When the consolidation wave hit the rental market in the late 1990s, many people predicted the demise of the regional rental company, and indeed, national companies acquired most of the ones existing at that time. That left a natural void in the rental market, leaving a space for smaller multi-location players to take over that niche.
I don't think Ken de Vries, CEO of Fairfield, Calif.-based All Star Rents, was thinking in those terms when his company began expanding in the late 1990s. The company simply responded aggressively to market opportunities. The de Vries family had made a number of acquisitions over the years, each operating separately with their own names, which made sense for a while. But as the company grew, cohesiveness became more important and the benefits of operating together outweighed those of operating separately. Likewise, a common name enabled it to present itself to the market in a regional area as a larger entity.
Likewise, de Vries and his team, profiled in this month's cover story, recognized that as national companies took a larger portion of the market share, the only way to compete effectively with them was also to grow and take advantage of the benefits of economies of scale. And as it grew, de Vries saw the need to add more professional managers and run a more standardized operation.
For All Star, evolving from a family-run business into a professional corporation was a natural progression. While it's still a family-run business with a casual atmosphere, All Star has also evolved into a level of professionalism that separates it from what has typically been known as a “mom-and-pop” type of shop.
All Star Rents, Star Rentals in Seattle, Diamond Rental in Salt Lake City, St. Louis-based Midwest Aerials and a number of others around the country are now becoming the regional-type companies that were so much the target of consolidators in the last decade. That doesn't mean that these companies are about to be snapped up as the regional players were then. But how these companies fare is a good barometer of how the industry will evolve. We know big national companies will pave the way when it comes to systems and efficiencies. But the “medium-range” companies are improving systems as well, while keeping a level of service that might set an example for companies larger and smaller.
There are some who believe companies of this size will be squeezed out, that they won't be big enough to compete with the big ones or small and specialized enough to occupy the local niche. I'm far from convinced there isn't a strong place for the well-run regional company. To be successful, they have to recognize their strengths and make them even stronger.
For example, All Star Rents recognized that to compete against larger companies with newer fleets, it has to excel when it comes to service. So now its goal is to get out the door in 15 minutes or less when a service call is required, to be on the jobsite working or swapping out the machine in less than an hour. A company that can consistently do that will win the loyalty of many customers.
A few months ago, we did a series of extensive interviews with contractors, most of whom told us their major pet peeve with rental companies was failure to communicate. One after another told us they could fully understand and accept it if a part had to be ordered and would not be available until the next day. But what they couldn't accept was not being informed.
As one contractor said, in this day and age, with cell phones, e-mail, voice-mail, fax machines and more, how could a company not communicate with him that there would be a delay? He said when he had something to communicate to a customer, supplier or provider, there was no such thing as being too busy, he could always find time to pull out his cell phone and make a two-minute phone call, no matter what. When a rental company failed to communicate to him, he said, what it did communicate was that he and his job and his equipment and his problem just wasn't important enough for that rental company to bother about. If that company didn't care enough, or wasn't efficient enough, to let him know there would be a delay, he would find somebody else who would.
I believe that a regional rental company that operates intelligently and communicates with customers promptly and efficiently will continue to succeed in this market no matter how many better-funded players there are. If you can prove me wrong, I'm listening.
