Is renting equipment a better option?
Most people think of renting when something they need is expensive and they are only likely to need it for a short period. However, as James Carlyle, General Manager
Ashtead Technology Ltd, explains, there are many other valid reasons for renting in
the high-tech environmental sector.
Ashtead Technology is part of the Ashtead Group plc – one of the world’s largest equipment rental companies. The group was founded in 1947, and has achieved considerable success, not least because renting is often a better alternative to buying.
In recent years, the choice of rented environmental instrumentation has been limited mainly to a small number of manufacturers that offer renting as an alternative to purchase. However, our experience shows that the provision of a renting service involves a great deal more than just a financial alternative. Our customers demand fast access to the latest models, supplied tested and ready for use, coupled with comprehensive technical support. We believe that a large and growing market exists within the environmental sector and this is the reason for our investment in the Industrial Division and stockholding.
Case for renting
Most people buy equipment when they need it, but how many of us stop to consider the renting alternative?
Let us suppose that you need to be able to measure solvent emissions at various places in a paint factory, but since this is not a frequent occurrence it seems logical to rent a portable analyser. However, if you and your colleagues can find use for this equipment every week, it might make more sense to buy the system.
So, this simple example demonstrates that the decision to rent is often dictated by the frequency of intended use. However, there are a number of other important advantages to renting.
For example, suppose the analyser fails; you spend a couple of hours trying to fix it, give up and then try and convince the manufacturer that it should replace it under warranty.
Let us also suppose that a colleague in a different department heard that you had your own equipment, and asked if he could borrow it for use on a different site, measuring different VOCs. Will he look after it properly and return it in its original condition? Is it the right analyser for his application? Will he change the calibration? And will he return it when he said he would?
In the following year, your colleague calls again, and asks if you can bring your analyser to an important site where they have a specific emissions problem. However, when you get there you discover that this application requires a heated sample line. So, your colleague hires another analyser and you are frustrated to discover that monitoring technology has moved on since you made your purchase and the hired model is far superior.
You would prefer the new model, but having purchased the (now) older model, you either have storage issues to contend with, or you have to find a form of environmentally acceptable disposal.
In all of these scenarios, you would wish that you had rented rather than purchased your analyser.
Speed and choice
If a rented machine malfunctions, it is replaced quickly because the rental company is anxious that the instrument performs to specification, so that you might rent it again.
Rented equipment is always delivered clean, checked, calibrated and ready for use and if you had rented an analyser, it would have been delivered to site on the prescribed day, at the right time.
Each time you rent an instrument, you have the opportunity to choose the model that suits your application.
For example, there are several different types of VOC monitor, and it is unlikely that it would be cost-effective to purchase all of them. For example, PIDs are the most appropriate analysers for some applications (contaminated land for example), whereas FIDs are more appropriate for others. In some circumstances speciation may be necessary, so an analyser with a gas chromatograph will be needed and in a number of applications an intrinsically safe analyser may be compulsory. The ability to choose the most appropriate model offers obvious advantages.
The same principles apply to all types of environmental monitoring equipment, including for example; toxic gas detectors, noise meters, contaminated land analysers, samplers or water quality instruments.
Perhaps the most extensive users of rented environmental monitoring equipment are consultants. There would be no sense in them purchasing a large range of gas and water monitoring instruments, when they can simply include the cost of renting in their proposals without taking on all of the disadvantages of ownership.
The strongest case for renting is of course financial. It is vitally important to remember that the money used in equipment purchase could have been used for something else. For example, if your organisation borrows money and is paying say, 8% per annum, that means that the opportunity cost of your purchase is 8%. If you had paid off that part of your loan you would have saved the interest charge. Conversely, if you are in the happy position of having no indebtedness, there is still the lost opportunity of investing that money, either in a bank account, or another activity.
Furthermore, your accounts department will depreciate the value of your equipment over a period of one to three years in most cases, which means that the cost of equipment with a purchase price of say £10,000 will actually hit your bottom line by something between £4,000 and £10,000 in the first year.
Cost of buying
In summary, the case for renting is stronger if the equipment is expensive to buy, or you do not plan to use the equipment frequently. You should also consider whether you could put the purchase money to better use.
You may also decide that the equipment requires skilled calibration, storage and maintenance, coupled with specialist equipment, and the cost for this would be preclusive.
You should choose to rent if you always need access to the latest technology, or if you do not wish to bear the cost and inconvenience of storage, or simply if you wish to “try before you buy”.
There are obviously many compelling reasons to rent and the decision by the Ashtead Group to invest in the environment sector is good news for anyone who needs to collect environmental data.