whereby equipment or services became available to any business (irrespective of size) or government for a price determined by the market.   Market forces of supply and demand in effect ensured the efficient market allocation of resources.  This is a major pillar of the economic theories that underpin the World economy.

For example, road construction plant could be made available through a rental or hire company to any organization for a period.  Through the process of hiring to multiple organizations the plant could be kept in near continuous use.  This increases the efficiency of the individual equipment.  Furthermore it enabled the client hiring the equipment to avoid spending their capital on buying the “hired” equipment.  This meant that they could in theory invest the saved capital in other areas of their business where they could gain a better return or competitive advantage.

In economic terms it is about opportunity cost.   But if the hire and rental industry did not provide this exchange market, then this opportunity for client companies to invest capital in higher return or competitive advantage areas would not exist.  

The opportunity cost principal is sound, but what makes it real is the sheer scale of the hire and rental industry.  Consider the size, range and distribution of the industry now.  The ability to apply the economic opportunity cost decision for businesses and even individuals has now been extended to nearly every conceivable area.  Think about businesses starting up or expanding now.  Rather than invest their start up capital in standard (no competitive advantage) items, they can instead invest in the things that will give them a competitive advantage.  Consider the standard items now available for rent or hire, hence the range of opportunity cost decisions made available to companies:

•   Office furniture, even to plants and fish tanks for the office ambience
•   Office technology, computers , printers etc
•   Marketing and Sales presentation equipment, eg Audio Visual,
•   Even the clothes and handbags when dressing to impress can be rented.  

The latter sounds trivial but when personal capital has been invested in this can be an important choice.

This ability to effectively choose where to apply capital only exists because the hire and rental industry enables the economic opportunity cost choice to be made.  Enabling this choice to be made means that companies can invest in other areas where by they can gain a competitive or innovation advantage.

Facilitating Global Innovation and Stimulus Package Delivery

The economic opportunity cost choice enabled by the rental and hire industry, in turn facilitates the delivery of innovation and competition to the global market.

Why because before downsizing commenced in the Western world, Corporations accounted for 80% of innovation.  Corporations now account for about 20%, with the bulk of innovation coming from small to medium sized businesses.  This change in sources of innovation could not be achieved if the hire and rental industry did not provide the opportunity cost choice to small and medium businesses about where to invest their capital.

Economists have argued that innovation is a key driver for economies to emerge from recessions.  If this is true, then the hire and rental industry is critical to facilitating this innovation.

Furthermore in relation to the various Government Stimulus packages, most are major investments in Infra-Structure and Construction.  It will be the hire and rental industry that will ensure that equipment and related services are delivered to these projects in an economically efficient and expedient manner.  Hence contributing to the more rapid delivery of these projects and the economic benefit they are planned to deliver.

Summary

The global economic value of the hire and rental industry is largely un-appreciated.  It is not just about the gross turnover of the sector, but its economic multiplier effect.  This multiplier is through the ability to enable opportunity cost choices to be realized.  Through the provision of such opportunity cost choices it facilitates the continued growth of innovation in the small to medium business sector, now the major source of global innovation.

Furthermore its ability to scale and efficiently allocate resources to major projects funded by various government stimulus packages will greatly contribute to their success.  

The hire and rental industry is a greatly under-estimated economic sector, because of its under recognized economic multiplier effect.

# # #

Making Life Ezy are the developers of HireEzy the world’s innovation leader in hire software and rental software. HireEzy provides the flexbility and power the Global hire and rental industry needs to meet its ever expanding range of products, services and solutions.

HireEzy is the complete booking management business system for the hire and rental industry. HireEzy includes a comprehensive on-line store and range of web 2.0 tools.

Given HireEzy's rapid growth, we are now seeking interest from investors and partners.
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