It’s been awhile since I posted about construction and since this news is both applicable to DIYers and my fellow construction workers I thought it would make the perfect post!
The construction business has always been one of boom and bust. Everyone from independent contractors to multi-national heavy-equipment distributors know the perils of being in a business that waxes and wanes throughout the year and through the decades.
Caterpillar, the giant U.S.-based heavy-equipment maker, is looking for a solution to the construction business roller coaster and may very well have found it.
To survive, a construction business must be able to ride out the rough patches — and there are always rough patches in this industry. To say the building business is cyclical would be massively understating it. Unfortunately, the construction industry ebbs and flows according to a myriad of factors. Everything from seasonal conditions and weather patterns to interest rates, the housing market and the economy all affect what gets built by whom and when.
A New Answer to Boom or Bust Development
A new business model that has begun to take hold is a concept most of us learned in kindergarten – sharing. By sharing resources such as equipment and personnel, a business can shave a big slice off its bottom line.
Business-to-business networks have proliferated in recent years and are emerging at a breakneck speed now that the economy is on an upswing. This inevitably has led to peer-to-peer sharing, or P2Ps, as businesses like Uber began to grow in popularity. Uber, a ride-share start-up that began in San Francisco just six years ago, is now doing more business than car rental giants Avis and Hertz.
As P2P businesses’ popularity soared in recent years, builders, contractors and equipment manufacturers began to take note. Sharing networks began popping up in municipalities across the Midwest as communities realized the economic advantages to sharing of expensive equipment and personnel.
- Ohio’s Lake County adopted a resolution in 2013 that included more than 23 villages, cities and townships and established a network for sharing large and expensive equipment between localities. Bulldozers, grading and paving equipment purchased by one city would be available for use by all. City administrators expect to collectively save hundreds of thousands of dollars annually. Sharing networks save the small towns involved from pricey equipment purchases and the need for additional personnel.
- Dirt Market is an online marketplace where contractors can trade construction materials like sand, dirt and stones, and it is just one of the many P2P networks that have appeared in the last few years that have garnered attention among savvy entrepreneurs.
The Future of Construction is Born – P2P Business Model
The P2P business model is now being praised by the construction and heavy-equipment industry as an important step in embracing the future of residential and commercial development. Heavy-equipment sharing is forecast to be one of the hottest trends of the decade, with construction companies sharing forklifts, bull dozers and other expensive, and often dormant, construction equipment according to capterra.com.
Online sharing and rental networks simplify the process for construction contractors with standardized rates, liability insurance and contracts. They also offer renters the chance to see pictures of the equipment and view user’s ratings of the machinery and processes.
- Yard Club Inc., in San Francisco, began matching contractors and equipment owners through a sharing website in 2013. Companies that own heavy equipment can generate income with machinery not in use by sharing or renting to builders and contractors that have a temporary need for it. Equipment rental is now a $40 billion a year industry in the United States, and Yard Club has become part of that.
- Caterpillar has invested in Yard Club. With Caterpillar’s help, Yard Club plans to expand services throughout North America in coming years. Caterpillar has made its equipment available to rent through the P2P startup and expects to have both Cat® and non-Cat branded products available to Yard Club later this year.
Using the network, a contractor can rent the equipment he needs and rent out the equipment he owns when not in use, thereby significantly lowering the cost of equipment purchases. A definite advantage to equipment dealers and distributors from Caterpillar’s point of view is changing the way the entire industry operates according to Yard Club.
A Win-Win for All
Caterpillar is among the first to jump on the P2P sharing bandwagon, but the list is soon to grow as construction companies look toward the future. Rather than viewing platforms such Yard Club as competition to be conquered, Caterpillar made the smart choice and joined it.
Future Caterpillar dealers and distributors can use the sharing platform as an enticement to potential buyers, making equipment purchases more affordable with the network providing the option of renting equipment out during periods of inactivity.
Businesses small and large will benefit with access to machinery they cannot afford to purchase. By sharing their equipment and operators between projects, construction companies can generate a steady stream of income with rentals to other contractors. Sharing also helps construction industry firms retain their equipment operators even when times are tough and jobs are few.
A conquering of the construction boom and bust at last.