Front Line of Rentals - From Owning to Renting - Hitachi Construction Machinery
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Tierra Plus
Number 134
This page is the English version of a special issue in
TIERRA+, an information magazine published by
Hitachi Construction Machinery for the Japanese market.
[Special Issue]
Front Line of Rentals
From Owning to Renting
Hitachi Construction Machinery Group
Rental Daisuke
Resale Masashi
Front Line of Rentals
From Owning to Renting
To contribute
to a circular
economy!
Only
What and When
Needed
The trend in personal consumption has been changing from “owning to renting,”
as exemplified by car sharing, whether corporate or privately owned, or by services, such as
sharing empty rooms as accommodations for tourists. The same is true of construction machinery.
We are seeing a shift from ownership to rentals due to the changing needs of construction sites and for reducing
costs. Our experts in charge of the rental business for Hitachi Construction Machinery, namely “Rental Daisuke”
and “Resale Masashi” have provided reports on the state of construction machinery rentals and the merits of
using them, all under the motto of “increasing customer satisfaction with our rental solutions.”
Text: Toshiaki Saito Illustrations: Kayo Honda Photographs (portraits): Norio Sekine
Front Line of Rentals
From Owning to Renting
Using the Machinery Only When You Need It: Providing Services Only a Maker with
The Growing Global Rental Market for Construction Excellent Maintenance Can Offer
Machinery Today In anticipation of such demand, Hi- 2017. After meeting certain standards chine sales per se.” Mr. Ohwada explained
tachi Construction Machinery started its set by the Hitachi Construction Machin- focusing on the rental business as fol-
The rental market for construction machinery is growing worldwide. rental business in 1996. It was rolled out ery Group, group companies and autho- lows. “Selling relatively-new used equip-
Behind this trend is both the need for cost reduction and more flexibility, and as as the REC brand in Japan and has grown rized dealers can become rental asset ment after the rental period that has
an approach to a sustainable circular economy. in tandem with its customers. Next, in holders, and perform rental operations been well-maintained is linked to the
We’ll focus on the efforts of Hitachi Construction Machinery, which is developing order to get serious about the rental directly and indirectly, as well as ma- value chain, including parts recycling
our rental business globally. business overseas, we established a new chine maintenance. After rental opera- and finance. It allows us to provide our
AKA
Resale Masashi company called Synergy Hire Ltd. in the tion, machines are resold as “Premium customers with a wide range of solu-
Good Outlook for the Rental Market UK. We formed a group with the ACME Used” (used equipment with warranty) tions and services. At the same time, we
Room for Growth in Emerging Countries Lift Company in the U.S. to fortify the under the same kind of logo as “Premi- aim to contribute to global environmen-
rental business there. um Rental.” tal measures in terms of extending the
In addition, Hitachi Construction Mr. Inoue said, “Trial rentals are a life cycle of each machine and conse-
The rental business for construction financially efficient. Exhaust gas regula- Machinery (Europe) has been develop- valuable point of contact with custom- quently the life of the product.”
machinery is expanding, mainly in devel- tions are getting stricter year by year, es- ing the Premium Rental brand since ers who have no contact with new ma-
oped countries like Japan, Europe and pecially in Europe, so the latest models of
North America. According to a survey of construction machinery have a high
Hitachi Construction Machinery, the turnover. However, it is not practical to
market had reached some 2.9 trillion yen replace machines frequently, so the
We offer a wide range of products
in Europe, about 4.9 trillion yen in North number of customers who prefer rentals preading Hitachi Construction Machinery
S around the world, with a focus on
America and about 1.4 trillion yen in Ja- has increased.” Rentals Around the Globe medium-sized hydraulic excava-
tors, mini-excavators and wheel
pan in 2018, so the estimated market size Similarly, renting has proliferated in loaders. The proportion of mini-
exceeds 10 trillion yen. Over the past 30 the United States due to its great land Masashi Ohwada excavators used in urban con-
years, the ratio of deployment to rental mass and the consequent high cost of struction is high in developed
Manager
countries, and they are often re-
companies out of all construction ma- transporting machinery. In recent years, Used Equipment & Rental
High Demand for sold as used equipment after
chinery has increased to about 50% in sharing services that allow online reser- Business Planning Dept. Europe short-term rentals in Europe and
Marketing Group Replacing Attachments
developed countries. Recently the mar- vations, applications and payment for AKA North America.
Teaming Up with ACME
Rental Daisuke Hitachi Construction Machinery U.S.
ket has seen rapid growth in China as construction machinery have begun to (Europe) provides rental to cus-
Fortifies our Presence
well, and if the rental ratio in emerging spread and they are likely to expand go- tomers via authorized dealers. Expectations for Future Given the size of the country, rent-
As they need not purchase ma- China Business in Rapidly al businesses of construction ma-
countries like China, India and Southeast ing forward. chinery, rental business is ex- chinery in the U.S. are common.
Growing Markets
Asia rises to the level of developed coun- On the other hand, what is the situ- panding among the authorized ACME had primarily focused on
dealers. There is a great de- The China market is growing handling aerial work platforms,
tries in the next 30 years, the market is ation in emerging countries like? Mr. In- mand for using quick hitches, rapidly and is positioned some- but filled out its lineup with Hita-
expected to grow to some 30 trillion yen. oue of the Used Equipment & Rental which simplify the mounting of where between developed and chi Construction Machinery prod-
attachments. emerging countries. At present, ucts, like hydraulic excavators
Mr. Ohwada of the Used Equipment Business Planning Dept. addressed that it is common to purchase new and wheel loaders. They provide
machines, but in many cases rental products to their customers
& Rental Business Planning Dept. com- questions as follows. “Currently, the trend rentals of Hitachi Construction via large companies that rent ma-
mented on some of the background to toward long-term rentals is common in Machinery lead to purchasing chinery in a wide area.
of new machines.
the development in construction ma- emerging countries. Rentals in devel-
chinery rentals to date. oped countries tend to take the form of
He said, “In developed countries, dry rentals for which only the machine is
Synergy Hire Deals
there are a lot of short-term jobs in urban rented. By contrast, wet rentals are the
Daisuke Inoue UK Directly with
construction and it can be difficult to se- norm in emerging countries, as operator Offering a Full Lineup,
Used Equipment & Rental Customers Japan from Small Items to
cure year-round work, such as large-scale skill is not as well developed. We antici- Business Planning Dept. In the UK, where the percent- Heavy Equipment
civil engineering. Since construction ma- pate the demand for wet rentals to in- Marketing Group age of rentals reaches 57%,
Synergy Hire started its busi- We are developing the business
chinery is not operated heavily in the re- crease all the more in line with increases ness in May 2019 and rents di- of renting directly to customers
gion, the trend has shifted to rentals as in population and construction work in rectly to customers. It mostly under the REC brand. To meet
rents out hydraulic excavators the wide range of needs on cus-
they can be used only when needed and emerging countries.” and mini-excavators. tomer construction sites, we
aim to rent everything on-site,
including other brands.
Providing Optimal Solutions to Customers via Rentals
In addition to frequent and
Parts Remanufacturing
Own Buy New large-scale development proj-
Parts Sales/Service
ects in emerging countries,
Demand for Diverse the breadth of the land results
Maintenance
Africa and
Buy Used
Customers
Southeast Asia Machines—Small, primarily in long-term rentals.
Own
Finance
Equipment Medium & Large Rental of Mining- Another characteristic is that
Australia Related Products the majority of rental type is
In Southeast Asia, rentals are
wet rental due to lack of
Share Rental mostly for small or medium- Expanding skilled operators.
sized construction machinery,
but Indonesia and Africa also Most rentals are to the major
require large hydraulic excava- rental company Delta Rent. In
Continue to Rent tors and dump trucks for min- addition to that, mining prod-
ing. And in Thailand agricultural ucts are also increasing. The
sites also need wheel loaders. Oceania region sees more dry
rentals, but wet rentals with op-
erators also occur.
03 04
Front Line of Rentals
From Owning to Renting
5 Merits of
Renting Construction Machinery Merit
Easy to Use the Latest ICT
The rental of construction machinery offers the advantage of not only meeting customer needs, but also
Construction Machinery and
creating value for Hitachi Construction Machinery and for the whole world.
Application Products
Let’s look at the 5 merits of rentals here. Mr. Ohwada says, “It is advantageous to try products
that would be expensive to buy, including the latest
models, such as ICT construction machinery, or hy-
brid machines that meet exhaust regulations, and
application products, such as those developed for
special purposes.” Obviously, you cannot determine
whether the latest features will meet your needs
M e ri t without actually trying them out. Renting construc-
tion machinery and using it on an actual construc-
tion site allows you to match the construction ma-
Needs
chinery that is appropriate to your work. Rentals also
allow you to arrange construction machinery to
Only the Quantity Needed, When meet conditions like ICT construction machinery re-
Needed: quirements when bidding on jobs, or when a joint
For Lean Management venture (JV) will be dissolved after completing con-
struction. Additionally, rentals provide freedom in
The biggest advantage of renting construction selecting the attachments to mount on machines to
machinery from the customer’s perspective is meet one’s needs.
After Rental, Providing High Quality
the ability to rent only the quantity you need
Own
Merit
Used Equipment to Customers Around
when necessary. Owning construction machin-
the World
ery entails acquisition costs, plus facility, equip-
ment and personnel costs for storage and re- Hitachi Construction Machinery is in the unique po-
pairs. As renting does not require such costs, it sition of being able to supply well-maintained ma-
helps streamline management and offers free- chines that have been rented as new for 1 to 3 or 4
dom to try the latest features. Mr. Ohwada points years as high-quality used equipment. This can be
expected to raise the bar in the used equipment
out, “Since you don’t own assets, you don’t incur
market, which is also beneficial for customers look-
interest rates or property taxes, and can make of- ing for used equipment. Of course from Hitachi Con-
fice work more efficient, by reducing calcula- struction Machinery’s perspective, “It gives us a
tions, such as depreciation. Another major ad- chance to engage with customers who haven’t had
vantage is that rental fees can be added into contact with conventional new machine sales and
construction costs.” after-sales services. We want to link this to creating
added value for our customers by providing solu-
Using Well-maintained Machiney tions throughout the entire value chain,” says Mr. In-
oue. Used equipment with warranty that hits the
M erit
= Peace of Mind market after being used as rentals under the mainte-
nance of Hitachi Construction Machinery has an ex-
When a company owns its own construction ma- cellent reputation and the demand is strong.
chinery, proper repairs and maintenance be-
come an issue. By contrast, when a rental of Hita-
chi Construction Machinery is used, the high
quality and original machine performance is
maintained via the excellent repairs and mainte-
M er i t
nance only a specialist from the manufacturer Seeking to Add Value and Solve
can provide. In addition, Hitachi Construction Environmental Issues via Product
Machinery also offers proprietary services, such Life Cycling
as Global e-Service, for collectively managing
Sending machines to the used equipment market
the operating status of machines, and ConSite, after their rental life extends their overall life cycle.
which contributes to the stable and efficient op- Mr. Ohwada says, “We provide proper maintenance
eration of machines by sending reports and for used equipment and utilize remanufactured
alerts about their operating status. Using the IoT parts as well, so the construction machinery can
allows us to manage construction machinery in lead a 2nd life. We believe that using resources ef-
their proper conditions. We would like to em- fectively and reducing the environmental impact of
phasize the merit of peace of mind when using products contributes to the circular economy and
rentals of Hitachi Construction Machinery SDGs (sustainable development goals), which are
thanks to these services. commanding attention worldwide.” In addition, put-
ting a lot of rental machines on the market like this
will allow us to analyze data, such as how they are
®
used, and then use it in developing subsequent
products.
05 06
Front Line of Rentals
From Owning to Renting
Switching from Owning to Using Leverages the Power of circular economy. Examples of what maintenance in the best form for the
this includes are specific guidelines at customer, the company expects to re-
Resource Recycling the design stage to make products duce life cycle costs as well as provid-
What Is a Circular Economy that Leads to a Competitive suitable for the circular economy, such
as making them easy to disassemble,
ing new value, which will lead to recy-
cling of resources.
Advantage? and making it possible to update to
the latest firmware. These are the kind
The most important point is that
the supply side and the customer can
of efforts the EU is pursuing, but if Jap- be linked by making these products
Hitachi Construction Machinery sees promoting the rental business as contributing to the circular anese companies fail to respond to into services, including rentals. From
economy.
them, it may result in barriers to enter- the manufacturer’s perspective, Hita-
We asked professor Yasushi Umeda of the Graduate School of Engineering at the University of Tokyo, who
ing the EU market. The concepts of the chi can provide detailed support via
specializes in life-cycle engineering, about trends in the circular economy and efforts to promote it.
EU are expected to spread around the this connection and get to know its
world, so taking steps now will not customers by collecting their operat-
only help avoid risk but also lead to ing data, which can then be used in
What is this circular economy that business opportunities. Further, we developing and putting out new prod-
everyone is talking about? see ESG investment growing in the ucts and services.
In contrast with a conventional lin-
ear economy, which uses a lot of re- same way and likely to incorporate the If the company does a good job
sources to make and dispose of concepts of the circular economy, so of linking product development and
products, a circular economy is a sys- technological capabilities, it can make
tem that circulates resources and
failing to respond is apt to have an ef-
creates value, as well as turning the fect on finance and procurement. the total value more appealing and
wheels of the economy. Assump- make existing strengths all the stron-
tions from the very design stage of a
product include reusing resources Providing Total Value by ger. And if the company can contrib-
and suppressing the generation of Connecting to Customers ute to the environment by working
waste.
Based on High Quality with its customers to extend the life of
Manufacturing its products, it will produce the best
possible outcome—wins for the cus-
In the first instance, a tomer, for the company, and for the
circular economy cannot world.
Unlike Conventional 3R, even after use, that is the be established unless
Circulating Resources and concept at the core of quality goods are pro-
Economic Growth are Linked life cycle engineering duced. Japanese manu-
that I study, and is key facturers have a strong
The notion of a recycling-orient- to a circular economy. tendency to emphasize
ed society debuted in the 1990s and In other words, it the manufacture of
the 3R initiative (Reduce, Reuse, Recy- means designing prod- goods with excellent
cle) got started in Japan. Since then, ucts with a long life in quality and this founda-
the Ellen MacArthur Foundation (HQ mind, being aware tion is important. That
in UK) was established in 2010 to pro- from the outset of said, the time has come
mote the circular economy. In 2015 maintenance, updates, to look at the life of a
the EU (European Union) announced a and reusing the product product, not being done
policy package that showed the direc- after its use. Unfortunate- with it once it’s sold, and
tion to a circular economy. This result- ly, however, the fact is the shift to the idea of long-
ed in a quantum leap in the attention concept has not yet fully term support. Yasushi Umeda
paid to the circular economy around penetrated the manufactur- In this sense, I feel Hita- Professor
the world. The biggest difference from ing industry. chi Construction Machinery is Graduate School of Engineering
University of Tokyo
a 3R society is that we aim to create an Of course, the maker may shifting to the direction of tak-
economic system that links the tend to think that the design ing up the circular economy way After working as an assistant
professor in the Department
strengthening of industrial competi- cost to ensure full recycling of a of thinking, in addition to creating of Mechanical Engineering,
tiveness while ensuring employment Graduate School of Engineer-
product may be a waste if it is not re- quality products themselves. The ing, Tokyo Metropolitan Uni-
under the premise of recycling re- cycled. That said, today using IoT al- rental business the company is work- versity, and as a professor in
the Department of Mechanical
sources. lows us to check data on how much a ing on is just one of these. As the cul- Engineering, Graduate School
In the manufacturing industry, of Engineering, Osaka Univer-
product was actually used and even ture of renting and leasing is wide- sity, he has been in his current
the main idea was “selling out of prod- whether it could be recycled. Using spread in the construction industry, post since 2014. His special-
ties include life cycle engi-
ucts,” or making, using and disposing this kind of digital technology will and as the products themselves are neering and life cycle design.
of mass quantities of things. However, make it possible to design a more ra- expensive, coming up with ways to
He is the chief researcher of
the 21st Century Public Policy
our sense of this changed upon close tional product life cycle. get products used for a long time is an Institute. Publisher of books
on the topic of circular econo-
observation of how people value easy task, especially from the perspec- mies (available only in Japa-
“ownership.” Conventionally, the idea Working Toward a Circular tives of maintenance and recycling nese).
is that products realize their greatest
Economy Also Helps Avoid parts.
value at the point they are purchased.
Risk and Create Business So what ends up being the key to
By contrast, the effort to produce val- it is digital technologies. By using IoT
ue throughout, not just at the point of The EU is moving forward with and AI to collect and analyze machine
purchase, but including during and standardization and legislation on the operation data and providing the
07 08
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