Heavy Equipment

The Heavy Equipment Industry

The heavy equipment industry deals with the sale, rental, or leasing of heavy equipment. Heavy equipment is generally construction equipment used in large civil engineering projects or farm equipment but either way this machinery is large, heavy equipment used for industrial applications. A lawn tractor is not heavy equipment. Bulldozers and cranes would be classified as heavy equipment.

Construction companies often enter into operating leases for heavy equipment because they consider it a better use of capital than outright ownership of the heavy equipment. When you consider there is not much use for heavy equipment other than at the construction site, you can see their point. Construction companies are generally involved in many projects scattered throughout the country.

If construction companies were to purchase heavy equipment, they would be responsible for the maintenance of the heavy equipment as well as storing it when it is not in use and that would also involve considerable expenses. They would also need to transport the heavy equipment from one construction site to another which adds more expenses to the equation. When you add it all up, it's not difficult to see that it's easier to call a company that leases heavy equipment and just ask for a crane, a bulldozer, and whatever other heavy equipment is required to be delivered to the job site and be rented for a certain period of time after which the heavy equipment leasing company will come and get the heavy equipment.

This arrangement works out well for both parties. The heavy equipment leasing company specializes in purchasing and managing heavy equipment rather than building with it. On the other hand, the construction companies specialize in building with heavy equipment and not having to deal with managing the equipment. Both types of companies realize the greatest returns on their investment capital by specializing on different aspects of heavy equipment.

Construction companies enjoy the flexible terms afforded to them when they lease heavy equipment. The heavy equipment lease can be adjusted to market conditions, cash flow needs, construction schedules, and tax situations. Another advantage to leasing heavy equipment for construction companies is the use of the excess capital. As you can imagine, purchasing heavy equipment requires a large cash outlay whereas renting heavy equipment does not. So by renting heavy equipment, the construction companies can free up cash flow to be invested on other projects offering higher returns on their investment capital.

Heavy equipment leasing companies on the other hand have expertise in the heavy equipment market that allows them to bargain for better prices than construction companies who don't buy in bulk. And the savings can be passed on to those who rent heavy equipment such that the terms of the heavy equipment lease are often more favorable than the terms of purchasing heavy equipment.