In researching for this month's cover story, we heard a wide range of opinions on when economic conditions will improve. As you'll see when you read the article, while optimism is not exactly unbridled and nobody is expecting a repeat of 2004-5, when the industry went from a recession into a boom, there is a general sense that the industry began to improve in the latter half of 2010 and will continue a slow and moderate rise in 2011.
Not everybody agrees with this assessment and some are continuing in the doldrums but overall there is a sense of optimism and most rental people we communicated with are increasing expenditures on fleet, which hopefully will lead to a more dynamic and energetic atmosphere at the upcoming Rental Show and ConExpo in March.
As you'll also read, most rental companies took steps to improve their operations, run leaner and more efficiently. Some are already planning on hiring back some people they let go, and I heard a few rumblings of concern about longer lead times as they make equipment purchases, as opposed to a sense that manufacturers were camped outside their door offering them discounted deals.
Rental companies all experienced rate degradation during the past couple of years and many are beginning to see some improvement in that sphere as well. If there are any silver linings to the dark clouds that have engulfed the industry, there is the hope that the recession might have increased penetration. For example, Joel Theros of Theros Equipment said he is finding that a lot of contractors are deciding to rent equipment on a short-term basis to get the work done without the costs of ownership or necessity to find financing. His company also noticed a resurgence of “do-it-yourself” projects, people saving money by renting equipment and doing repairs themselves.
Those trends aren't likely to have long-term implications, but one rental company owner I spoke with said his company concentrated on expanding the market. He ordered his sales staff to, instead of just calling on the same customers, devote a certain percentage of calls to potential customers they've never called on, using the old-fashioned — but still utilized by many — technique of filling out call reports on those cold calls. His philosophy was similar to one I recall from a rental owner some years back who told me that in his opinion, every building in America had a need for some piece of equipment that his company had in its fleet, and it was up to his sales people to find out what that item was.
This year's company said its results were encouraging. He didn't tell me the numbers, but his company came up with a better-than-expected number of new customers, many of whom had never rented before. During these calls to new people, his sales people frequently heard the comment “I never thought about renting that” or “I didn't even know you could rent one of those.” Music to the ears of a rental salesperson, a welcome change from “here's the discount XYZ is offering me, can you beat it?”
Again I was reminded of a comment made by Ned Graham of United Rentals when I visited its headquarters last summer. Graham's view was that rental penetration was held back by our industry's own inconsistency. As Graham said “the reason they continue to own is because we have not provided the quality of service, the level of consistency, security of supply, those things that the customer needs across the board. We do very well in some cases and our competitors do very well in some cases. But as an industry we have not done a sufficient job in my view.”
So for this company going after the non-renters, I salute them for those efforts, and strongly hope that others will make similar moves to draw new customers into the rental fold and expand the pie for everybody. But once you convince somebody to try rental, make sure you don't let them down with poor service, late delivery, or poorly functioning equipment.
I don't imagine many of this column's readers take much notice of my picture but you may notice this month I am posing in front of St. Basil's Cathedral on Red Square in Moscow. No I haven't moved to Russia, but I did visit that country last month to attend Russia's first conference on equipment rental. If you're interested in my reporting on that conference, look at the December issue of RER or read our online coverage at http://rermag.com/trends_analysis/headlinenews/rer-attends-first-international-russian-rental-conference-120310/index.html and my blog at http://rent-talk.rermag.com/2010/12/10/is-russia-the-next-great-rental-frontier.