Discovering a Gold Mine

A number of natural concerns accompany any equipment distributor's entry into the rent-to-rent business. One obvious issue is that rental companies that bought Komatsu equipment from parent company Furnival Machinery Co. might balk at either directly or indirectly subsidizing a competitor by continuing to buy machines from it.

However, Furnival and FMC Rents president Ron Ludchak have found that once those rental companies established a customer base that uses Komatsu equipment, they will continue to want to please that customer base and, therefore, continue to buy equipment.

Another concern was the effect FMC's short-term rental business would have on Furnival's long-term rental business. Ludchak says long-term rental customers who rent while they are waiting on an order to purchase have continued to come to Furnival. He has also found that FMC's short-term business has exposed many customers to Komatsu equipment that might otherwise have lacked such exposure, leading them to eventually buy equipment. The result is that FMC has enhanced Furnival's sales as well as its long-term rental business. FMC has close to 600 customers, increasing daily. If 10 percent to 15 percent go on to purchase equipment from parent company Furnival, the result is a gold mine for the dealer.

"The only real changes within Furnival have been within the mindset of its salesmen who now see FMC Rents as an asset as opposed to a competitor," says Ludchak. "Now they don't have to take what they consider the nuisance rentals, for a week or two. With these rentals, salesmen were often reluctant to bill them for an extra day or two if they kept the machine. They didn't want to risk making them mad because they might still buy it. So they've eliminated that problem. They can just tell customers who want short-term rentals to go see FMC."

Any concerns about the impact of the rent-to-rent program have certainly been laid to rest by FMC Rents' success, making a profit within the first 12 months. "You don't see that in an AED distributorship," Ludchak says.-M.R.

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