RERMAG

Signs of the Times

No one can say the rental industry has been stagnant in the last few decades. Since entering the market in 1961, I have witnessed change after change. I have seen the construction equipment market in the '60s controlled by the AED-type distributors, with each one having "exclusive" distribution rights on certain lines of products.

Change came unexpectedly in the construction equipment arena in the '60s with the advent of the rental industry gaining serious power in California. It dominated the stage because it offered new conveniences the contractor had never realized before. The key words here are change and convenience. The contractor recognized the convenience of having rental equipment close to his job and having it available for the duration of his job whether it was a day, a week or a year. Distributors who didn't adjust to the changing demands of their customers died off.

It's easy to understand that the rental industry changed with how the contractor did business, but many distributors didn't welcome the change. I was probably one of the first manufacturers who recognized the potential of the rental industry and started selling direct to rental people, bypassing the AED houses. I made many enemies by changing our operations, but I made more friends and built a highly successful company based on the rental industry.

Today I hear many complaining about the changes occurring as a result of recent consolidation. I will say the same thing today as I said in the '60s: "You can't stop change. You can't stop the inevitable." Whether you like change or not, you better adapt or you will take the same path as the old-line distributors - extinction. As that old jazz singer said, "You ain't seen nothing yet."

We are going to see rental growing at an unprecedented pace. It will get more popular because of the convenience it brings not only to the contractor, but also to many other industries that will begin looking at rental as a viable alternative to ownership. When companies like General Electric and Home Depot enter an industry, they've done their homework and realized that rental is the future. They are not looking for millions of dollars. They are looking for billions.

So what's going to happen to the independents, the consolidators and the large players like GE? Just like any other industry, there is room for all. Service and convenience are still the key words. The independents will cater to niche businesses while the big players will probably enter all markets. Too many small companies fear the big players, but the big players are making markets "rental aware."

Here's my analogy: Y2K made every business "generator aware," but this awareness did not disappear Jan. 2, 2000, even though very few problems occurred. Every business knows if it has a power failure, that business is dead. Demand for generators will continue to expand and grow because all businesses rely on electricity and can't afford to be without it. You can see the same in rental. Every industry needs it, so it will continue to grow in popularity and demand.

We will see a resurgence of independent contractors. Some will be brand new players, and some will be re-entering the industry once their covenants not to compete expire. E-commerce will also be in the rental equation. So start preparing for the new millennium. It's going to change everything, and the winners will be those companies that adapt best.

TAGS: Ar
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