RM Online - 'I said this is an Opportunity'

I discovered rental by accident, on a trip to the United States in 1976,” says Robert Tropato. “I saw a rental company in Philadelphia, and I went in and asked the man some questions — and he opened my eyes!”

There were specialty-rental companies back home in Belgium for cranes, compressors, etc., “but nobody was renting tools!” says Tropato. “I said, ‘This is an opportunity!’” Tropato went back to Antwerp, where he owned half of a garden-machine importing company, and shared his enthusiasm with his partner. His partner was unmoved.

“‘But this is a fantastic idea!’ I told him. But he said our business is doing very well, why should we start something new? ‘But this is the future!’ I said. “So he bought me out. He said he knew my heart was with rental, but he wanted no part of it. All of my friends were laughing, but I said I had seen it work in the United States and I couldn’t see why it wouldn’t work here.

“And the first two years, the customers were queuing up! “But I was losing money, because I had no experience, I had the wrong location, the equipment I bought was not resistant to rental use and my employees had no experience in the rental business — so everything went wrong. But the customers were there.

“So I got a better, bigger location and the right equipment, and then things started to go well.”

EuroRent, the company Tropato started in 1977, was the first general-tool rental operation on the continent of Europe, although rental was already well-established in Great Britain. The current location is on the main commercial street in Antwerp — “Everybody in the building trades goes by and sees us,” says Tropato.

Tropato kept going abroad to learn about his new career — which he took up at age 46. “I went to the United States — I started going to the A.R.A. show from the very beginning — and to Canada. I even went to Australia,” says Tropato. “I met many rental people, and everywhere I heard the same story: ‘You have to buy the right equipment.’

“The United Kingdom was already big in rental, but I did not know it! I had to go to the United States to discover rental! “Doug Zehrung [then owner of BlueBird] introduced me to rental people and other companies, like EDCO, and helped me very much. I learned that, in fact, in the United States there were companies that were manufacturing equipment especially for the rental industry! “So I decided to do that, too.”

Tropato started a company called Etramo and began importing equipment, and soon expanded Etramo into a manufacturing operation, starting with conveyors. Today he exports these portable, rental-tough conveyors to other European countries, North Etramo also makes pressure washers that shut down immediately if they lose suction, non-clogging vacuums, unbreakable hose and cable reels and testers for vacuum cleaners, so the power of a vacuum can be proven to a skeptical customer. In the back of his warehouse, new product prototypes are scattered around in various stages of development.

“We don’t want to build something that is already on the market,” Tropato says, “because then all we can do is conduct a price war. But if we can find an advantage that makes a product good for the rental industry, then we are interested. We sell only to rental companies.” In fact, Tropato uses his own rental company as a beta site — he tests every new product for six months under the intense stress of extreme rental conditions before he releases it for sale to other rental companies.

Finding eager customers is not a problem. To the south, France alone has 4,000 rental companies, about 350 of which are mid-sized to large operations and “they listen to you,” says Tropato. “They are well-organized companies and they know what you are talking about.” Holland, next door to the north, also has a well-developed rental industry, and Germany, to the east, may be the boom market of the future, Tropato thinks, despite the fact that Germany historically has been ownership-oriented. “In some areas of Europe, rental is considered a sign of poverty,” laughs Tropato. “I know of a company in Switzerland that cannot put its name on its delivery trucks, because customers don’t want anyone to know they’re renting. There are some cultural hurdles to overcome. “But if I were 30 years younger, I would go to Germany,” he says. “Because the potential there is unbelievable.”

The reason for that, Tropato explains, is that the need to rebuild former East Germany and the enormous capital requirements involved are conditions that cry out for rental. It’s a simple economic equation of problem and solution — an inevitability, to his way of thinking, when people see the benefits of renting. His eyes were opened in 1976 in Philadelphia; other people’s eyes are now being opened in Antwerp. “People come to see me all the time, from all over Europe, to ask about the rental business,” he says.

When Tropato started his rental company in Belgium 23 years ago, he found no resistance, but he did need to get the word out. So he put a letter in virtually every mailbox in Antwerp — a city of about half a million. He printed his product line and company information on planning calendars targeted to housewives. “We printed 500,000 of them,” he recalls. “And we put them in all the mailboxes. And soon everybody knew about us. We just had to tell them we existed.”

The name “EuroRent” was another tactical innovation of the educational process. The word for “rent” in Belgium is not “rent.” Belgians speak French (in which “rent” is “louez”) and Dutch (“verhuur”) and many speak German (“vermieten”). “But an English word suits everybody,” says Tropato. “Even if they don’t understand English, they’ve all seen ‘rental car’ signs, so they know ‘rent.’”

EuroRent’s market, about 70 miles in diameter, has moved gradually to a mix of six kinds of customers: about 85 percent are renovators, cleaning and industrial maintenance companies; and 15 percent are builders, landscapers and homeowners.

The inventory falls into three carefully calculated groups: general items that are simple to operate and idiot-proof; equipment for contractors, such as compressors, generators, pumps, access equipment, excavators and loaders; and a full range of specialized product lines including industrial vacuums, pressure washers, paint sprayers and surface-preparation, renovation and cleaning equipment.

“This category of rental [this inventory mix] is very difficult for large, multiple-branch [tool rental] companies because of the variety,” says Tropato. “It is nearly impossible for all the managers and all the people in all the branches to know all the equipment well. So that is their weakness — they must have very easy-to-understand equipment.

“And the communication in our company is very short — 20 steps from my office to the counter. But if you are a national company you have to explain to everyone about every piece of equipment. You cannot communicate as well and you don’t make the best of the investment.

“And there is a lot of movement — people coming in and going out, and you have to train these people. So when they leave, you lose all of your investment in them. “So we don’t think we have to be afraid of multiple-branch rental companies. We don’t understand why people are afraid of the big players. We tell them, ‘You should not be afraid. You should thank them!’” Tropato walks the talk. He chose what he calls “the most difficult” category of rental markets, betting that the large competitors couldn’t match EuroRent on its own turf, and he seems to be winning that bet. But he has hedged his bet, too, by becoming a supplier to those companies and turning them from competitors into customers.

In his own market area, he is secure in his business plan, which is to hold his position with the traditional and predictable, but claw away at undeveloped territory with new rental offerings — something like allocating an investment portfolio to income and growth stocks. “I think we have to carry the broad range of equipment — that’s a kind of insurance,” says Tropato. “But then I think we have to have some specialty items to grow the business.” And it is definitely growing: “Our turnover [revenues from rental operations] is about $3.8 million. Last year we experienced 32 percent growth, and it keeps growing because we are always adding new products,” says Tropato.

“This year we are growing again, because we have the mobile telephone companies. They need generators to run their new mobile stations for three or four months, until they get it connected [to permanent service]. So now we have more than 100 generators out, just for that business. “We make a contract that says they must rent them for six months, during which we have to provide full service,” says Tropato. “But at six months, they are paid for. And our rates are very high, because we have to provide 24-hour service and we even have to supply the petrol for them.” One good reason for the growth is a robust economy. Belgium is centrally located in the European Union and its main port, Antwerp, is one of the two largest shipping centers in Europe. (The other is Rotterdam, nearby in The Netherlands.)

The growth appears to be open-ended, and Tropato is now in the process of adding 50,000 square feet to the present 100,000 to meet the future needs of his rental company, as well as make room for more fabrication of prototype products for his manufacturing company.

All this at a point in life when most people would be winding down. “I’m 69 years old and I’m too young to retire! I enjoy what I’m doing too much!” he declares with a determined twinkle in his eyes, sweeping his arm expansively eastward ... toward Germany?

February 2001