What’s Behind the Hottest Equipment Markets?

We zero in on the top four in ELFA’s What’s Hot, What’s Not: Equipment Market Forecast 2021

Carl Chrappa hits the, um, nail on the head when he calls Construction “a bread-and-butter asset.” That’s because the massive equipment sector leads the list of hot markets for the eighth consecutive year in ELFA’s “What’s Hot, What’s Not: Equipment 
Market Forecast 2021.”


“It’s remarkable, really,” says Chrappa, Senior Managing Director of The Alta Group LLC, and author of the report. “The survey scores for Construction are very high, showing that equipment leasing and finance companies feel comfortable with the market. Also, the U.S. Department of Commerce recently announced that construction projects put into place and annualized for 2021 amount to more than $1.5 trillion. So, it’s a smokin’ hot market—and today’s low interest rates are a real help.”

“What’s Hot, What’s Not” is a benchmarking tool that provides industry perceptions of 15 equipment markets based on a survey of ELFA members. Survey results, along with responses on economic conditions, allow companies to compare their progress with that of others and identify opportunities for future success. One hundred responses were received this year, “a very good rate, considering the pandemic,” says Chrappa. Now in its 31st edition, the report continues to be one of ELFA’s most popular resources.

Tied for second place this year are Medical and Trucks/Trailers. Medical’s showing demonstrates solid consistency, as the market typically ranks in the survey’s top five. But Chrappa says the showing for trucks and trailers marks a “huge rebound” for this market, which ranked second to last in the 2020 Survey. 

Coming in fourth this year is Hi-Tech/Computers, which showed an actual increase in sales of about 13%. “Sales are often negative for this sector, but pressing requirements for new technology and equipment to support digital transformation and working from home made the difference,” says Chrappa. Below, ELFA industry experts comment on the state of business in each sector.

Construction’s Brass Tacks

Jim Mengacci, Senior Vice President—Sales at People’s Capital and Leasing Corp., a subsidiary of People’s United Bank, agrees with the strong outlook for the sector this year. “Commercial construction continues to benefit from low interest rates and a boom in the warehousing and logistics business,” says Mengacci. In addition, he says, certain manufacturing sectors are evolving with newer technologies that require new or expanded facilities. “Perhaps most important, though, is infrastructure spending,” he observes. “Recent stimulus has reinforced and even expanded state and federal infrastructure spending, with backlogs building aggressively in many places across the country.”

Even so, he says equipment finance companies are still challenged to help customers navigate the economic setbacks of 2020. “Last year required deeper partnerships with both equipment sellers and customers to get behind the numbers and to the real growth story,” Mengacci notes. “And because supply-chain disruptions have extended lead times by months, the ability to quickly acquire the assets needed to start and finish projects has led to increasing backlogs and delayed realization of growth revenues for both manufacturers and their customers.”

“[Construction is] a smokin’ hot market—and today’s low interest rates are a real help.”

 Carl Chrappa, The Alta Group


Mengacci and People’s Capital and Leasing Corp. are confident nonetheless. “As stimulus-supported state, local and federal spending produces realized projects and private-sector projects also increase, we think the demand for construction equipment will be feverish at times,” Mengacci says. He adds, “Even with the headwinds of the last 12 months, we believe our commitment to marry our construction industry expertise with a track record of solving real problems and providing reliable capital is a powerful opportunity.”

Because access to low-cost, flexible capital enables customers to take advantage of such trends, Mengacci thinks manufacturers and equipment finance companies must present their best efforts. “Any manufacturer not only offering payment solutions but looking to innovate with new and differentiated offerings will be in a unique position to win,” he says. “Innovative customer finance programs will be integral to maximize both sales and margin.” 

“Perhaps most important… is infrastructure spending. Recent stimulus has reinforced and even expanded state and federal infrastructure spending.”

 Jim Mengacci, People’s Capital and Leasing Corp., a subsidiary of People’s United Bank

Medical’s Endurance 

“I have to say we’re not surprised by Medical’s high rating,” says Ellen Comeaux, Senior Vice President, Commercial Division Sales at TIAA Bank. Consistently a strong market, medical equipment’s favorability this year stems from three factors: the segment’s strong leasing-financing culture; demographics showing an aging population, which will lead to an increased need for medical technology; and the COVID-19 slowdown, expected to result in more capital expenditures as pent-up demand for non-emergency procedures is released. 

“But the pandemic continues to cause economic uncertainty, particularly pertaining to capex dollars, since it’s unclear when hospitals will invest as demand for non-emergency services returns,” Comeaux adds. Also unclear is timing for the return of in-person equipment expositions, a key sales point for equipment manufacturers. “Medical is one of the more unique channels in that regard, where new modalities really drive acquisitions,” she explains.

At the same time, though, Comeaux notes post-COVID opportunities for TIAA Bank to demonstrate its domain expertise through its ability to understand medical technologies and leverage that understanding to provide competitive structures and terms. “One example is our ability to offer deferral or step-up structures to match customers’ expenses with their reimbursements,” she says. “These structures help our clients invest in needed equipment earlier than they may have otherwise.” 

A second opportunity involves testing and diagnostic equipment, demand for which Comeaux thinks will continue through 2021. “Non-contact modalities, such as tele-health and remote patient monitoring, are also expected to remain strong, representing another opportunity for growth,” she says.

Comeaux sees transactions increasing for technologies that provide a cleaner, safer clinic environment, such as air purifiers and disinfecting equipment. “We’re also seeing opportunities in robotic-assisted surgery, and we expect an increase in this as well,” she adds. 

“Deferrals and step-up structures will be popular as medical practices get up to speed, invest in equipment and need revenue flow before they start paying.”

Ellen Comeaux, TIAA Bank


In financing, Comeaux says TIAA Bank is hearing a lot about pay-per-use and subscription-based payment options as customers look to short-term rentals and cancellable contracts to support equipment put in place during the uncertainty of the pandemic. “We also think deferrals and step-up structures will be popular as medical practices get up to speed, invest in equipment and need revenue flow before they start paying,” she says, adding, “Newer and cutting-edge technologies are where pay-per-use comes in—and that’s the shift we’re watching for.”

In all, Comeaux thinks 2021 still holds some uncertainty, but that the Medical market won’t experience much of it. “The need for healthcare is only going to grow, as close to 19% of the U.S. population will be over 65 by 2030, compared to 10% in 2010,” she says. “There’s a need for technologies to care for this growing population, not only from a standard-of-care perspective, but from a cost perspective. And this will drive additional investment in equipment that can provide care for outcomes in a more efficient manner.”

Trucks/Trailers’ Comeback

Jennifer Sablowski agrees with the report’s assessment on trucks and trailers and says the market is in for a dynamic year. “We’re seeing pent-up demand because clients either delayed getting the replacements they had planned for 2020, or they’re expanding their fleets, especially in the food-service and food-delivery business,” says Sablowski, Senior Vice President, Truck & Equipment Business, at Lease Plan USA, Inc. Demand for both trucks and trailers began rising in late 2020 and continues this year—so much so that Sablowski says the orders for new trailers are now backlogged into 2022. 

Truck orders are encountering similar obstacles. “We’re seeing clients start to focus more on sustainability and technology, so we’re having a lot of conversations with them about their earlier-model fleets, and whether they should replace them in favor of lower emissions and better technology,” Sablowski says. Of particular interest: real-time telematics applications that can track driver behavior as well as vehicle location, mileage, fuel consumption and engine diagnostics. Used in conjunction with data analytics, fleets can make more informed decisions about vehicle repair and replacement. But supply-chain issues continue to slow the delivery of truck parts, causing manufacturing delays. “I think for rest of this year, the challenge in both tractors and trailers will be trying to fulfill the orders being placed now,” she concludes.

“We’re seeing pent-up demand because clients either delayed getting the replacements they had planned for 2020, or they’re expanding their fleets, especially in the food-service and food-delivery business.”

 Jennifer Sablowski, Lease Plan USA, Inc


Longer term, Lease Plan USA is seeing growing interest in electric trucks. “A lot of large corporations have made commitments to reduce their emissions and carbon footprints,” says Sablowski. “Last-mile delivery is a big focus right now, and that’s where the interest is.” Just recently, a customer asked for help with a five-year pricing forecast for adding electric vehicles. “Even though trucks are behind passenger vehicles in this trend, it’s coming—and probably sooner than later,” she adds.

Regardless of the manner in which trucks and trailers evolve, Sablowski has confidence in the market at least through 2022. “COVID-19 has made people spend more on products than on experiences, and we don’t expect that to change quickly,” she says. “The demand for actual products continues to grow, increasing freight and the need for more trucks and trailers.” Add to the upbeat forecast changes in truck and trailer technology and a growing mix of manufacturers, and Sablowski makes an admission: “Personally, I’m excited, because this is the industry we’re in.”

Hi Tech/Computers’ Critical Use

“Digital transformation was happening before the pandemic, and the pandemic has only accelerated it,” says Brad Shapiro, Vice President for Enterprise, HPE Financial Services, a subsidiary of Hewlett Packard Enterprise. “There’s now a real urgency around creating digital models and experience, and you can see it in businesses of all sizes, from Amazon to my local pizzeria, where I can order and pay online and pick up contact-free.”

Shapiro concurs with the survey’s ranking of Hi Tech/Computers and cites research suggesting that nearly two-thirds of global GDP will be digitalized by 2022. “Thus, the primary driver of IT for the next two years will be digital transformation,” he says.

Challenging this transformation, however, are customers’ stronger focus on cashflow and budget scrutiny, both results of last year’s lowered revenues. “Customers are trying to figure out where the money to invest in more technology will come from,” says Shapiro. But for HPE Financial Services, the situation is both opportunity and challenge, since the company deploys its expertise in technology and technological assets to increase customers’ investment capacity. 

To wit, in 2020 HPE Financial Services took in more than 3.1 million technology assets spanning the gamut in brands and equipment types. “In some cases, we monetized assets off customers’ balance sheets and moved them into use-as-a-service,” explains Shapiro. “In other cases, customers retired assets, and we extracted the value from them by putting them back out for reuse. By using a combination of these approaches, we can accelerate customers’ financial vitality and help them self-fund a portion of their move to digital.”

“There’s now a real urgency around creating digital models and experience, and you can see it in businesses of all sizes.”

Brad Shapiro, HPE Financial Services, a subsidiary of Hewlett Packard Enterprise


Other recent trends, such as working from home and remote learning, present still more opportunities for equipment finance companies to add value by creating solutions extending beyond a credit line and financing rate. Says Shapiro, “We now have the chance to adapt certain solutions previously designed to work at large centralized sites so that they function amid a more distributed workforce.” 

Edge computing is a related challenge and opportunity, as 5G (the fifth-generation technology standard for broadband cellular networks) enables more computing outside computer centers. “Instead of sending data out to big, centralized computers for computation, that work can now be done on the edge, where real-time decisions need to be made,” says Shapiro. “The challenge is that the data is not in one location. The opportunity is to compute it because it’s all connected.” 

Yet another evolving opportunity is customization of the Cloud experience. “While the public Cloud is growing rapidly and we’re seeing some on-premise activities moving to it, there will be applications and data that customers want to keep on premise,” says Shapiro. In response, HPE has created “HPE GreenLake,” a pay-per-use offering using a single platform to manage a customer’s public and private Cloud activity. “With this product, we’re providing what the customer wants in the service experience and the pay-per-use experience,” Shapiro says.