First they bought platform companies in target markets, and then they concentrated on “tuck-ins” to fill out their presence. Those phases essentially have passed, although we'll see branches added and small purchases here and there. The major players are either everywhere they want to be or can't afford to go anywhere else. Capital is not easy to come by when stock prices are a couple of bucks per share.
Many industry pundits predict that the next phase of consolidation will have major players buying each other rather than smaller companies. United Rentals' proposal to acquire Neff — not a done deal at press time — might be a harbinger of that next phase, or it could simply be that Neff is in trouble and has to sell to salvage something for its shareholders. Time will provide perspective, as it often does in analyzing trends. There is speculation that NationsRent will be the next domino to fall, but again, time will tell. That company is redefining itself and publicly is committed to a partnership with Lowe's home-improvement centers to open 60 rental departments this year.
Cruising the trade-show floor and hospitality suites at the Associated Equipment Distributors show last month, I heard several theories on who will emerge as the leading rental players of the future. People talked of Caterpillar and GE Capital. The idea that it would be somebody not currently associated with our industry was floated, as was, of course, the name United.
I didn't initiate these conversations. The topic was on a lot of peoples' minds, with many sensing that changes during the next three years will be bigger than those of the past three.
People also sense major changes in the distribution channel. The focus, increasingly, is on what end-users want, because everybody — manufacturers, distributors, rental center owners — agrees that end-users will drive the changes. Do they want to do business with national rental chains, local rental houses, distributors or combinations of those? Do they want to do business with the distribution chain at all, or would they rather deal just with the manufacturer and be done with it? Even while all parties are competing for end-users' allegiance, strategic alliances and partnerships likely will become more important than ever before.
Do they want one-stop shops or specialists? Do they want local players or global chains? Do they want electronic services custom-designed to their needs, or will established systems and business models dominate relationships?
It's a time of flux when all the rules are changing and being rewritten. There are a lot of questions and few easy answers. But to get answers that work for you, you'd better be asking questions.
