More municipalities looking to outsourcing

Municipalities turning to equipment leasing and maintenance outsourcing

Equipment leasing and maintenance outsourcing isn’t just for commercial fleets anymore. Many municipalities are examining those options more closely as a way to reduce their fleets costs, according to an executive at Penske Truck Leasing.

“Municipal fleet operators, like all fleet operators, are looking for ways to maximize productivity, access the latest technologies, and above all, hold the line on costs,” says Russ Scaramastra, vp-specialized equipment services for Penske Truck Leasing. “To achieve these goals, they are looking at alternative strategies including, in many cases, outsourcing the entire fleet maintenance function to a third party.”

It’s an issue partially grounded in the massive fiscal crises states and local governments faced in 2001, in the wake of the economic aftershocks from the terrorist attacks of Sept. 11 and a growing recession. By 2003, state governments alone collectively faced $70-billion worth of deficits.

Though the economy has rebounded and state revenues are rising again, spending remains well below average and many states still face budget holes, according to a survey by Inc magazine. These holes were incurred by borrowing money or dipping into reserves in previous years.

Municipal fleets are also trying to deal with a growing shortage of maintenance technicians – an issue reaching a critical stage in many parts of the country – adding to the pressure municipal fleet managers are under to sustain a consistent maintenance process.

“Municipalities are charged with supplying a wide variety of services to their constituents such as fire and police protection, park services, utilities and waste management,” Penske’s Scaramastra says. “Fleet maintenance and management are ancillary to the job of running the business of government. More and more, municipal fleets are turning to companies whose core competence is fleet maintenance, allowing them to focus more on the services that fleet provides.”

In his view, the trend toward outsourcing – both in terms of owning and maintaining equipment – is definitely on the upswing, though certain parts of the country are moving towards it more rapidly than others. “There is no doubt that fleet operators of all kinds are looking for alternatives that can produce benefits in fleet availability and, therefore, productivity,” Scaramastra says. “The pace of municipal outsourcing does seem to be accelerating, and we are aggressively pursuing a share of the market.”

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