Strategies for Survival: Cincinnati

Feb. 1, 1999
Mark Twain once wrote that when the end of the world comes, he'd want to be in Cincinnati. The city was so far behind the times, wrote Twain, everything

Mark Twain once wrote that when the end of the world comes, he'd want to be in Cincinnati. The city was so far behind the times, wrote Twain, everything happens there 10 years later than everywhere else.

In some respects, that observation could be applied to the rental industry in Cincinnati, where consolidation has still had relatively minimal impact. Only one Cincinnati-based company, Bode-Finn, has been acquired by a major consolidator, NationsRent. Although Hertz Equipment Equipment Corp., Prime Equipment and United Rentals each has a presence there, the city is not a major battleground of the national chains. Independent rental company owners still meet regularly to discuss business. Seeing one another as friendly competitors, they routinely refer customers to each other, and compare notes about equipment lines and common problems such as obtaining credit and finding and training employees.

But with the proactive steps they have taken to strengthen their buying power and remain viable, one might ask: Are Cincinnati's roughly three dozen independent rental operators behind the times or ahead of them?

The answer to that question dates back to the late 1950s, when the owners of eight rental companies founded the Greater Cincinnati Tool Rental Association and developed it into a buying cooperative that is still, along with Quebec's Lou-Tec, among the industry's most vital locally run and operated buying groups.

The GCTRA has about 40 member companies, mostly in Cincinnati, but extending to Columbus, Ohio, northern Kentucky and Indiana. It recently imposed a geographic limitation of 120 miles distance from downtown Cincinnati, because people from Michigan and other states wanted to join. Proximity became an important issue because the key to the group's success is regular participation.

"If you're outside the area, you're just not going to participate as much as we'd like," says Wayne Mosley of Central Tool Rentals, who has served as group president five of the past six years. "We meet once a month, and that's where some of the other buying groups have faltered because they weren't able to keep up their meetings. Once the meetings stop, it's hard to stay in touch with people and hard to get salesmen involved and get these deals going."

The GCTRA, which purchased more than $1 million in goods last year from about a dozen key vendors and quite a few others that sell to the group less regularly, makes its acquisitions in a number of ways. Sometimes a group purchase is made and the vendor delivers to the various buyers directly. Other times a vendor drop-ships its shipment to one particular member and the other participants in the order pick up the equipment from that store.

Sales personnel and manufacturers' reps often attend monthly meetings to make presentations and offer deals to the membership. Whereas in the early days of the GCTRA, the group had to seek out opportunities and convince vendors to give them deals, now salespeople aggressively seek GCTRA business.

Member discounts generally average about 5 percent to 10 percent, but even more important is the free freight that vendors often provide because of the quantity of the orders. The groups' ability to obtain attractive terms is another advantage. Six by sixes - where the member companies get six months to make six payments - are an example of terms that enable buyers to earn enough revenue on the piece to cover payment by the time they've finished paying. Some vendors bill the group and the group bills the members, and some vendors bill the individual companies. Gayle Bruner, wife of Cincy Tool Rentals' Bob Bruner, who just took over the presidency from Mosley, handles the billing chores for the group, working out of a basement office in the Bruners' home, and getting paid a percentage of the amount billed as her salary.

The four Cincinnati rental companies profiled in this issue - Cincy Tool Rentals, Central Tool Rentals, All American Rental Center and Brueneman Rentals - all credit GCTRA as having made a significant contribution to their success and continued viability. In an era of decreasing margins, the discounts and terms make buying much simpler. In fact, of the 40 GCTRA member companies, only a few have joined the American Rental Association's Member Buying Alliance because they feel they get better deals with GCTRA.

A byproduct of the GCTRA is the strong relationship among Cincinnati's rental center owners. They consider one another friendly competitors and, while they do compete for business, there is a more cooperative, less cutthroat atmosphere in their vying for contracts. Referrals to one another's stores are part of the common way of doing business, and several owners have sent their children to work at other companies for periods of time so that they could obtain a broader view of what the rental business is about.

The transference of small family business from one generation to the next is common in the rental industry and, to some degree, is an aspect that could face extinction in this age of corporate consolidation. All four of the owners profiled in the following pages have teenage sons who work part time for the family business, some taking roles of major responsibility. for example, Kevin Bruner, son of Jim Bruner, owner of All American Rental Center, has actually headed that company's tent division for summer periods, coordinating entire jobs.

However, none of the owners knows for sure if their children will continue in their business, and some are not sure they want them to. Whether they do may determine if these companies will be absorbed by consolidation in the coming years.

Whatever the fate of these particular families and rental companies, Cincinnati's rental businesses show that it is still possible to thrive as independent rental companies at the turn of the century. And while the new millennium is probably not going to mean the end of the world anyway, Mark Twain may have picked the right city to be in - at least as far as the rental industry is concerned. The world of the independent rental center will probably continue to thrive - for at least 10 more years.