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Location, location, location — a mantra used often in business — mattered much in 2007. So did inventory mix. It was not a good year in the earthmoving business, especially in places like Florida and Southern California, and, in general, most of the West and East. Even in the steadier Midwest, there were pockets where the housing slump hit particularly hard and quite a few companies felt the effects of it.

Still commercial and industrial and infrastructure work tracked fairly strongly in most areas, not really hit yet by the effects of the housing slump. But so much construction is related to housing — all the strip malls that cater to the new housing developments, the roads to get there, the schools, hospitals and businesses that would cater to those residents. In many places it hasn't caught up yet. In many markets, 2008 will be the year that it does.

National companies tended to deal with the issue by restructuring their fleets. Companies transferred equipment from slower markets to where there was more demand to a larger degree than ever. United Rentals, for example, altered its compensation structure to offer incentives to branch managers to move equipment out of slower markets. Hertz grew its percentage of aerial equipment and reduced its earthmoving inventory to about 25 percent of its fleet, an all-time low for the company. A number of smaller companies did subtle makeovers to emphasize the commercial/industrial segment of their business.

Despite the general tone of doom and gloom in much of the media — often exaggerated, but not based on fantasy — 2007 certainly won't be remembered as a down year among the 100 largest companies. Not including the additional companies — 101 through 110 — the RER 100 totaled $13,853.6 million in rental volume, or, rounded off, $13.85 billion, a 4.3-percent year-over-year increase.

Excluding companies whose revenue figures are based on RER estimates only, 67 percent of companies on the 100 list this year as well as last had rental volume increases in 2007 compared to 2006. Of those with increases, a surprising 60 percent had double-digit boosts. Still, these numbers are a far cry from last year's listing, where 95 percent had year-over-year increases compared with the previous year, with 70 percent of those in double digits and the overall list jumping 14.5 percent.

The consensus is far more will experience decreases in 2008, although many still expect an increase. The majority of companies expecting increases look for single-digit jumps, but some, especially those that have niches in the industrial and commercial end, still see double-digit revenue growth as possible this year.

Such is the unpredictability of the current environment, that the range of increases and decreases of rental volume among the RER 100 was as wide as it has been in recent memory. Unlike the 2004-2006 period where just about all companies posted increases, this year reported revenues ranged from 64 percent down to 46 percent up.

For most companies, the commercial construction, industrial and infrastructure markets remained vibrant although some companies saw signs of softness, with some jobs held up pending financing, with credit harder to come by, and the sense of economic uncertainty in the air causing investors and banks to hesitate before funding projects. Industrial companies that had considered manufacturing plant expenditures and other ventures were adopting the cautiousness normal for this type of economic cycle.

For many rental companies, 2007 marked the beginning of a tightrope that would have to be walked, that might get narrower and windier in 2008 — the need to be cautious with expenses and cut costs while at the same time look for opportunities to gain market share, either by improving service or making an acquisition or starting a greenfield branch. How to expand and cut costs at the same time? It's a delicate balance to say the least, and those that went for opportunities had to study them carefully — gone are the days of acquisition-mania throwing caution to the wind. Not in this market.

Several themes were constant among RER 100 executives interviewed for this year's 100: constantly refining the business, using information more effectively, maximizing efficiencies. How deep the current slowdown — or recession, if you will — will go is a subject of much debate and nothing even close to a consensus has emerged. But the long-term demographics, in a country where the U.S. Census Bureau expects the population to grow by another 60 million over the next two decades, are seen in very positive terms in most of the country.

“The long-term demographics of our market are quite good: populations will continue to grow, commercial building remains strong, net in-migration to our markets continues,” said Mark Clawson of Diamond Rental (No. 66), speaking of the Intermountain West, but expressing a sentiment shared by people in many regions. “A recession may come but we are trying to take a long view to this business and that helps mitigate the possibility of a relatively short-term slowdown.”

Most 100 executives agree the long-term outlook remains strong. But some are optimistic of a turnaround in the latter half of '08, perhaps with the assistance of the federal stimulus package. Others don't see it until 2009 and others see the slump lasting a year or two beyond. Location has a lot to do with it. A lot of variables are yet to be played out in the financial markets, still uncertain and unpredictable.

Seven of last year's top 10 posted rental volume increases, with NES decreasing because it sold its tank and traffic safety divisions, and Neff, heavily concentrated in earthmoving equipment and located in areas particularly hard hit by housing, posting a 3.6-percent rental volume decline and dropping out of the top 10 to No. 11.