As we begin the new year, or as some point out, the real beginning of the much-hyped new millennium, the media are filled with concern about the economy. The headlines blare: Are we headed for a recession? Will the landing be soft or, gulp, hard? Or will Alan Greenspan save the day by slashing interest rates?
While there is no consensus that a full-blown recession is on the horizon, and we don't wish to contribute to an epidemic of Chicken Littles predicting a falling sky, a slowdown does seem likely. After the torrid growth of recent years, a slowdown doesn't necessarily spell disaster. But rental executives do need to be prepared strategically for the potential consequences of a slowdown and to think about how it would affect their businesses.
To address this concern, we, along with analysts from Credit Suisse First Boston, recently convened a daylong symposium with some of the brightest executives in our industry. We chose executives in leading management positions with rental companies of various sizes. The smallest was Allied Equipment, a "midsize" rental company from the lower levels of the RER 100. The largest was the industry's biggest, United Rentals. NationsRent, National Equipment Services and the Rental Service Business Area of Atlas Copco participated as well. We included multiregional powers such as Ahern Rentals and Sunstate Equipment, and international rental giant Ameco. We had people who have been through many recessions and lived to tell about them, such as Tom Hawthorne, a veteran of nearly five decades in the rental business.
The 10 leaders talked about the lessons learned from past recessions/slowdowns. They talked freely about mistakes committed and lessons learned and the hope that today's more sophisticated management information systems will help them identify and correct problems before they become crises.
They wrestled with questions. Should they reduce fleet or at least stop buying new equipment, or should they increase expenditures to reach for more market share? Should they cut back on advertising or boost it to be better-positioned for future expansion? Should they cut staff, or is every valuable employee more vital than ever? Should they be prepared to transfer equipment among branches to take advantage of areas where there is more demand? Should they acquire struggling companies to expand their reach or reserve precious equity for more pressing needs?
These and many other important issues were examined that day. There are many ways to look at a variety of problems, and these 10 original thinkers shared ideas openly and freely with a frankness often hard to find in these competitive times.
Just as the analysts of CSFB shared these results with their customers in the investment community, we share this partial transcript with our readers in this month's cover story. Although downturns might bring unexpected problems that no previous road map can solve, history does tend to repeat itself in many ways, and the experience of others can offer valuable insights.
There might not be a recession or even a slowdown coming at all. But it wouldn't hurt to ask: What would I do if ... ?
