March 2001

Industry News

Shashoua appointed NationsRent EVP/CFO

Ezra Shashoua is the new executive vice president and chief financial officer of NationsRent, Fort Lauderdale, Fla.

Shashoua replaces company co-founder Gene Ostrow. Ostrow is expected to remain with NationsRent to ensure an orderly transition of his responsibilities to Shashoua and to continue to assist with the strategic direction of the com-pany.

Shashoua has been serving as chief financial officer for convenience-store operator 7-Eleven, where he spent the past 18 years in several capacities, including treasurer.

“We are pleased to have Ezra joining our team,” said James L. Kirk, chairman and chief executive officer of NationsRent. “His multi-unit retail experience will be valuable to NationsRent as we continue to focus our strategy on internal growth opportunities, including our strategic alliance with Lowe’s.”

NationsRent operates almost 200 locations in 27 states.

The company offers a broad range of construction equipment at its locations that are located in visible areas with a consistent retail look and feel.

More information on NationsRent is available on its Web site at www.nationsrent.com. 

Beware of invoice scheme for directory listings

A.R.A. has received reports that a bogus invoice scheme for directory listings has been hitting rental companies across the country. The Better Business Bureau (BBB) and the Yellow Pages Publishers Association (YPPA) offer these ways to avoid these schemes.

Examine every invoice carefully. Check files for pending contracts to ensure the mailing relates to advertising or merchandise that has been ordered. Verify invoices with the appropriate executive responsible for written or verbal authorization.

Contact the local Better Business Bureau before you respond to any unsolicited offer from an unknown business. Ask if the BBB has a report on

the company or other information. If a scam is being perpetrated, the BBB can issue an advisory to alert other businesses in the area. BBBs also can assist in resolving marketplace disputes that arise between businesses.

If you are not certain if the directory is legitimate, ask for business and local bank references and check them out; find out how long the firm has operated out of its present location; and verify the directory’s circulation figures and that the circulation fits your business’ needs.

Establish effective internal controls for the payment of invoices. Channel all bills through one department.

Photocopy fraudulent solicitations and post them on office bulletin boards to educate staff. Make sure your receptionist and office manager also know how to identify fraudulent solicitations.

Notify the local postal inspector. The U.S. Postal Service works to stop fraudulent and misleading mail solicitations and wants to be informed.

For more information, contact the BBB at www.bbb.org, or the YPPA at www.yppa.org. 

CIT’s Construction Industry Forecast 
predicts slight decrease in rental market

For the past 25 years, CIT’s Construction Industry Forecast has been a barometer of what is in store for the construction industry for the coming year. CIT Equipment Financing (www.efinanceit.com) provides equipment financing to the construction industry in North America, as an operating unit of The CIT Group, a publicly owned commercial finance company. Access The CIT Group at www.cit.com. — Ed.

While many contractors prefer to own their equipment, results of CIT’s 2001 Construction Industry Forecast show that 15 percent are looking to rent more equipment in the upcoming year, compared to 18 percent last year. Despite the 3 percent decrease, 81 percent say their needs will remain about the same as in 2000.

About 50 percent of contractors expect rental rates to rise, compared to 26 percent of distributors who believe the same. Fifty-three percent of distributors who provide rental equipment expect an increase in their income.

Fairly consistent with past years, 45 percent of distributors who provide rental equipment foresee no changes to their rental inventory in the coming year, yet the types of most frequently rented equipment continue to shift.

“Rubber-tired backhoe loaders lead the list for the fifth year in a row, but the crawler-dozer category has lost ground on both the rental and purchase list,” says Kay Russell, CIT Equipment Financing senior vice president – construction sales. “Excavating equipment remains strong, but cranes, compaction equipment and elevated work platforms have all slipped in popularity.”

Contractors turn primarily to non-distributors for rental equipment; 71 percent of their needs are met by rental companies, but non-builders show a greater preference for distributors. While one out of three distributors reports winning more business away from large equipment rental companies, almost 30 percent say they are losing business to their chief competitors. To help combat this trend, 51 percent of rental distributors say they will lower prices to compete more effectively.

The number of distributors providing fleet rental equipment has continued to rise in recent years, moving from 35 percent in 1999 to 52 percent in 2001. In addition, this year’s forecast reveals some changes among general distributors in the rent-to-sell vs. rent-to-rent business. Almost two years ago, 63 percent of their sales resulted from rent-to-sell business, yet today the rent-to-rent choice has a slight lead, comprising 52 percent of business volume.

Citing a limited need for the equipment, costs incurred and other unexpected needs that arise, the reasons behind renting equipment remain consistent with those in past years.

A total of 1,265 telephone interviews were conducted with the president or chief financial officer of contractor and distributor firms across the country. Survey respondents consisted of more than 900 contractors and distributors. The companies were selected based on a random sample from each construction segment (e.g., light equipment distributors vs. heavy equipment).

Survey participants are classified as contractors or distributors. Contractors are identified as non-builders or builders. Non-builders generally use equipment for underground construction or site development (earthmoving, water or sewer systems, logging). Builders work on projects from the ground up (residential or apartment buildings, non-residential and commercial buildings/warehouses). Distributors are classified as primarily dealing with light equipment (pumps, compressors, generators), general equipment (loaders and backhoes) or heavy equipment (bulldozers, excavators, cranes). 

Hertz acquires French company; Ford gets Hertz shares

The Hertz Corp., Park Ridge, N.J., has acquired Cogeloc SA, an equipment rental company operating from six locations in the Lyon-Burgundy area of southern France. The acquisition is part of Hertz Equipment Rental Corp.’s expansion of its European business.
Cogeloc SA was established in 1992 and has developed a customer base focused on the construction and building industries. The terms of the acquisition by Hertz Equipment France SA were undisclosed. Eventually, Cogeloc will be re-branded and integrated into Hertz Equipment France.

“This acquisition enhances the customer base of Hertz Equipment Rental and reinforces its leadership position in an important area of France,” said Olivier Guiraud, general manager of Hertz Equipment Rental France.

Hertz is the second-largest equipment rental company in France and the only national equipment rental company in Spain. HERC operates more than 90 locations in Europe and 290 locations in North America.

In addition, Ford Motor Co., Dearborn, Mich., has agreed to acquire all the publicly held shares of Hertz Corp., for $710 million, or $35.50 a share. The deal is an increase of 18 percent over Ford’s original offer of $30 per share made in September 2000.

Ford currently owns about 81.5 percent of the outstanding shares of Hertz, and public shareholders own the remaining 18.5 percent.

The companies expect to close the deal early in the second quarter of 2001, following approval from Hertz shareholders and regulators. 

industry briefs

Neff shareholders file class-action lawsuits

Miami-based Neff Corp. announced Jan. 16 that shareholders have filed class-action lawsuits relating to a merger proposal recently made to Neff by United Rentals, Greenwich, Conn.

The actions, filed in Delaware Court of Chancery in January, name as defendants Neff and its directors, United Rentals, General Electric Capital Corp. (GECC) and Santos Fund I.

The complaints allege that directors Jorge, Juan Carlos and Jose Ramon Mas, GECC and Santos “have acted in concert with respect to URI to breach fiduciary duties allegedly owed to the remaining stockholders of the company.” They further allege that “the terms of the merger proposal are unfair to other company stockholders,” and that “United Rentals, Inc., has aided and abetted the alleged breaches of fiduciary duty by the company’s directors, GECC and Santos.”

The complaints seek, among other things, to enjoin the consummation of the URI merger proposal.

Neff said it believes the complaints are without merit.