Sourcing Welding Equipment During Supply Chain Interruptions
There are no shortage of reasons for current supply chain issues and correspondent price increases, but it would be safe to say that we’ve never experienced anything like this in recent history.
For contractors, fabricators and other industry segments that require welding services, it’s more viable than ever to consider equipment outsourcing as a means of fulfilling existing orders and contracts, not to mention the ability to quote on new business opportunities without having to worry about having access to the most suitable equipment in sufficient quantities.
The basic tenet of rental versus ownership, is the idea of paying for equipment use, without the complexities and inconveniences of the cost of equipment ownership. These costs are often referred to as “hidden costs” as they are frequently overlooked when determining the total cost-of-ownership. To cite just a few examples, fleet owners not only have to arrange for back and forth transportation of equipment to their job sites, they also have to arrange and pay for storage and servicing of the equipment when not in use. If the equipment becomes out of date due as a result of being superseded by a new product, or if a new welding process is required, they can be stuck with obsolete or non-suitable equipment that has to be disposed of, or at the very least, loses some of its utilization potential. For servicing, maintenance and troubleshooting challenges, paid in-house personnel or outside service shops need to be retained and relied on to keep the equipment up and running, as well as certified or calibrated to meet published operational standards.
“The basic tenet of rental versus ownership, is the idea of paying for equipment use, without the complexities and inconveniences of the cost of equipment ownership.”
Renting Stabilizes Equipment Costs Over Time
Since welding equipment OEMs often have limited control over sub-component costs, selling prices can be both sudden and dramatic. By contrast, rental fleet operators, whose fleet costs are calculated on an averaged basis, are able to react to price increases in a somewhat more tempered manner, especially when service capabilities and other secondary value-additions can be factored into the pricing formula.
Rental fleet operators have to balance their revenues against equipment utilization percentages and one way to do this is to keep rental rates somewhat elastic (compared to new equipment selling prices) in response to periods of lower utilization. However, rates must be commensurate with the ability to sustain and grow the business while providing service capabilities that allows operators to depend on the supply chain advantages provided by the rental partner.
The relative stability of costs and equipment availability sourced from reputable rental partners, as well as the opportunity to take advantage of other acquisition models including lease programs and the purchase of well-maintained used equipment, has made the viability of these alternatives even more compelling than during pre-COVID periods.
Value Added Services
A good rental partner will also offer other value-add services such as product and process selection advice, and typically offer the benefit of factory trained and authorized technicians which can have the effect of minimizing equipment downtime, as well as the ability to rapidly diagnose and correct potentially incorrect welding procedures and practices.
Over the years, companies like Red-D-Arc have grown their businesses by partnering with contractors, fabricators and other equipment operators while sustaining those relationships by continuing to explore opportunities that maximize the value-add benefits of their services. For example, this could include discussing the current state of their business processes, as well as assisting with the planning, direction, and development of future activities. The success of both parties is in their mutual best interest.
Customer Focused Equipment Leasing
“A lease program for customers that wanted to have equipment that was always up to date, always under warranty, and who didn’t want to deal with acquisition and disposal costs.”
Over 50 years ago, Red-D-Arc began the journey of developing a service-focused rental business model that would be attractive to companies that were interested in establishing long-term, sustainable relationships in order to help them maximize their own growth potentials. A lease program was developed for customers that wanted to have equipment that was always up to date, always under warranty, and who didn’t want to deal with acquisition and disposal costs, as well as other operational challenges. A well-maintained fleet of used equipment was made available for purchase to the budget-minded customer who wanted to minimize capital costs without having to worry about equipment failure due to improper maintenance or neglect.
If you’d like to learn more about how Red-D-Arc has contributed to the success of our clients and how we can assist with your business, please contact your local Red-D-Arc representative who will be happy to share our story with you.