A Vote of Confidence for the Rental Industry

Dec. 18, 2009
Sumitomo Corp. has acquired a minority ownership in Phoenix-based Sunstate Equipment. This news will be up shortly on RER's website at www.rermag.com. The investment is a significant investment in the United States rental industry at a time when capital ...

Sumitomo Corp. has acquired a minority ownership in Phoenix-based Sunstate Equipment. This news will be up shortly on RER's website at www.rermag.com. The investment is a significant investment in the United States rental industry at a time when capital is hard to come by for most rental companies.

Sumitomo apparently took a good look around the U.S. industry and picked Sunstate as the company it wanted to invest in. While there are other fine rental companies around, Sunstate is certainly an outstanding choice that few would argue with. This is no sudden or hasty decision as the companies discussed the possible relationship over an 18-month period.

Although manufacturer Komatsu owned a few of its distributors and rental companies for a period of time, this investment is, to my knowledge, the most significant investment in a U.S. rental company by a Japanese company.

Sumitomo is certainly not doing this capriciously. It owns rental businesses in Japan, Europe and Canada, so it is no stranger to the rental industry and obviously has great confidence in the future of the economy in the U.S. and its rental market.

Tough times that these are, with so many rental companies badly in need of cash infusions, I'm sure some of you are thinking, “When is somebody going to invest some money into my business?” I don't blame you, I'm sure I'd be thinking the same thing if it was me, and most of you aren't likely to find a Sumitomo standing on your doorstep tomorrow morning with a checkbook.

Still, taking the broader overview of it all, this is still a significant development. Clearly, this is a vote of confidence in our industry and the economy. With an 18-month gestation period – and obviously Sumitomo must have considered it for some time before beginning its dialog with Sunstate – the thought of investing in the U.S. rental market came about during better times. But the recession didn't stop it from going forward, which means Sumitomo's management clearly sees the potential in the rental industry long term.

If nothing else, hold that thought. There are better days ahead.

About the Author

Michael Roth | Editor

Michael Roth has covered the equipment rental industry full time for RER since 1989 and has served as the magazine’s editor in chief since 1994. He has nearly 30 years experience as a professional journalist. Roth has visited hundreds of rental centers and industry manufacturers, written hundreds of feature stories for RER and thousands of news stories for the magazine and its electronic newsletter RER Reports. Roth has interviewed leading executives for most of the industry’s largest rental companies and manufacturers as well as hundreds of smaller independent companies. He has visited with and reported on rental companies and manufacturers in Europe, Central America and Asia as well as Mexico, Canada and the United States. Roth was co-founder of RER Reports, the industry’s first weekly newsletter, which began as a fax newsletter in 1996, and later became an online newsletter. Roth has spoken at conventions sponsored by the American Rental Association, Associated Equipment Distributors, California Rental Association and other industry events and has spoken before industry groups in several countries. He lives and works in Los Angeles when he’s not traveling to cover industry events.