This continues to be a year of much change in the rental industry and several stories that we report on in this month's Industry News section are worthy of comment.
While California Rental Association executive director Chuck Maltese is one of the last people on earth to want to draw attention to himself, I couldn't just let the announcement of his retirement from CRA go without sending a few “props” his way. While CRA is not the industry force it once was in terms of producing annual trade shows that at one time drew thousands, I believe that's a sign of the times rather than any failure on Maltese's part.
I have known executive directors of numerous associations and I've known none more dedicated to their membership than Chuck. Always dealing with people on the basis of integrity and candor, Chuck has been a straight shooter, with no hidden agenda other than the benefits of his membership. CRA continues to have excellent insurance programs, a strong anti-theft alert system, a strong credit card program and a number of other excellent services that rank with any that associations in any industry offer. Chuck would take little credit for any of these, deflecting any praise to that of the dedicated membership, but I'd be surprised to find much disagreement on this point on the part of CRA members and the many vendors that serve those members and participate in the California market. Not only is California the nation's largest economy by far, but it has complex laws that are not as business-friendly as many other states. To serve this membership effectively is not easy and many will miss Maltese for his dedication and insight.
On another topic, investor interest in the equipment rental market continues to increase. Diamond Castle Holdings is forking over about $850 million to acquire NES Rentals and sources close to Atlas Copco and Rental Service Corp. say that there has been no shortage of suitors for the Scottsdale, Ariz.-based rental company. Many give much credit to Atlas Copco's Freek Nijdam for his no-nonsense management style, since continued by Tom Zorn. The company has been running leaner and more effectively according to all reports and we expect to hear news of a possible sale in the coming months.
And, after a major infusion of private equity, Neff Rentals has announced it has filed paperwork for an initial public offering to raise as much as $345 million. Given the success Ahern Rentals, H&E Equipment Services and Stephenson's Rental Services in Canada have had in the public markets recently, the time may be ripe for Neff as well.
Taking a look at some of the first-quarter results of rental companies, as well as personally speaking with many of the CEOs of RER 100 companies, the first quarter of 2006 was generally very strong, with most companies ahead of 2005's record pace. Not only are there few signs of a slowdown, but there is ample evidence that we have yet to reach the peak of the upward arc, and some expect the upward slant to continue for a few more years.
While there are concerns of housing slowdown, fuel prices and so on, one can't always realistically expect a “perfect storm” of positive conditions. Close contact and communication with your customer base is always extremely important and is as essential now as ever.
While cycles will always be part of the rental business, this brings me back full circle to the subject of people retiring from this industry. In our Industry News section, you can also read about the retirement of Steve O'Hearn after about three decades with Deere & Co., and I'd say most people who attended ARA shows over the years know the personable O'Hearn. He is also a big believer that the rental industry is on a strong upward climb that will continue as contractors worldwide discover the cost-saving benefits of rental. O'Hearn strongly believes that the penetration of rental will continue to grow by leaps and bounds, occasionally hitting cyclical plateaus but always resuming its inexorable climb towards increasing penetration.
So just in case you're wondering, yes, most of you are in the right business at the right time. And though you must adapt to change and you must continue to stay on the cutting edge, looking for new products, investing in your fleet and your people and improving efficiencies, you are in a business that still has immense room to grow and mature.
