While researching for the new RER 100, RER’s Michael Roth recently spoke with Bob Kendall, CEO of Seattle-based Star Rentals, about the current business environment in the Pacific Northwest, rental rates and why he remains energetically optimistic.
RER: What are your expectations for business in 2009?
Kendall: My business expectations have been significantly revised downward. Star Rentals is fortunate to have many customers who have projects in 2009 but overall volumes will be off dramatically. Currently our revenues are not off as much as most of the numbers I am hearing for the Pacific Northwest in general but I have already revised my 2009 business plan twice. Things are very unpredictable at this time.
How did the business climate change in 2008 and how do you expect it to change in 2009?
Our business in 2008 was not off very much from 2007. 2009 will be off significantly over 2008 but not across the board. Some branches are still performing at levels close to 2008.
Do you have any expectations for when the business climate will improve?
I believe as the weeks and months roll on we are getting a clearer picture of what is really happening and the overall severity. Project financing is certainly a big part of the problem but confidence is a much larger component. People are sitting on the sidelines waiting for something positive to happen before moving forward.
What do you plan to do differently to deal with likely softer demand? What changes have you made to deal with the recession?
Everyone’s business is going to be smaller for the foreseeable future. To that end, we will adjust the size of our business accordingly. Star Rentals is opening in Bellingham in August 2009, which will give us the opportunity to spread our underutilized fleet around. We will be looking for other such opportunities as they appear and are currently evaluating several other geographic possibilities. We have reduced employee count by 5 percent through attrition over the past six months. If necessary, we will consider more aggressive measures if justifiable.
What are your customers telling you about their expectations for business over the coming year?
Most of our customers remain optimistic but concerned about the future. I believe everyone would admit “these are uncharted waters.” When difficult business conditions exist, basic business fundamentals must be practiced!
How is the rental rate situation?
Although we have seen similar rental rate erosion in the past during other recessionary times, I have never seen this rapid rate of deterioration.
Despite all the issues, are you optimistic about the future?
As always, I am extremely optimistic about Star Rentals’ future. Recessions are never fun. The current economic situation is far more complicated than anything we have experienced in the last 25 years. However, this is a great opportunity to identify areas of our business to become better at, spend more quality time with customers, and work energetically at promoting our brand in the market place. To that end, our “to do list” is long and keeping everyone energized!