Quality Beyond Quantity

May 1, 2005
As always, in preparing the RER 100, our staff spoke to leading executives from most of the major rental companies in North America. We spoke with them

As always, in preparing the RER 100, our staff spoke to leading executives from most of the major rental companies in North America. We spoke with them about their numbers so we could compile our listing. But more important than the numbers was the story behind them, how these executives saw the industry, how they viewed their businesses and the kinds of preparations they were making toward the future.

We all know that 2004 was a good year in the rental industry and that 2005 is starting out the same if not better. But most impressive to me were not the numbers, nor the double-digit increases that many companies experienced. More impressive to me was the way many RER 100 companies went about obtaining those results. The increases in total construction revenue or non-residential construction were not as high as the increases so many RER 100 companies had. It was far more than just customer demand being up.

It was that so many rental companies changed their way of doing business in fundamental ways. After three very tough years, many rental executives knew they couldn't just sit back and wait for the good times to come. They knew the good times would only be good times if their companies were properly prepared.

Rental rates improved throughout the industry in 2004. Part of the reason for this was increased demand. Obviously when demand is high, it's easier to charge more. But many rental companies were determined to charge more because they couldn't be profitable if the rates continued to drop. Rental rates also improved because rental companies looked for ways to raise them even without an increase in the construction market.

So 2004 was about improved business conditions, but it was also about HERC's Gerry Plescia riding around with his salespeople to meet with customers to find out how HERC could do a better job meeting their needs. It was about many companies looking at their inventory mix from top to bottom to determine if it was the right mix going forward. 2004 was about Wayland Hicks and the other top leaders of United Rentals holding town hall meetings with all their employees to spark a dialog on making the company more efficient and effective. It was about Neff Rentals' internal reorganization to become closer to its customer base and RSC Equipment Rentals unifying its brands and de-centralizing decision-making. It was about NationsRent becoming a full-service provider and finding new ways to serve its varied customer base. It was about Ahern Rentals deciding that the best way to raise rental rates was to compensate sales staff for lowering discounts rather than only producing volume. It was about Sunstate Equipment developing a prototype rental branch of the future and re-examining every aspect of its rental process. It was about Wagner Rents developing a central dispatch system and improving transport utilization, enabling the process of a piece of equipment going off-rent and back to the shop and back to the ready line to occur more quickly.

Other positive changes occurred, but not just with the big companies. The entrepreneurial spirit is alive and well. Look at companies like California High Reach, American Equipment Rentals, Midwest Aerials & Equipment, owned and operated by people who worked for rental companies that were acquired by big players and then decided to go out on their own and start their own companies. The same is true for many of the Volvo Rents franchisees. I'm not praising them in criticism of the larger companies they left. But for this industry to continue to grow and renew itself, it will continue to need pioneers who are willing to take risks and go out on their own and develop new independent companies. This is a sign of healthy renewal, a sign that the same spirit that drove the pioneers of the early days of rental to better themselves and the industry is still out there and will continue to be.

What gives me the greatest hope are the companies not yet listed on the RER 100, that are just starting out, perhaps in Buffalo, N.Y., or Dayton, Ohio, or Carson City, Nev. Undoubtedly as I write these lines and we prepare to go to press, somebody is opening the doors to a new rental company. Or the owner of a recently established rental company is looking at his first full-year results and realizing his company is going to make it. And the RER 100 of tomorrow is taking shape somewhere in North America, way below the radar screen.