The Jefferds Corp. (No. 99), St. Albans, W.Va., is a large forklift dealer covering West Virginia and parts of Virginia, Tennessee and Kentucky. RER spoke with CEO Richard Sinclair about the state of the rental industry.
RER: Many people are concerned about the difficulties in finding qualified personnel, especially with the fairly low unemployment levels we are currently seeing. What should RER 100 companies do to develop long-term strategies to deal with this problem?
Sinclair: We are having some success with second- and recently third-generation employees. The number one thing is to build a reputation for fairness - that takes time. My guess is the smaller we are, the more of a family atmosphere we have. The computer industry has siphoned off a lot of the folks who have the aptitude to do mechanical repairs. It's a cleaner business and therefore perhaps more attractive to some.
RER: What is the biggest challenge facing the rental industry?
Sinclair: The economy. If it goes in the tank, we are all in for some rough rides. While the rising cost of fuel is a problem, we are only catching up to where other countries have been for a long time. I think we can absorb this cost.
An early spring coupled with a good stock market and low inflation seems to keep confidence up. I am concerned about rising interest rates and their effect on housing starts. If loan growth drops at the banks, we could see things slow down in a hurry. I would advise the Fed against another increase now.
RER: How would you characterize the rental market in your area?
Sinclair: Although this could be interpreted as sour grapes, I think it's safe to say we have too many players for the size of the market. They all came to town, but the market hasn't grown as fast as some other markets, and that has had an adverse effect on rates. Some of the rates on shooting boom forklifts are borderline crazy, at least the way that we keep the books. I think this will settle down, but it's a problem until it does.
RER: What can be done to increase rental rates?
Sinclair: This always seems to me to be market-driven. When supply exceeds demand, you will have low rates. Until demand picks up, I think pricing and rates will be low.-MR
Despite double-digit growth last year, the RER top 10 rings up only about $1 out of every $5 spent in the equipment rental industry, so there's plenty of "loose change" for hundreds of local companies. At the other end of the RER 100, a crowd of companies hovering around the $5 million mark just missed making the list. And another hundred "little guys" are knocking on the door with one good growth year. Here's a few to look for next year, from different parts of the country, targeting different segments of a still-fragmented market.
* Construction Equipment Rental: A division of Industrial Tractor in Jacksonville, Fla., this three-location Deere dealer specializes in developing maintenance programs for its customers' equipment and other rental fleets.
* Total Equipment: Around for a quarter of a century, this Long Beach, Calif., outfit has been on the RER 100 before, renting a full line of equipment while coordinating projects with a sister company that provides operators for backhoes, loaders and dozers.
* SES Equipment: Headed by Steve Martines, this West Chicago, Ill., earthmoving specialist places a heavy emphasis on training mechanics, and its service trucks feature advanced diagnostic capabilities.
* Stowers Rental & Supply: Based in Knoxville, Tenn., this three-location Cat Rental Store unit of Stowers Machinery has doubled the value of its rental fleet of allied equipment in the past year and expects revenue to follow.
