||Ringing up revenues with Cat Rental
Wayne Walley is editor of Rental Management, the official magazine of the American Rental Association, 1900 19th St., Moline, IL 61265; 800-334-2177 or 309-764-2475, ext. 253; fax 309-764-2747; e-mail firstname.lastname@example.org
| One of the first things you notice about Ring Power and its Cat Rental Store in St. Augustine, Fla., is the sheer size of the campus — nearly 100 acres — and just how clean and shiny everything is, including the equipment. |
Of course everything should look new. The 380,000-sq.-ft. corporate headquarters just off Highway 95 opened less than a year ago and the company managers have just about everything they asked for — a 65-bay repair center for equipment, another large repair building for trucks, an enormous parts department, a training center with four instructional classrooms and four lab classrooms, a state-of-the-art dispatch hub, a fabricating shop, a state-of-the-art paint booth, a huge wash rack, a four-story corporate office building, a Cat merchandise store and a Cat Rental Store.
“We all put our wish lists together and the bulk of what we asked for is here,” says Tom Bauers, Ring Power’s vice president and Cat Rental Store general manager.
On a gray Friday morning in February, only a few people wander into the Cat Rental Store, but Bauers says this particular facility doesn’t thrive on walk-in traffic. Many of the company’s rental customers have been using Ring Power’s Cat Rental Store for years and much of their business is done by phone and by sales representatives personally visiting contractors.
Business is good. According to Bauers, Ring Power’s 13 Cat Rental Store locations in Florida accounted for about 16 percent of Ring Power’s revenues in 2005. As a private company, Ring Power does not disclose financial results.
Ring Power is one of the largest Caterpillar equipment dealerships in the country with more than 25 locations. The company also has several specialized divisions including heavy equipment, power systems, Ring lift, used parts, Ring Power crane and entertainment services in addition to Cat Rental, which is responsible for the rental of everything from light towers to mid-size Cat iron and sales of compact construction equipment. All divisions have a variety of equipment for sale, lease or rent, so total rental revenues for Ring Power are much greater than the 16 percent generated by the Cat Rental Store division.
Ring Power is benefiting from the strength of the construction business in Florida and growth of rental in the area. The American Rental Association’s benchmark study, “2005 State of the Rental Industry,” released in February, shows that total rental revenues nationwide in 2005 have grown to an estimated $31.1 billion. The study, completed for the ARA by Global Insight, Lexington, Mass., shows that rental industry revenues in Florida in 2005 totaled an estimated $2.2 billion.
“We are definitely in a growth mode,” Bauers says. “We have been very fortunate that the growth in Florida has been strong. We feel as though we’ve been able to put ourselves in a position to capitalize on that. That’s why we feel it’s time to increase size in some of our facilities to enable us to grow the business even larger. The market is strong and we’ve gone into new avenues and new niche markets to try to capture different business.”
L.C. Ringhaver started the company in 1961. His son, Lance, developed Ringhaver Equipment with nine locations in central Florida. His other son, Randal, had six locations of Ring Power Equipment in north Florida. Lance retired in 2004. The two companies merged, but they had two management groups in two locations, so the new facility was built to accommodate both teams.
“It was unique that we found a place in St. Augustine because the company was originally founded by Lance and Randy’s father in St. Augustine. We’re, in essence, back home as far as the Ringhaver family is concerned.”
Bauers says it’s Caterpillar iron as well as Ring Power service and support that help set Ring Power apart from its competition. “The key is having the best equipment, the youngest fleet and the best support and service. We are affiliated with an industry leading name — Caterpillar. Everybody knows the Caterpillar name. Then you add the strength and support of Ring Power, parts availability and convenient locations. When you talk about other rental companies, they rent equipment. They are normally not set up to sell equipment and they are not set up to support equipment that may have been sold by them or someone in the area.
“With our scenario, we are able to rent equipment and we’re able to sell equipment. We can help customers rent or purchase equipment in more creative ways. And if a customer buys something or owns something, we can service it. That includes allied or non-Cat products as well,” he explains.
Ring Power’s average fleet age is 18 to 20 months — much younger than the industry norm, which can be 48 months or more.
Another factor in Ring Power’s favor, Bauers says, is that the company is the dealer for everything it represents. That means highly trained technicians and better parts availability, which can equate to more productivity for an end user and reduced downtime.
“We start with a newer product, which will inherently have fewer problems. When someone does have a problem, we can get there quicker due to our large number of trucks for field service. We can diagnose the problem and we are probably going to have the part. If we don’t have it, we should have it the next day. We have a lot of our competitors buy parts from us,” he says.
Ring Power’s Cat Rental Store sells its overall value — newer equipment, top manufacturers, more trained technicians for increased support, faster repair and parts availability. The parts warehouse in St. Augustine has 24,000 line items.
“If someone paid $300 more a month for a piece of equipment from us, but the competitive piece goes down for a couple days, how much extra does that downtime cost the customer? We go out, we diagnose it and we fix it. That enables us to show value and keep the equipment costs down for a contractor. We also have a mobile hose-building truck that we can dispatch to a job site to build a hose for a customer,” he says.
Bauers says Ring Power made a conscious decision to have a younger equipment fleet for its Cat Rental Stores.
“In public companies, they are sometimes forced to make short-term decisions that may not be good for their company long-term and depreciation is an example. A key to rental in a Cat dealership is that you are able to populate your area and you have the ability to create used equipment for your dealership to sell, which in essence is an annuity for the company. If you sell it in territory, the parts and service are always coming back to you,” he explains.
While the St. Augustine facility is the newest and largest branch, all Ring Power locations use the same multifaceted concept on a different scale. Bauers says each location takes care of its customers by having parts, service and rentals readily available.
“The general theme is to try to make our locations all ready to serve in a variety of ways. We’ve changed and grown in several of our facilities. We are in the process of building a new facility in Tallahassee. We just completed a new facility in Sarasota. We’re definitely trying to make all of our facilities ready for any possible need a customer may have. We’ve seen the growth in the area and we are outgrowing several of our facilities. We’re expanding those locations now to ensure we can continue to provide quality service to our customer base.”
Previously, warranty and repair work for equipment sold by Cat Rental Store was handled through another Ring Power division. But today, Bauers says, Cat Rental services its compact construction equipment — including skid-steer loaders, mini-excavators and compact wheel loaders — after sale as well.
One of the biggest challenges facing Ring Power and its Cat Rental Stores, Bauers says, is recruiting quality technicians. The company overall currently has about 2,000 employees, but like most rental stores, it is a constant battle to find and retain quality employees.
Another challenge facing Bauers is keeping the sales force focused on growth and not getting complacent in a strong environment. “The market is strong and it’s easy to get complacent, but we’re still hungry and we work hard to instill that philosophy in our entire division.”
Finding a niche
Tom Bauers grew up in Chicago, moved to Florida with his family while in high school and earned a bachelor’s degree in marketing from St. Mary’s University in Minnesota.
After college, he returned to Florida and landed a job selling staff leasing and temporary labor. While many of his peers concentrated on warehouse companies or other typical businesses that used staff leasing, Bauers started focusing on the construction industry.
“I wanted to get into sales. I had no idea about the rental industry. I really stumbled into it,” Bauers recalls.
As time went on, he kept running into the same person at different job sites who later offered him a job as a sales representative for Actron Equipment Rental in Orlando, Fla. Actron specialized in smaller equipment and had become a referral partner with what was then Ringhaver Equipment. A position eventually opened with Ringhaver and Bauers made the move in 1997.
Actron was later acquired by US Rentals, which was then acquired by Greenwich, Conn.-based United Rentals.
At Ringhaver, Bauers first started as a sales representative in the Orlando market and was soon promoted to sales manager. Then two years later came another promotion — this time to vice president and Cat Rental Store general manager. He retained his position when Ringhaver merged with Ring Power Equipment in 2004 to form Ring Power.
“It’s been a little timing, a little luck and a lot of hard work,” he says.
Today, he manages Ring Power’s Cat Rental Store operation, which has roughly 185 employees. He is responsible for rental budgets, sales goals and service revenue through the Cat Rental Store.
Opening new markets - Ring Power demo yards to help promote compact equipment
Ring Power’s Cat dealerships and Cat Rental Stores already have a loyal customer base and they have been able to sell those customers on Cat’s compact construction equipment to buy, lease or rent.
But Tom Bauers, Ring Power’s vice president and Cat Rental Store general manager, says the challenge for his department in 2006 is to market the compact equipment to other potential clientele.
“Every division manager is always thinking those same things — how can I gather more business? Things are good, but you don’t want to get complacent. You want to try to grow at that point,”
“We’ve done a pretty effective job with our normal customer base — people on job sites and in construction offices. But we haven’t done a very effective job selling to those people who may run their business out of their house. So now we want to draw those people in.”
The plan is to build “demo” yards in Ring Power’s three largest facilities — St. Augustine, Tampa and Orlando. Then they will advertise with billboards, direct mail and more to get people to come in and try Cat’s compact construction equipment.
“We’ll have about nine new machines dedicated to the demo yard. There will be a pile of dirt to dig in, dirt to move with a dozer and different application opportunities to show how a machine can work at a height, like dumping dirt into a truck,” Bauers says.
“Hopefully we can start getting people to come to us rather than one of the other companies they are currently dealing with. They can see what we have to offer.
We haven’t done a good job of tracking those people and we’re trying to address that by asking them to take the Ring Power challenge and demo up,” he says.
The St. Augustine Connection
L.C. Ringhaver founded Ring Power Corp. in 1961. The company initially built wooden shrimp trawlers at Desco Marine in St. Augustine, Fla., and used Caterpillar marine engines. Then in 1962, Caterpillar awarded Ring Power full-line dealership rights.
More than 40 years later, Ring Power is one of the largest Cat dealerships in the country. But it wasn’t until last year that the company returned to St. Augustine.
L.C.’s sons, Randal and Lance, had built two sister companies. Randal, who ran Ring Power Equipment, had grown his business to include six locations in north Florida with its corporate headquarters in Jacksonville. Lance’s company, Ringhaver Equipment, had nine locations with headquarters in Tampa.
When Lance retired in 2004, Randal started the process of buying the central Florida dealerships and eventually merged the companies to create Ring Power. He then started looking for a place to build a new corporate headquarters.
“The question was, ‘Where can we find enough property to allow our initial facility and be prepared for the potential growth over the next how many years?’,” explains Tom Bauers, vice president and Cat Rental Store general manager for Ring Power.
“We had to have the key management in one location. We did not have the ability to do that at either of the existing corporate locations so Randal Ringhaver bought this property.”
The facility took 20 months to build before the staff could move in, starting in May 2005. The result is an estimated 380,000 sq. ft. of buildings on 97 acres just off Highway 95 in St. Augustine. The buildings include heavy equipment bays and Cat Rental Store bays for prep, service and warranty work; a truck shop to work on Cat engines; a state-of-the-art paint facility with a sandblast booth, two 65-ft. paint booths and a custom color paint matching system; a state-of-the-art covered wash rack with cat walks and water cannons; a fabricating shop; a massive climate-controlled parts warehouse with 24,000 line items; a training facility; and even a retired Cat race car — Caterpillar is a NASCAR sponsor — on display in a merchandise store.
The four-story administration building includes corporate offices, purchasing, human resources, a credit department, information technology, accounting and even a special theater-style conference room — with state-of-the-art electronics — that can seat about
60 people. A central dispatch office for all of the locations in central Florida is part of the St. Augustine facility, too. The office dispatches transport trucks, purchased machines, rental equipment and anything that comes in for service.
“We move almost 5,000 pieces of equipment each month in the state of Florida and in this yard alone we have 400 pieces to keep track of in addition to whatever is on job sites that we have to bring back. This is a big operation,” says Jeremiah Stokes, Ring Power Corp.’s general
manager, transportation division.
The Cat Rental Store offers daily, weekly and monthly rentals of Cat hydraulic excavators, Cat mini-excavators, Cat dozers, Challenger box blade tractors, Cat wheel loaders, Cat backhoe loaders, Lee Boy motor graders, Cat skid-steer loaders, Cat multi-terrain loaders, Cat compactors, Cat telehandlers, Lull telehandlers, JCB straight mast forklifts, Grove rough-terrain cranes, Genie straight boom lifts, Genie articulating boom lifts, Genie scissor lifts, Genie aerial work platforms, National and Manitex boom trucks, water trucks, dump trucks, Vac-Con vacuum trucks, air compressors, sweepers, welders and light towers.