One of the advantages consolidation can bring is increased capital, enabling acquired rental centers to be adventurous and try different types of equipment. Being at the right place, at the right time doesn't hurt either, particularly at a trade show.
Like most rental center owners, Don Schmidt and his son Dale, former owners of Adon Rental (now United Rentals) in suburban Cleveland, attend industry trade shows to meet old friends, share ideas and learn about new machinery.
Such shows offer hands-on demonstrations that are better than any manufacturer's brochure or video to evaluate a product. Plus, a trip to a trade show is less time-consuming than a visit to a manufacturer's plant, and there is a wide variety of equipment on display.
It was during a trade show visit in 1999 before Adon was acquired that the Schmidts decided to purchase a new piece of equipment. What caught their eye was a track-mounted telescopic excavator with a 24-foot reach at grade and 16 1/2-feet of digging depth. They knew no comparable machines were available in their competitors' rental fleets and thought many of their customers would be interested in the new machine.
While eyeing the machine, United Rentals approached the Schmidts and asked them if they wanted to join its growing list of rental companies while remaining as the local management. The acquisition eventually gave the Schmidts the financial clout to bring their new equipment purchase to fruition.
Don Schmidt, backed by 30 years of experience in the Cleveland rental market, had an inkling of what his customers needed and would use. He also had a history of introducing innovative products to the market - he was one of the first in the area to offer aerial work platforms when they were introduced 30 years ago.
Schmidt sees the introduction of new products to a market as a way to enhance profit margins. In his experience, you can often rent a new product for higher rates because no one else in the market has the same equipment and customers are curious. Also, a market's saturation with similar products often depresses prices to the point that business sometimes goes to companies that offer the lowest rental rate.
Schmidt knew that he might have to do some extra work initially to get customers to try their new product. He also knew that once customers see its value, they are usually willing to pay for it. Other potential customers then see the machine in use, particularly in construction where jobs are highly visible.
United acquired Adon in May, and immediately, the Schmidts' ordered the new unit. After its delivery 60 days later, the staff at the North Olmstead branch went to work introducing the machine to local customers. They distributed a flier to all area contractors announcing the newest machine and called on customers who were most likely to rent. They also, surprisingly, arranged to display it at the local county fair.
The introduction was successful. Not long after the fair, United received a call from a regular customer who needed the machine for highway work. The customer needed a straight telescoping boom excavator that would allow operation beneath the overpass. A knuckle boom machine would have been difficult to use because of the low overhead clearance of the bridge floor.
This customer has proved that Schmidt's foresight about acquiring the unit was right on target. The machine has been in constant use since then.
"Another machine is on the top of our equipment list for next year," Schmidt says. "With the success we have had with this machine and the pent-up demand we've built up, we expect that the purchase decision for our second machine will be a 'walk in the park.'"
Or maybe another walk through a trade show.