Boels Rental: A European rental success story
Boels Rental: A European rental success story
10/03/2012

When you walk into a typical Boels Rental store in Europe, surprisingly it isn’t much different from what you might see in the United States. However, that’s by design.

Pierre Boels Jr., the second-generation director of Boels Rental in Sittard, Netherlands, readily says much of what the company does comes from practices he gleaned when visiting general rental stores in America during trips to The Rental Show in the 1980s and 1990s.

The headquarters in Sittard is a shiny example of the company’s brand, with bold “Boels” signage and plenty of orange machines that are readily identifiable as Boels Rental equipment. Ask anyone in Sittard and they know where Boels is located.

Boels Rental stores also feature the same type of signage as well as a wide variety of general rental equipment, containers and trucks sporting the favored orange color and the slogan, “Boels rents almost everything.”

The professionalism is evident from the spotless floors and organization to the friendly staff members at the counter. Even the racking system for equipment storage is orange, something Boels ordered from the same company that supplies orange racks for The Home Depot in the United States.

As director, Boels has shepherded a vast expansion of the Boels Rental empire over the last 30 years and was named “Rental Person of the Year” by the European Rental Association in 2011. His parents initially ran a small construction company and had several pieces of equipment that were lent to friends, family, neighbors and businesspeople, which led to the decision to turn the business into a small rental company in 1977.

Boels joined the company in 1980 and says his first trip to the United States that year made a big impression. “The decision to go to America as a small rental company from Europe to look at how Americans did it was very important for the later development of our company,” Boels says.

“At the ARA show, we saw all these products and suppliers, which actually were dedicated to the rental business. We found we could bring unique products to Europe. We saw all the high-reach equipment, which we didn’t have in Europe at that point. The way we do construction in Europe, we worked more with cranes, not high-reach equipment. It started with those products,” he says.

“We visited companies that I admired like Regal Rents and Big 4, a California company with multiple locations. They had beautiful, big sites, all with a wide range of products. We saw 30 years ago that there was a totally different way of renting in the United States,” he says.

The result has been a unique European rental strategy that has been highly successful as family-owned Boels Rental is among the 10 largest general rental companies in Europe and has a revenue target of €270 million (US$355 million) this year. Boels Rental also has been a member of the American Rental Association (ARA) since 1989.

Boels, who always seems to be pressed for time and on the go at industry events, is much more relaxed in his office. Unhurried, he is gracious and thoughtful in answering questions about his business and the European rental industry. His passion for rental and his company is obvious when he provides a guided tour of the headquarters and one of the local rental stores.

The company currently has more than 300 locations across Europe and more than 1,800 of what Boels calls DIY or “shop-in-shop” rental departments, which are co-located within building materials companies.

“In 1980, no one in Europe had multi-stores and America already was beyond that. Later on, I saw how The Home Depot and Lowe’s were trying to get into the rental business. Then there were the Grand Rental Station franchises. I looked very closely at what was happening in America, especially with rental at Lowe’s, and we copied the system,” Boels says.

“We have almost 1,800 shop-in-shop rental departments today and that idea came out of America. We learned these things on our ARA visits and tours of rental stores I made in New Orleans, Orlando, Los Angeles and Las Vegas,” he says.

Today, six Boels locations — Berlin and Dusseldorf in Germany, Brussels in Belgium and three in the Netherlands — are dedicated exclusively to party and event rental with about 150 employees, and the company has been involved in renting equipment for several high profile events, including the European Soccer Championships in the Ukraine and the 2012 Summer Olympic Games in London.

“Being involved with prestigious events gives our employees a good feeling,” he says.

However, party and event accounts for only about five percent of the company’s total revenue these days. In 1990, Boels says party and event was responsible for 90 percent of the company’s revenue.

The Iraq war in 1991 changed all that as the company had several cancellations of events and determined that party and event was heavily influenced by incidents and recessions.

“We stopped growing that part of the business and put it into harvest mode,” he says.

It’s not that party and event rental for the company has declined, but that the rest of the company has grown so much around it.

As for the company’s most recent accomplishments, Boels is proud that during the financial crisis and global meltdown in 2009, the company only showed a revenue decline of 0.7 percent, and that remains the only year in the company’s existence that it had less revenue than the year before.

“Our tradition is that we have double-digit growth every year. Still, 2009 was not such a bad year compared to the total rental market. In 2010 and 2011, we grew again at more than 10 percent. This isn’t necessarily an accomplishment, but it’s how we built our company,” he says.

“We have a very wide range of products. We have a wide range of customers. We have a very wide range of depots, including almost 300 depots all over Europe. I don’t want to say our business model is ‘recession-proof,’ but it is very strong when a downturn comes. You can steer a company easier with this business model through a downturn than when you are specialist focused on a smaller customer base,” he says.

As for the future, Boels remains expansion-minded, looking at possible new territories in and outside of Europe, some of which may be a surprise. Taking advantage of these sorts of opportunities, he says, is a result of being a family-owned company.

That doesn’t mean Boels makes business decisions on a whim. His plans usually are thoroughly researched and crafted before a course of action is taken.

“As a family-owned company, you always have to look at how you can grow the company without going to the stock market or getting private equity. You always are looking at new ideas. Franchising was an idea, but we decided against it. Instead, we decided to work with DIY stores,” he says.

Boels has several partnerships with builder merchandise stores for contractors. “What we do in all the countries where we are active is look at those players, make contact with them and discuss how we can cooperate. Sometimes we search locations together and sometimes they have a location and we hire some space in the yard or the building to set up a rental company. It is a win-win situation because they have an extra service bolted on their location and we have access to a customer base that comes there several times a week. It’s an important part of our business model,” he says.

For example, last year Boels opened locations in Milan, Brescia and Verona, Italy, making Boels one of the first non-Italian companies to launch rental stores in Italy. “These are typical stores with high-reach equipment and all the equipment is orange. Despite the fact that rental of smaller equipment is not very common in Italy at the moment, we expect that there will be a demand for this in the future. In the coming year, we also will open 50 shop-in-shop stores in Italy and we will work very hard to make it successful,” he says.

Earlier this year, Boels also acquired a DIY rental specialist in Germany with 443 small locations in four countries.

“We do acquisitions, but we have our limits. I think Europe will stay behind in the next years and maybe for a long period. You will see good companies that will grow and buy rental companies that lost their strategy and were not managed very well. The good ones will grow again, even in a flat market.

Boels says his company has a strong balance sheet and does not have a problem with financing purchases. “I like what your icon in America, Warren Buffet, says, ‘Don’t tell me the future. Show me your balance sheets for the last three or four years.’ That’s what I say to my banks. ‘Don’t ask for my opinion about the next three years, but look at what we’ve accomplished and how are we doing.’ That’s what you have to focus on,” he says.

As for a secret to the company’s success, Boels says it isn’t just one thing, but many, using a baseball anecdote he once heard from Dan Kaplan, a rental industry expert who now has a consulting firm in Morristown, N.J.

“Dan Kaplan once told me, ‘You don’t win the season by making a few home runs. You win the season by hitting 1,000 singles.’ We don’t know that sport here, but I know what he’s talking about. You have to be good every day. It is taking 1,000 steps, not just one thing or one big secret. You have to know the market and test new ideas. I don’t know a saying for that, but I very often use what Dan told me many years ago when I talk to my employees,” he says.

When it comes to why the penetration rate of equipment into the rental channel in Europe is high, Boels does have a theory.

“You have to be very professional with very good services and work on a very low cost, so the customers have to decide that outsourcing — hiring and renting equipment — is the only and best thing. That’s how I believe you can grow this market,” he says.

“In Europe, because of regulations, there are new engines, new liability issues and all kinds of stuff. We see it in the U.K. and it doesn’t matter in which sector someone is in. Are they busy in the cleaning sector? Are they in construction? Are they in the maintenance sector? Why should they own scaffolding? Why should they own electrical tools if someone can supply them at a good, efficient, cost-effective way? That’s what we are all doing. When we talk to large customers, we talk about this and ask, ‘How can we work together and give you the best, efficient way?’” he says.

One difference in Europe when compared to America, he says, is that construction companies generally do not cross borders. Instead, they buy construction companies in other countries and then manage them the same way.

“If a construction company doesn’t travel or is just doing the job in an area of 100 miles, it can afford to have its own equipment. When you have to travel with all this equipment, it’s very expensive. We have beautiful highways, but it costs a lot of money. We have high gasoline prices. We have high taxes on using the highway, so they don’t want to ship equipment. As a result, they rent. That also influences rental. Maybe that’s the reason we need more local rental companies,” he says.

“In the Netherlands, a construction company may want to have its own cabins and put them on the building site. He could be very proud, but he can only afford it because the Netherlands is a small country. In Germany, this is impossible. In France, this is impossible. They have to rent this equipment because today, they may have a job in Lille and then tomorrow in Marseilles. They can’t transport their own skid-steers,” he says.

As for the potential of rental company mergers in Europe along the lines the United Rentals $4.2 billion purchase of RSC in America, Boels was non-committal.

“I’m not a visionary. It only works when it makes sense. For every sector, not only the rental sector, there is a certain maximum of scale where beyond that there is not a lot of efficiency, only scale. For example, my company has EBITDA [earnings before income taxes, depreciation and amortization] of around 40 percent every year. Would we have more by merging? What is the exact benefit? I think Europeans are still too small, but on the other hand, what is the maximum efficiency of scale? I’m not sure where that is in our business,” he says.


 

PROFILE

Pierre Boels Jr., Director

Boels Rental, Sittard, Netherlands

boels.com

Company history: In 1977, the parents of Pierre Boels Jr. decided to turn their small construction company into a rental company. After all, they had been lending much of their equipment to friends, family, neighbors and businesspeople. Boels joined his parents in 1980, traveled to America and incorporated U.S. rental practices in the business to make Boels Rental a general rental company with a wide variety of products to appeal to a wider customer base, a concept that was new to European rental. The formula has worked as the company has grown by at least 10 percent every year except for 2009 and expects to finish 2012 with €270 million (US$355 million) in revenue.

Locations: More than 300 throughout Europe in addition to more than 1,800 “shop-in-shop” rental departments that are co-located within building materials supply stores as a separate company.

Target customers: Large and small contractors, and homeowners.

Niche businesses: The company has six party and event locations with 150 employees and has been involved in several high-profile events, including this year’s European Soccer Championships in Ukraine and the 2012 Summer Olympic Games in London. The company also rents portable kitchens, targeting hotels, hospitals and other companies renovating professional kitchens.

Management team: 11 employees, several of whom have been with the company for decades.

Employees: More than 2,000.

Interests outside of work: Boels says he enjoys time with his family. “I’m lucky to have my wife working in the company. We have three children and I’m a family man. My hobby is hunting,” he says. Last year, the family traveled to Canada for a vacation, but also added several stops at different locations of United Rentals. “We were counting United Rentals equipment and game. We saw everything. As long as it is possible, we travel the world with the family. We have cancelled our skiing in February to go to Las Vegas for The Rental Show,” he says. “I’m a passionate hunter and my whole family is. We often go hunting in the U.K. and we have our own estate in Germany where we can hunt deer. I love the outdoors.” His other love is the equipment rental industry and he has no intention of slowing down any time soon as many of his employees also are like family, some having been with the company for decades. “I am very happy I can do this. As long as you are healthy, you do what you want to do,” he says.


Taking a risk on party and event

 

In 1980, Boels Rental in Sittard, Netherlands, was an equipment rental company, but when Pierre Boels, the second-generation director of the company, went to the United States in the 1980s, he was impressed by party and event rental.

“The eye-opener for me was that a lot of companies that had equipment rental also had a party department. That’s why we brought party to Europe in 1980,” Boels says.

As a result, the company purchased a variety of party and event equipment throughout the decade and by 1990, party and event rental accounted for 90 percent of the company’s revenues.

“By 1991, we had party rental companies in Germany, Belgium and the Netherlands and we were preparing to open in Paris and Munich. For party, you have to go to the big cities where the events are,” he says.

“Then the Iraq war came and we saw a lot of cancellations of events. We saw that party and event was very influenced by incidents and recessions, much more than equipment rental. We gathered together with the family and said we will not let party grow anymore. It was successful, profitable and an important part of our business, but we felt it was risky. We stopped growing it and put it into harvest mode,” Boels says.

Today, party and event rentals account for 5 percent of the company’s revenue. “When I look to profitability, equipment rental is bringing a better profit. Party rental is more labor-intensive with short rental periods, never long-term rentals,” he says.

“However, for events you also need high-reach equipment, generators, heating, forklifts and fencing, which come from equipment rental. You can mix the products, but in the end, you need totally different management. You have to run party and event as a totally separate company,” he says.

While Boels isn’t focused on growing the party and event segment, the company remains proud of its legacy.

“Many people in the Netherlands and Germany know Boels from party rental. It’s lovely to see our equipment used at major events. We’ve shipped to the Ukraine, where we have had the European Soccer Championships, and to London for the Olympics. Being involved with prestigious events gives our employees a good feeling. I can grow party, but then I have to open more locations in major cities,” he says.

In addition to party and event, another niche business for Boels is renting portable kitchens, however this segment does not target party and event customers.

“I saw PKL, a company in the U.K. that rented portable kitchens, and I copied that in 1991. I thought this could be a solution for party rental that could be a long-term rental and it has become a successful niche market, but it has nothing to do with party rental,” he says.

“We rent the kitchens to hospitals and hotels that are remodeling. When someone wants to rent it for a weekend for an event, we are not happy. It’s an expensive product and to rent it just for a weekend is not good,” he says.

“It has more to do with construction and you don’t always have repeat customers. Some hospitals might rebuild the kitchen once every 25 years, so we always have to find new customers. We also do this for the Army when they do maneuvers. It’s a nice niche product market and sometimes it fits with the other markets. That’s also the Boels formula,” he says.

“I always look at rental not as ‘equipment’ or ‘party rental,’ but just as ‘rental.’ If it fits for us, then you look at all the branches and sectors. This makes our company unique. You look at our specialized products and we have that much more than other rental companies,” he says.

Also as a result of his first trip to United States, Boels brought back another idea for a rental item besides party and event equipment. “I told my dad I was in California and that they rented jet skis. I wanted to have my own jet ski, so I bought a few to rent. It was not a big success, but I had fun,” he says.