RER interviewed numerous rental executives in preparation for our January rental forecast about their expectations for 2014 and are including several in an ongoing series in RER Reports. Here RER talks to Fred Leach, general manager of Odessa, Texas-based Cisco Equipment about the oil-and-gas industry, improving construction and customer expectations.
RER: How has 2013 turned out for you business-wise?
Leach: This year is tracking to be up about 10 percent over prior year in rental revenue. Sales are flat as well as parts and service revenue. We expect rental to continue to be strong and the rest of our business to be flat. Profit margins are tracking to be the same as prior year.
What areas have been strongest for you in the past year?
Our only market that has been driving our business is the petroleum industry.
Do you expect to target a different customer base in 2014 than in the past, or emphasize a different segment?
We expect some non-residential and residential business; however I do not see it as being a large part of our business. Our target will remain the petroleum industry and product offerings related to that industry.
What kind of results do you expect for 2014?
I anticipate our business may be slightly up to flat over 2013. This is for several reasons. First we do not anticipate growing our fleet over what we currently have; second our APR is strong as it can be with the lack of infrastructure, our municipalities do not anticipate infrastructure growth so we have pretty much hit our max for the area.
How are your customers looking at the year ahead?
Our customer base is optimistic for the next six to seven years.
What kinds of changes did you make to your business in 2013 and what kinds of changes do you plan for 2014?
We have had some line changes by our manufacturers and we continue to see one of our main line manufacturers grow weaker. We will most likely need to find a replacement for our weakening lines.
A few years back during the recession most rental companies reduced their fleet size, and reduced personnel. Have you in the past year grown your fleet or added back personnel and do you expect to do so in 2014?
We have grown our fleet substantially. We have lost several employees to the oil industry and are trying to fill those positions.
What issues most concern you going into the next year, either rental industry issues or wider issues in the world related to the economy, infrastructure or politics?
My biggest concern is the consistency of the petroleum industry. I am also concerned about the effects our current administration and the changes in health care will have on our business. I think there are several things that can affect our fragile economy, but for our company if the oil and energy sector remain strong we should be fine.