Aaction FiguresJul 22, 2016
Serving a varied customer base, Northern California’s Aaction Rents is a leading rental player along Highway 101.
Story and photos by Michael Roth, rer
Highway 101 north of San Francisco is one of the oldest and most scenic highways in the United States. The 330-mile stretch to the Oregon border passes through magnificent redwood forest, wineries, marijuana farms, orchards, small towns and scenic coastline.
From a rental perspective, this rugged terrain is the trading area for one of Northern California’s most successful companies, Aaction Rents, headquartered in the small community of Windsor, Calif. Established in the 1970s by Mark and Paul Grill – who are still part of the ownership team -- Aaction Rents today is primarily run by their younger brother John Grill, president, and his right-hand-man general manager Ken Dern, a Southern California transplant who has made his home in California’s wild North. Mark Grill is still active as chief financial officer, and Paul heads up accounts receivable.
Aaction operates from six locations mostly along the 101 corridor: the Windsor headquarters, Fulton, Santa Rosa and Vacaville to the south, Healdsburg and Ukiah to the north. Primarily operating in Sonoma County, the region is well known for its wineries, dairies, orchards, telecom companies, health care facilities and tourism.
The northernmost store, Ukiah, sits so close to Highway 101 that it’s the first visible business as drivers approach the town and because of the way the highway curves, the facility is visible for about 20 seconds. John Grill and Dern are strong believers that the impression a rental store makes on people that drive by are lasting and important and are fully on board with the dramatic improvements the rental industry has made in how it projects itself to the world, believing that clean and attractive buildings and nicely painted and clean equipment is important for the industry in attracting and maintaining customers.
Grill and Dern have found that an attractive appearance is also important in being able to find facilities for rental companies, especially in many of the smaller, tourist-oriented communities where they do business. Many of these towns don’t want an equipment rental company that they believe is likely to look like a junkyard with rotting hulks of machines a sharp contrast to scenic bed and breakfasts, helicopter tours of the wine country and wine-tasting rooms in lush green valleys dotted with vineyards where tourists go from one idyllic scenic winery to another to sample the result of the crop. So while Aaction yards are relatively small compared with many of the national companies they compete against, the company has managed to blend into the landscape very well.
“The image of the rental business as a whole has changed dramatically,” Grill says. “Transport equipment down the road looking nice and have a pickup truck look nice or alooking nice, it’s in our best interests to do that.”
“Nowadays with competitors like the Uniteds and Hertzes of the world with bright, shiny equipment, whose are they gonna rent?” asks Dern. “Now the little guys like us have to keep up with the Joneses.”
Aaction is keeping up well with the rental Joneses, thank you, and creating a positive image and developing strong community relationships is a major part of its business philosophy.
“We’re a very homeowner, community-based company,” says Dern. “We don’t give rentals away for free, but we offer half off for the soccer team, the baseball team, the football team, graduations, the Boy Scouts, Cub Scouts, Girl Scouts, all the community stuff. Our forte is that. When you think of a rental center in Windsor, Santa Rosa, Petaluma, all the towns along here, you think Aaction. We’re at the home shows, everything in the community. Without it you can’t survive.
“Santa Rosa is 166,000 people, but that’s still a small town. Here in Sonoma we’re involved in Chambers of Commerce, all of the municipalities, the independent contractors association; the building groups. We know all the people and that’s been good for us.”
Building relationships has had other far-reaching effects besides growing the customer base. When a party business next door to Aaction’s Healdsburg, Calif., store caught on fire a few years ago, the fire quickly spread to the Aaction branch and consumed it in flames. The firefighters, long-time friends of the Aaction staff, went to incredible lengths to save Aaction’s assets.
“They came in and got one of our forklifts,” recalls Grill. “They took it inside and packed stuff on top of a pallet and took it outside. They kept doing that. They took our computers and just yanked them out. Other than a few items on the wall that just melted because the wall got so hot, they saved all kinds of things. We were away at the Rental Show so when we came back we had a big dinner for them at the firehouse. We barbecued steaks for 50 or 60 people. They did a great job for us, otherwise it would have cost so much more. And it would have cost our insurance company. So they saved us time, energy and money.”
After the fire, Aaction set up shop in a trailer, only closing for three days before it was up and running again. The staff ended up having to move again before finding a suitable facility and building it from scratch, but the group was resilient, working out of trailers for more than a year.
When Aaction decided to explore the possibility of expanding further south to Vacaville, a town of about 90,000 inhabitants without a general rental business, Grill took the first step by personally visiting the small city’s planning department.
“I went there and said ‘You have no rental yard in this town, where can I put a rental yard?’ And they gave me all these leads and I got hold of a real estate agent and we thought it was the biggest no-brainer. There is a rental company, but it’s a Holt Cat Rental Store, they’re open Monday through Friday and it’s mainly big stuff. Matter of fact after we opened, they took all their small stuff and they sold it to us. They send us lots of customers and still do to this day.”
Aaction also benefited when a largefacility closed in Vacaville around the time Aaction opened.
“A local underground contractor bought the place and we ended up going in and we bought their rental counter, we bought all the stuff that goes behind, we outfitted our store with it,” says Dern. “We just changed the color of the laminate to our color and it worked out really good.”
Working in small communities as Aaction does, variety is essential and the company features that in its inventory and its customer base.
“We have a tremendous volume of small contractors who drive their trucks in to pick up an airor scaffolding, non-charge-account credit card or cash business,” says Dern. “And we’ve got the next size up, which is the drywall company, the plumbing companies and all that, that’s all charge business. And then we go to the next level, the up to the dozers and big , the big dirt customers. And high reach, which is a whole different animal, from 19 feet up to 80-foot boomlifts. And so we’ve got those customers, which is mostly all charge. And also we rent to local guys who want to use the low-level scissorlifts.
“We’re open seven days a week. If it’s raining, we’re open. If it’s the day after Christmas and the wife threw all the potato peels down the drain and it’s all clogged, you can come in and get a sewer snake from us. So we’ve got everything from the homeowner to the biggest contractors.”
The marijuana growers, a major driver in Northern California’s economy, are a big customer for Aaction, which rents them a variety of machines and sells the clippers that are used to trim plants.
Underground construction contractors are also a big customer segment for Aaction. “Before we were small, and we didn’t do much with big underground construction companies, but now we’re first call because we’re local and we’re carrying larger items,” says Dern. “We’re turning equipment over on a timely basis, we branched out into Cat and Deere and more varieties so we’re doing a lot of business with larger companies.”
Remember the homeowners
Although homeowners typically rent smaller-ticket items, it was that business that really kept Aaction Rents going through the Great Recession.
“During the recession, we were so happy that we retained that homeowner business,” says Grill. “A lot of national companies abandoned opening on Saturday and Sunday, but our homeowner business didn’t fall off very much at all. Matter of fact there were probably some small segments that actually increased because of that. That carried us through the recession. We never actually lost money, [although] we came close. We just broke even one year. But a lot of those companies lost big money. So we will always retain that homeowner base as well as the small- to medium-sized contractors, municipalities, wineries, vineyards. Those are all really good customers for us, great customers.”
As a smaller independent, Aaction is not always able to completely turn over its fleet as often as a larger, national company. Its shop is skilled at refurbishing machines to keep them running for longer.
“For example, let’s take a skip loader,” says Grill. “You have a 2006 skip loader and a 2014 skip loader, the technology doesn’t change that much on a skip loader. So you take that skip loader with 2,000 hours on it, we’ll put it in our shop and we’ll re-do everything on it. We’ll put in new cylinders, or even re-build the cylinders, re-do almost everything on it, have it sand-blasted, paint it and we’ll put the most modern paint on it so it looks like it’s brand new. We do that quite a bit. You can get away with it on machines where the technology hasn’t changed that much. But if the technology has changed quite a bit on that equipment, it doesn’t really work.”
“Sometimes equipment has years but not that many hours on it, so we’ll do a re-model on that and put it out for rent and it’s like brand new,” adds Dern. “You might spend $10,000 or $15,000 doing that, but it’s not as much as buying a brand new piece of equipment either.”
“We might get another two or three years out of it,” Grill says. “If the ROI is really good, that $15,000 seems like a good investment.”
When Aaction divests equipment, it often sells retail to its regular customer base, again making sure the unit is in top shape and painted with a high-end professional paint job.
In addition to keeping inventory and customers for a long time, Aaction has had tremendous success keeping employees for multiple years as well, with the majority of its staff logging double digits in years with the company.
“Many of those in double figures are store managers and a lot of them started off working the wash rack,” says Grill. “Most of our managers were yard personnel and they worked their way up. Our service manager, Jesus, cleaned chairs when we had a party store and he worked his way up. He couldn’t even speak English when he started. We’re real proud that we can take people and provide them with a good income and a nice place to work and make a career.”
“And we don’t steal people from other rental yards,” adds Dern. “That’s a tactic the big companies use to get people. But it’s been our hiring policy ever since I’ve been here, not to go to other companies and try to take their people. We like homegrown people.”
Aaction in the past laid people off during the winter but one of the positive by-products of the drought California has experienced in recent years is that with less rain, there is more business activity and therefore Aaction has stayed busy enough in winter to avoid this practice. They also found, with unemployment low, it was harder to replace those people.
“So we don’t lay people off any more,” Dern says. “We cut hours for everybody so we could keep all the people. Even when it does rain, because we do a lot of business with the homeowners and small contractors, people are still coming in. They’re cleaning gutters, trimming trees, they’re still coming in!”
With so many company veteran Aaction players managing branches, the managers adapted to a program the company adopted to encourage sharing of equipment between branches, so that now managers’ compensation packages include incentives to share equipment between locations. In the past, the tendency to hoard was common as managers didn’t want to let go of machines in their branches.
“We had that problem, but we changed the compensation package so a store manager got paid not only on how well his store performed, but how well the company as a whole performed,” says Grill. “Sometimes when those commission checks come out, the pay package for the company as a whole is higher than the individual store. So now we’re really good at sharing equipment.”
Aaction also centralizes repair, with the main service functions taking place at its Windsor headquarters. “Everything that needs repair comes here, basically,” says Grill. “Some small stuff they will repair themselves at the branches, but a lot of stuff comes here. If we have a service call, we have four service trucks here and we dispatch from here. If there’s a problem with something, we get somebody on the road right away. We’re not going to be there in two hours, unless it’s a two-hour drive. We’re going to be there real soon.”
Pinot noir or chardonnay?
Northern California is wine country and Aaction Rents’ trading area is full of wineries. In fact there are more than 425 vineyards in Sonoma County, covering more than 60,000 acres. Grill says at least 25 percent of its 50 biggest customers are vineyards. And the surrounding counties where Aaction does plenty of business, such as Marin, Napa and Mendocino are also leading grape-growing regions.
To start with, wineries rentand tractors during planting.
“They pick grapes of different varieties and they become ripe at different times,” says Grill. “It’s not just one crop, there are multiple crops. A lot of times they pick at night and they are machine picked because the grapes have to be firm. If they wait until too late in the day, the grapes become softer. So we rent them a lot of light towers. We rent them all of our industrial forklifts, water trailers, water trucks, forward reach forklifts -- we can’t get enough. If we had twice as many as we have, we’d still run out. Some of the bigger companies like Gallo will use them for two or three months at a time.”
But Aaction gets what it needs. “In the past, we weren’t a big enough company to handle the grape harvest,” adds Dern. “Now when they say ‘we need this many light towers, we need this many water buffalos, we need this many forklifts,’ we can handle them.”
Brush chippers are another big product for wineries and other landowners in the Sonoma area.
“The vineyard management people, they use a lot of chippers,” adds Dern. When they clear an area for a vineyard, everything gets chipped. And now they can’t burn anymore up here, so you have to chip. It’s too expensive to take it to the dump, where they charge an arm and a leg. It’s a lot cheaper to chip.”
With six stores, Aaction is far from finished expanding. Grill and Dern would love to have a branch in Napa, but municipal officials, trying to keep a certain touristy image in the area, have frowned at the idea. They would also love to have a branch closer to the Bay Area – in the East Bay or even in San Francisco itself.
“I’d love to have a store in the Bay Area,” says Grill. “Even in San Francisco, but it’s cost prohibitive. And you couldn’t have all the inventory you need. You need acres of land and nobody has that in San Francisco. So we’d have to have a support yard in the general area, Concord or Napa, to bring the equipment into the Bay Area. We’re constantly looking.”
Aaction tries to own all of its facilities rather than rent them.
“We’ve seen this happen over and over again where you start up a facility and you build it up and then the property becomes so valuable that the landlord terminates the lease and then you’re forced to leave and you have to scramble really hard to find a facility. So we always try to buy the facility, that’s part of our plan.”
Because of the difficulties in finding suitable property for a rental business, Aaction Rentals has retained a person who is busy looking for properties. Expansion and growth is very much a part of Aaction’s future.