Critical Issues
Emissions regulations continue to have the largest impact on the portable pump rental industry. In response to the effects of global warming, the U.S. Environmental Protection Agency (EPA) has tightened regulations on engine emissions, diesel lube oil and sulfur content in off-road diesel fuel.
In addition to those regulations, different regions throughout the United States have further tightened emissions regulations, possibly requiring contractors to install aftermarket devices on heavy-duty equipment with pre-Tier 3 engines. As a result, many of our clients are now specifying the latest in Tier 3 engines to be ahead of or on schedule with the upcoming regulations. And while Tier 3 continues its rollout, Tier 4 will fall closely behind.
Likewise, our industrial clients have a "total emissions limit" for their plants, which includes the sum of emissions for all equipment. It is understandable that more customers are considering electric-driven pump sets, which is okay, but will change the face of how we do business. Electric pump sets require a permanent power source that is less portable than a fuel tank on a trailer or skid.
We are fortunate to be partnered with engine manufacturers that are at the forefront in developing engines that meet and/or exceed emissions standards. We have developed electronic controls to communicate with our diesel engines that regulate our pump's performance based on the flow requirements. The same is true for our electric-driven pump sets.
The unfortunate side-effect for us and our customers is the continued cost for development and implementation of higher cost engines and components to meet these regulations. Obviously, it's worth the effort to clean up our air quality, but the costs are extreme and will certainly have an effect on all of us in the trickle down.
Current Trends
Tracking and utilization hours are two big trends on the horizon in both the portable pump rental industry and the rental industry in general. At a very basic level, global positioning system (GPS) technology will help equipment owners reduce equipment theft. We'll be able to set a virtual fence around our equipment, which is both a safety perk and an equipment insurance plan. Everyone is looking forward to that. GPS technology will also help us have a real-time link to the equipment (in this case, pumps) in an effort to optimize equipment longevity.
From the rental customer's perspective, GPS technology will help us track actual hours equipment runs on a job. Customers will likely expect to pay for actual equipment utilization, instead of the length of time equipment sits at a jobsite. This will certainly increase competition amongst rental companies and will change the way rental business is done.
Additional Insights
I believe we are on the cusp of a very real change in the pump manufacturing and rental business. Emissions controls and GPS technologies will have the largest effect on the rental business, but manufacturing will have its share of hurdles that concern product quality.
China and other low cost countries will affect the cost of manufacturing and how we current "Western" manufacturers handle the competition. We are generating an understanding that the quality of components coming from China is basically good...basically. It is not great yet, and it can cause quality problems.
I believe that a blend of inexpensive manufacturing combined with good engineering and quality control will determine who comes out on top.
Pumps & Systems, January 2008