Last month I attended the Associated Equipment Distributors annual executive forum in Chicago — and for those of you who have never attended one, I highly recommend it. Although the issues discussed are directly related to dealer-distributors, which many rental people are for one product or another, the issues are universal to this industry. The end user panels of contractors discussing issues that are important to them when renting or seeking service on equipment are particularly informative, as are the networking opportunities with a wide range of people, particularly distributors and manufacturers. The candid interchange of ideas are a breath of fresh air and profoundly needed in our industry.
I was pleasantly surprised by the overall mood at this year's conference, far more upbeat than the past couple of years. Although much of the optimism was cautious, the tone was far more positive. Most people I spoke with felt that they had turned the corner after a couple of very challenging years. Most felt that business is looking up, that their customers are busy and more willing to spend. That means more jobs are starting up, more contractors are needing equipment, more rental companies are buying — both because they are busier and because they can no longer put off long-delayed equipment purchases after aging their fleets.
Another sign for optimism is that recent quarterly reports issued by equipment manufacturers such as Caterpillar, Deere, JLG, Ingersoll-Rand and CNH were far brighter than they had been in a while.
So the question of course remains: will this optimism turn out to be warranted? Is some of it wishful thinking because they have been in the doldrums so long they are just plain sick of it and therefore any slightly positive sign is reason for hope? Are they buoyant coming off the busier summer months? Well, this conference is held in September every year and summer sure didn't help last year's more pessimistic mood.
There are certainly still reasons for concern. Construction data is still questionable, with improvements seeming to come in fits and false starts before dropping back again. Non-residential construction is still down. Rental rates are still a major cause for concern although I've heard more positive reports on that subject in the past month than I've heard in the past two years. Some are concerned about 2004 being an election year, although while many point to that as a cause for caution, others see it as a good sign because politicians want to please their constituencies while running for re-election. And of course the world situation remains precariously unstable.
Whichever way it's going to go, I pause to remember thoughts that I heard expressed many times by owners of rental companies, dealer-distributors and manufacturers over the past couple of years. Waiting for the boom times when everything is going to get better is missing the point. Recessions are, to a large degree, corrections caused by imbalances. Downturns cause companies of every kind to tone down their excesses, re-examine their procedures, shore up inefficiencies and rid themselves of poorly performing assets.
Things get better partly because of economic cycles beyond our control, but also because of improvements companies make. So is the economy going to “turn around” in 2004? The consensus seems to be that it will, not dramatically, but perhaps measurably. Perhaps not. But the most important point, once again, is what rental companies, dealers and manufacturers all do to improve themselves and run more intelligently and efficiently, while, hopefully, raising rental rates.
If that process continues, the coming year is bound to be a good year. If it doesn't, no external boom, or increase in demand for equipment will make enough of a difference to keep you from continuing to feel like you're living on the edge, one bad month, one temporary slowdown away from being in trouble again.
In the meantime, speaking of living on the edge, I invite you to check out this month's cover story on Chief Equipment Rental. You don't have to jump out of a plane or ride a motorcycle — although please do if you're so inclined — to have the enthusiasm and spirit for your business that Mark Harrington does. But that enthusiasm for your business will certainly help. If you don't remember what it's like to feel that way, check out the article and maybe you'll remember and recapture it, becoming better equipped for the upturn around the corner.
