GREENWICH, Conn. — United Rentals chairman and CEO Bradley Jacobs announced last month that he will step down as chief executive officer Dec. 31, but will remain involved as executive chairman in the company he founded with six others in 1997.
Wayland Hicks, currently vice chairman and COO, will succeed Jacobs as chief executive officer on Jan. 1. John Milne, president and CFO, will continue in his current positions.
“I've been a part of a great management team here at United Rentals and I'm ready to do it again,” Jacobs told RER. “I'm looking for that next opportunity to create a large amount of value in another huge industry.”
Jacobs said he is prepared to invest $100 million of his own capital into his next venture, though the details of his new endeavor are still undecided. Jacobs outlined to RER three options he's considering: another acquisition-based business plan in a large market sector; a roll-out-type business that is successful in one area and can be duplicated with cold-starts in many different regions across the country; or a turn-around situation, a scenario in which a company with healthy growth potential is in need of new management to breathe life back into it. “Now that I'll have more time on my hands I'll be able to do some more research into other opportunities,” he said.
Jacobs will continue to work on training programs in place at United Rentals, including teaching courses to new branch managers. He also plans to stay involved in the company's efforts to ensure rental rates reflect the economics of the industry, an issue for which he remains very passionate.
“If my legacy is anything, I'd like it to be that I got United Rentals focused on setting rental rates where they should be,” he said.
Jacobs is steadfast on his continuous commitment to improving the rates situation facing United Rentals. Jacobs said he's seen customers talk down the rate of a scissor lift by more than 20 percent, and that shouldn't be happening.
United Rentals has grown to depend on its IT system to help reduce unnecessary discounting of rates. On a monthly basis the company runs a rate distribution report that looks at the range of rental rates on one type of equipment (for a month-long rental) over the past several weeks. In some cases, Jacobs says, that range has been as much as $1,000. In order to stabilize rates, United has put in place a district-wide floor pricing system to make it more difficult for sales people to discount below that floor price. The company also runs a daily “on yard” report, which shows what equipment is out on rent, what equipment is available and what equipment is down. It also shows how much demand there is for each type of equipment, giving UR the opportunity to charge more appropriate rates on the most in-demand items.
“We're putting a much greater emphasis on how utilized our equipment is,” Jacobs said. In addition, UR plans to roll out a new compensation system next year that will compensate sales personnel based on rates obtained. To further improve the rate situation, Jacobs believes that sales people should be compensated like they are owners of the business, not like hired hands.
The company is also working to improve customer service — looking for ways to demonstrate to customers that it deserves higher rates and educating them that it's actually in their best interests to pay a fairer rate. Its efforts include taking initiative to find out from customers what their expectations are, by doing customer surveys and roundtables, and then looking for ways to meet and exceed those expectations.
“Managers need to spend less time with bond holders and more time with customers,” said Jacobs, who is highly optimistic that the enthusiasm within the United Rentals organization is going to make a difference in improving rates across the industry.
Though he can't predict whether the economic rebound in the construction industry will have its full impact in 2004 or in 2005, Jacobs said the rental industry could get the benefit of a double whammy in the near future — a result of improving volumes and increased rates. “It could bring the industry to a new level of profitability,” he said.
Jacobs remains the largest shareholder in the company with about 10 million shares.
“I'm gratified that the company we started around my dining room table six years ago has grown into North America's leading equipment rental company. It has been a privilege to help build United Rentals.
“I will be leaving management of the company in the hands of two friends and colleagues who have been instrumental to United Rentals' success. Wayland and John have been with the company since 1997 and know every aspect of our business. I anticipate a seamless transition. Wayland will be running the show as of Dec. 31, and will put his imprint on the organization.”
The company also announced the promotion of Michael Kneeland to the newly created position of executive vice president-operations. Kneeland is currently vice-president-southeast region. He joined United Rentals in 1998, serving first as district manager and then as vice president-aerial operations. His 25 years of experience in the equipment rental industry includes senior management positions at Freestate Industries and Equipment Supply Co.
Jacobs founded United Rentals with Milne and six others in 1997, and has served as the company's chairman and CEO since its formation. Jacobs previously was chairman and CEO of United Waste Systems, which he founded in 1989. United Waste Systems was the fifth largest solid waste management company in North America when it was sold in 1997.
Hicks joined United Rentals as chief operating officer in 1997, and became a director and vice chairman in 1998. Hicks previously held senior executive positions at Xerox Corporation, including executive vice president-corporate operations, executive vice president-corporate marketing and customer support operations, and executive vice president-engineering and manufacturing. He is director of Maytag Corp.
“My finest accomplishment is putting together a management team of executives who take pride in the company and have their hearts in it,” Jacobs said. “This is a strong management team that can sustain the growth of the company.”
Greenwich, Conn.-based United Rentals is No. 1 on the RER 100.
