|This discussion was taped at Rental Management‘s industry forum at the A.R.A. convention in Orlando, Fla., in February. Participants included Chris Wehrman, executive vice president, American Rental Association; Tom Fouts, president, Bledsoe’s Equipment, Lee’s Summit, Mo.; 2001 A.R.A. vice president; Dan Kaplan, Daniel Kaplan Associates, rental industry consultant, Morristown, N.J.; former president of Hertz Equipment Rental Co.; Keith Klarin, rental industry consultant, Palm City, Fla.; retired general tool and event/party rental operator; 1987 A.R.A. president; RM columnist; Connie Miller, Walker Miller Equipment Co., Orlando, Fla.; former member of the A.R.A. Construction and Industrial Services Special Interest Group; Charles Neffle, president, All Occasions Event Rental, Cincinnati; 2001 A.R.A. president; Larry Pedersen, president and CEO, A Tool Shed, Campbell, Calif.; president, Rental Industry Association; Phil Petrocelli, executive vice president, NationsRent, Fort Lauderdale, Fla.; Ian Richardson, managing director, Delyn Hire Centres, Mold, Wales, United Kingdom; 2001 chairman, Hire Association Europe; Bill Sitter, principal, Jordan-Sitter Associates, San Antonio, Texas (executive search consultant in the manufacturing, distribution and rental industries); Gary Stansberry, CPA, principal of Hageman, Stansberry & Associates, Arlington, Texas (merger-and-acquisition consultant); formerly with NationsRent and RSC; RM Publisher Fred Anderson and Editor Brian Alm.|
Wehrman: What current issues are uppermost in
the rental industry today?
Kaplan: The primary issue for the rental
industry today is the effect of rental rates, curtailing
the growth of the industry. Rates have come down,
profitability has come down, cap-ex spending is
declining, acquisitions of stores and greenfield
openings are declining — all driven by a lack of
profitability. And that’s going to impact not only
rental companies — it is impacting manufacturers,
forcing manufacturers to consolidate, and impacting the
A.R.A. show, as well.
Stansberry: I think everybody is trying to
grab market share, especially in the larger equipment,
and I really think there is a great opportunity for the
independents, but I think they’re going to have to
increase their level of sophistication. I don’t think
it’s always going to be in their best interests to try
to compete with the NationsRents, Uniteds and Hertz
Equipment Rentals. They’re going to have to use some
more sophisticated information-gathering techniques to
educate their employees and managers. I think it’s
important for the independents to really focus on what
they’re trying to do and raise their business to a new
level of professionalism that we haven’t seen in the
Kaplan: He is absolutely correct. I have been
to many small rental companies, consulting, and I’m
appalled [that so many] don’t understand software. Tools
are out there to be had. You can’t run a rental company
well without information systems. And you have to
understand how to use them.
Miller: I understand what you’re saying.
That’s an issue. The problem is the small business
cannot compete at your level because we don’t have quite
the buying power that you do. [But] the big players are
not service-oriented. Their main idea is to just go for
people like us.
Wehrman: How do you approach competing? How
do you compete when rates are so important?
Miller: Our major way of competing is
service. That’s what we concentrate on more than
anything. We take care of our customers. Orlando is a
very tough market, but we’ve been here 40 years and we
have built a very solid customer base. But you still
have to answer to the big boys.
Richardson: What are you going to do when a
contractor calls at 3 in the morning and says the
generator broke down? Who else is going to provide
24-hour service 365 days a year? I think we have to get
smarter at marketing ourselves. I do see light at the
end of the tunnel, and it’s not a train — there is hope
Pedersen: The consolidators have no concept
of how to make a profit in our industry based on
service. We had a large computer before the
mini-computers were even invented — over 20 years we’ve
had a computer — and its primary function is customer
service. I think the folks who grabbed this ball a few
years ago thought this would be a great industry to be
involved in, but didn’t know a thing about service, and
it’s strictly a service business. It is not just an
industry to squeeze some bottom-line profit out of. We
have been doing this for 56 years and we’ve seen a lot
of them come and go. You can’t really manage a service
industry business from afar. Managers working for a
bottom-line profit will create a feeding frenzy for
rates. Salesmen are out there trying to make a living.
You’ve got stores with the same names on the sides of
their pickups and nine salesmen from nine different
stores calling on the same contractor. The contractor
eventually gets tired of it. These stores don’t share
equipment like we do. All my stores share equipment.
When a contractor calls me wanting a backhoe, he gets a
backhoe Saturday morning. When he calls one of the
larger companies, he may or may not get it and he
doesn’t know who he called. These large stores are
confused. I mean those of us who have been in this
industry, who have dedicated our lives serving the
consumers in our community, know what it takes to make a
profit. Our bottom-line profit is astronomical compared
to what those folks expect after seeing somebody’s
financial statements. But they can’t do it. They never
will do it.
Wehrman: Phil, can you do it?
Petrocelli: It’s a capital-intensive
business. I think Dan’s point was that the industry’s
rate of growth will slow if the rates don’t come up, and
that’s true, because you’ve got to make a return on the
capital investment. I think we have $1.2 billion in
inventory at first cost — we’ve got to have information
systems to be able to manage that and see what’s going
on. We’re up to, I think, 205 locations. You do have to
keep a customer with service. But it’s difficult to make
it all work. You’re trying to convert entrepreneurs and
cultures and information systems and everything else.
And when you’re doing the consolidation roll-up kind of
game — we did 71 acquisitions, I think — even if you
have done it before, you always think you can get better
at it. Next time it happens that much more smoothly.
Construction spending grew in the double digits in the
late ’90s and now it’s slowed. There’s been
over-fleeting in the market. That’s pushed down prices
in the used equipment, rental rates and new equipment
sales. I think it’s going to take some time for that to
straighten itself out.
Wehrman: What will be the key to turn that
Petrocelli: It will be a combination.
Everyone will spend less this year on new equipment.
Manufacturers’ sales should go down this year in
general. That will flush some of the equipment out into
the used-equipment market. Some of it will go outside
the United States. And then as long as the economy
holds, construction spending grows a little bit, rates
should be able to rise. But there will be further
consolidation amongst the larger companies as well.
You’ll get the top three or four players and lots of
small players, niche players, specialty areas — it all
will find its own level, because you’re going to have to
make a profit to stay in business. But everyone will
focus more on service.
Kaplan: All the big rental companies run with
regional offices. Look at the large consolidators and
the progress they have made. They’re only 42 months old.
I think you said, Larry, [your business was] 56 years
old. So a lot of progress has been made in 42 months.
NationsRent has 71 acquisitions, United has 230
acquisitions. You don’t swallow that in a year. It takes
time to integrate it and move it, and they’re moving it
and improving every day. They’re not where somebody like
you is. The greatest strengths a smaller rental company
has are the management and the ownership. But they’re
moving forward and improving every day. [Something] is
going to straighten this mess out. A major rental
company puts its foot down and says enough is enough and
takes a position and firms pricing and leads, and people
follow. I once did that in the ’80s and it worked. Or a
major rental company acquires another major rental
company and takes market share, puts a stake in the
ground and says, “I have had enough of it.”
Richardson: It is very interesting to compare
what’s happening on this side of the pond with my side.
I think that what’s happening now in America happened in
Britain 10, 15 years ago. We’ve had the rationalization
in the U.K. — we have had for the last 10 years, but
it’s starting to slow down now. All the strong
independents either sold or don’t wish to sell.
Companies are now picking off the small independents who
are weak and have lost their nerve in the marketplace.
They depressed their rates trying to compete with the
national firms and can’t reinvest in the industry, so
they basically traded themselves out of business. The
most interesting thing that’s happening in the last
couple of years is that [when the national companies’]
financial performance drops off, the City* catches up
with them — the City always catches up with them.
They’re where they are today through creative
accounting. They can stay where they are today only by
running fast. As soon as they slow down, the whole thing
collapses. If they buy market share by depressing the
rates in the market, the City loses confidence in them
and their shares drop. We’re so used to this spiraling
down of rates that it’s going to take a very brave
company to say, “This is the rate I want. Take it or
leave it.” At some point, any company — small or large —
has to say, “We’ve reached the point where we can’t go
Wehrman: Where will we be in, say, three
years, in regard to this issue of the independent and
national rental companies?
Richardson: It’s going to be a global market,
not just a national market, whether it’s the U.K. or the
Stansberry: The first words out of Larry’s
mouth were service and community. Phil, from a public
company, led his comments with return on investment. I
think at the end of the day it’s probably service, but
the challenge for the independent is to get more
sophisticated, using the service standpoint as the
basis. I have more confidence in Larry’s ability to be
able to learn marketing and return on investment — I’m
not saying he doesn’t already know that — than I do with
the bigger companies’ learning about service.
Sitter: This is really interesting. Having
come from a heavy equipment background, and in rental
about 10 years on the people side of business, I’ve seen
a real lack of training. When Dan was with Hertz, they
were well-known for developing branch managers that
moved up to various division roles — there was a career
track. I don’t sense from the people I talk to from the
big companies or the smaller companies that people
generally feel there is a career track in this industry.
There’s certainly a lot of exceptions — some companies
do their own training — but I see a lot of people in
branch manager roles who don’t understand the economics
of running a business, don’t have an entrepreneurial
spirit and really aren’t sure where they’re going. I
also see a lot of people coming in with the big
companies who had been drafted from other industries and
have no industry knowledge. I’m not here to say that
they’re making bad decisions, but I think it’s hard to
make service-based long-term decisions if you have a
very narrow base of experience in the equipment
industry. If we don’t make this appealing for people,
we’re going to have less-qualified people. Somebody else
is going to get them and our industry is going to
suffer. I think this is really a place where A.R.A.
could be a catalyst. My real concern is people are not
coming to this industry and seeing a career track.
Pedersen: A number of years ago the
Engineering, Grading and Contracting Association (EGCA)
in our area put together a training facility for
[members’] employees, in cooperation with the
manufacturers. That’s what I’ve always admired about
Hertz and McDonald’s. They send an employee or future
manager to school for awhile — a week, two weeks — to
learn what we’re all about, how to do it and why we do
it, how to give good service, why we answer the phone
the way we do, why we ask the questions we do of the
customer so that person gets the proper piece of
equipment for the job. All of these things are extremely
important. We have 100-plus people but we need 125, and
so to take three of them or four or five of them and
send them to school for two weeks or whatever, it’s
really difficult. Because the people you want to send
are the ones you want to keep — they’re the ones you
need every day. Conventions like this are great, but
unfortunately, they’re not in our backyard. We [need]
schools on the West coast, the East coast and middle
America, where you could justify the expense of the time
for people. I’m being realistic. Also the safety aspect
of our business. All this equipment you can get hurt on.
We’re going to have some serious problems because of the
lack of training. I wish we had some way of training
these folks. I’d be more than willing to send them to
school. Anyone who wants to go to college and take
extension classes, we pick up the tab. Anybody wants to
learn Spanish or English, we send them to school, pay
for it — anything we can do to upgrade employees’
Petrocelli: We’ve focused on ROI, yes — how
fast could the industry grow without capital? But
everyone’s made a great point. You have to have a career
path for the people, spend more on training and
concentrate on customer service.
Stansberry: We need to establish a “community
of rental” so that we can ask others we are not
competing with what they’re doing, what they are paying
employees, and how we can learn from them. Connie might
have someone in Atlanta she could talk to, for instance,
not here in Orlando, so there would be no competitive
issues involved. Store tours are great. We can ask
questions and see what we can incorporate in our own
stores tomorrow. I think that’s your biggest challenge,
Chris, to reestablish that community of rental.
Alm: That is what the magazine is for — we’ll
give you a success story and a store tour just about
Neffle: I see this as an opportunity for the
American Rental Association to help the independents,
when I hear that they lack the ability to interpret the
information systems, develop marketing programs,
training. I think this is where the association can be a
Kaplan: You should have done that 10 years
ago. Do it today. Do it as fast as you can do it.
Miller: Is online training a possibility? I
only have 12 employees, so if I lose an employee for a
week or two, it is just devastating to me. We do only
about $2 million a year, but every person I have is
Neffle: We’re just getting in the
certification program with the party and event industry
and we do have the option of taking that over the
Internet. Our partner, the University of Illinois, is
helping us do that. We have 91 employees enrolled in the
certification program now. To get the actual
certification is probably a 12-month process. We’re
still developing some of the disciplines in the course
work. We’ve done focus groups on general tool and
construction to see if it’s viable to move ahead with
that, and we’re looking at our resources to see if
there’s a real need for that type of program. What I’m
hearing here today is very encouraging.
Sitter: There are some encouraging things on
that front. The younger generation people do very well
in online training and computer-based training, unlike
my generation. We liked to be in class and have direct
contact with the instructor. I think there are a lot of
things that could be done there.
Kaplan: What’s going to happen to the A.R.A.
members and the rental industry in five years? The top
five rental companies today have a market share of 19.8
percent. That goes up to, like, 40 percent in five
years. The [typical] A.R.A. member is fine. The
industrial rental companies, the midsize companies
between RER rank No. 10 and No. 200, with rental revenue
of $165 million to $2 million, are at risk. All the
other members of the A.R.A. are fine. Those between 10
and 200 are in direct competition with the rental
giants. Everybody else is not in the same customer base,
so they’re fine — they provide good service at the local
level, the giants don’t want to touch them and they go
on forever. It’s that 190 companies that are going to
have difficulty. The big ones are going to get a lot
Alm: Dan, Ian mentioned earlier that the City
is down on the bigs in the U.K. because of their
financial performance, and the same thing has happened
here. The bloom is off the rose — the multiples have
eroded, the stock has plummeted, there are no IPOs,
nobody is in registration, the venture capital market is
leery — it’s difficult to locate capital. So my question
is, does the fact that the independents don’t have to
report their financials in this country actually protect
them? Larry goes to the coffee shop and sees his banker
there. He doesn’t have to try to please the Street or
woo venture capital, he just goes to his local bank.
Kaplan: The whole issue is the customer. What
does the customer want? Take General Motors. At Hertz, I
signed them to a sole-source contract, 143 plants,
probably doing about $40 million a year [with them].
They’re not going to deal locally. So these national
accounts are going to be worldwide accounts — 100, 200
locations, and all this huge spending. Now, if you can
get a customer who’s going to give you incremental
revenue that the local person doesn’t have, you become
the low-cost producer, because you have efficiencies
that the local person doesn’t have. You have business at
the national level and at the local level. With that
kind of [nationally based] business, you have different
economics. The big account is not going to go to the
local level and negotiate 50 different agreements.
They’re going to go to one company and do one worldwide
Klarin: It seems I hear a lot of criticism by
the small rental guys about the big rental guys and the
big rental guys about the small rental guys. But we have
an awful lot to learn from each other. Profitable
decisions are not made in the boardroom. Profit comes
from the branch stores and direct dealings with the
customer, and the little rental guys know how to do
that. The certification program that is currently in
progress in the A.R.A. is very positive, and can be
expanded to the construction and the general tool rental
people. I totally agree that service is the name of the
game. In the rental industry it’s service, service,
service. I always ask my customers, “Would you rather
buy your wedding ring from Sears or from Tiffany’s?”
There will always be a place for the small fella, and I
agree with Dan that there will always be a place for the
big fella, and the thing is to cooperate with each other
and not knock each other or look down on each other.
Miller: We’re no threat to the big players.
They all think we’re their best friends. We rerent to
the big players when they won’t share with each other.
We do a lot of business with all of them.
Anderson: I’ve heard the same comment from
many parts of the country. A lot of independent rental
companies are working with the big players like that.
Pedersen: We do not rerent to anybody. We
never have. Our attitude is, if you don’t have it, buy
it or send them to us. As a result, the customer comes
to us. I drive by rental centers and see four or five
lifts on the lot, and we don’t have a one. They’re all
out. We have bought a lot of large equipment this winter
just to keep up with the demand. It’s all being driven
by the inability of the consolidator to provide the
Fouts: We have a good relationship with RSC
and United and others in the Kansas City area. I have
often thought that maybe I ought to get into the big
iron, but I look at the return on investment and it’s
not here. And that’s where they’re fighting it out on
rental rates. So why even get into it? I’m much better
off where I am, making good profits and doing very well.
Dan said we should have gotten into training 10 years
ago. How much do we invest in our employees? They’re our
biggest asset. These certification focus groups are
really important now, and I hope we do bring it off,
because certification in those areas will be a great
advantage for those rental companies.
Wehrman: As a new person in the rental
industry and seeing the trends and the diversity of
economic drivers and the different sizes of companies
that compete in this industry, I wonder if we have
self-created the problem of large and small? And how do
we overcome this psychology of large and small in order
to get to increase the appeal of the industry to the
market? If we keep thinking in terms of “we and they,”
we may not be seeing the larger picture, which is
increasing the overall appeal of the rental industry to
the consumer. How effectively are we building the appeal
of the equipment rental industry?
Pedersen: This is one area where I applaud
the consolidators. Over the last four years, those folks
have come in and bought so many marginal companies and
have put those companies on the right track. They’ve
cleaned up the facilities, gotten rid of the junk
equipment and brought in brand-new equipment and raised
the level of our industry to its highest peak ever. And
they have forced people like myself to upgrade my fleet,
in order to compete. Five years ago, a lot of my
competition had equipment that was 15 or 20 years old.
Now, United, for instance, is setting a standard of
three years, and my fleet is getting pretty close to
that — we have spent millions of dollars to do that. And
my customers appreciate that.
Petrocelli: I never realized there was as
much “we and they” as I have heard today, and I find
that fascinating, because we consolidators are only made
up of smaller players that we were able to purchase. I
didn’t realize there was this much angst about rerent.
We prefer not to go to the direct competition, of
course, United and Sunbelt and the other large players,
but I think in the future you’ll see more alliances like
that with the smaller companies in order to get more out
of that asset.
Pedersen: Well, I think that animosity
between the large players and the independents has grown
when, for instance, we have seen them come onto our yard
and try to hire our people away from us. When
consolidation first started, we thought we might lose 10
percent of our workforce that we have spent the money to
train and develop in this industry — but instead we’ve
picked up about 10, in the past year!
Wehrman: How do we create a different way of
looking at it besides this “we and they” and concentrate
on the positives instead of the negatives? How do we
increase the appeal of the rental industry? I would be
interested in hearing what you have to say about the
U.K., Ian. What is the overall image of the industry
Richardson: From what I am hearing, it sounds
like the U.K. is the 51st state! So much of what is
going on here we have over there as well. We have a lot
of people in a very small land mass. I believe 20
percent of my customers work outside my geographic area.
So we have set up a rental network system. If a customer
of mine is working 80 miles away, I recommend a rental
store to him. I know exactly the level of service he can
expect, because they are all in the HAE and we all abide
by the same ground rules. It has been very well-received
by the customers. The small and medium-sized
construction firms like dealing with the small- and
medium-sized rental firms. They don’t like having to go
to the national companies.
Wehrman: What is the future of the small,
independent rental companies?
Klarin: They will grow and prosper.
Wehrman: And the national rental companies?
Klarin: They will grow and prosper.
Stansberry: A lot of people I deal with don’t
want to deal with General Motors. The independents who
are dealing with small contractors and homeowners will
be fine. And the 190 mid-size companies that Dan thinks
are at risk, I think they will be just fine, too,
because there is a big-enough pie — if they all just
keep their eye on the ball — there’s plenty of room for
Wehrman: What’s your projection of what
percentage of the industry will be represented by
national companies and by independents? Will the
movement toward consolidation level off or keep growing?
Petrocelli: We look at the U.K. and the rest
of Europe, as well as Japan, and the rental industry
here grew about 5 percent last year. That’s the first
time it’s gone into single digits in a while, but it’s
about $25 billion, let’s say. And that’s about 25
percent of the market — it’s roughly a $100 billion
market in the United States. My belief is the
fundamentals will continue and rental will continue to
grow, because it’s a more efficient way to build. It
makes sense. The fundamentals are good. And there’s room
for everybody. When I got into this industry three years
ago, the manufacturers were wondering if this was really
a legitimate distribution channel, and now they are
thinking strategically about how much they want going
into the rental channel, how much they want to diversify
their risk. I think the thing we have going with Lowe’s,
for instance, gets the word out. The average Lowe’s
store does 50,000 transactions a month. We’re making
sure we put rental-trained people in those stores. We’re
trying to build our brand and get the awareness up and
leverage the equipment, and develop career paths. It’s
making rental more commonplace to the average person in
the United States.
Anderson: How is the rental industry being
influenced by the decisions of manufacturers to come
into the rental industry?
Petrocelli: As rental becomes a larger and
larger channel, the rental industry picks up power. I
think we will see more consolidation of manufacturers,
like the Case–New Holland merger, because they want to
broaden their product line [and reduce fixed costs].
They will want to [pay attention to] the small
independents because they buy a little every year, while
the big companies may buy big in one year and then go
somewhere else or not buy, and the fixed costs
associated with manufacturing will make them think
strategically about the small companies.
Stansberry: I think one thing the
independents can thank the large companies for is that
they have driven the costs down. I am seeing smaller
independent companies buying products for less than RSC
paid four years ago. Now, I imagine Phil and the other
large players are beating them up even more now, but the
fact remains that the small independents are buying at a
lot better price because of it. The manufacturers are
realizing that there are still 10,000 or 12,000
independents out there, and if we are going to sell to
them, we’re going to have to sell at a price where they
can compete with the big boys.
Klarin : A reader asked me what the A.R.A.
was doing “to protect us.” And my answer was that the
A.R.A. is not there to protect you, it’s there to help
you learn and grow. That’s why I think it is important
to have the strength of the larger companies in the
membership, and involved in the association.
Wehrman: Where do you see the industry in
Sitter: Huge and growing. I see great
opportunity in new areas that were never considered part
of the rental industry as we know it. New markets that
have never been tapped. Agriculture, mining equipment on
cradle-to-grave leases. But I think the companies that
are going to make the most money are going to have to
service their own equipment and not rely on third-party
service providers. They’re going to have to provide the
product, the service, the capital — the whole thing.
Petrocelli: I see a lot of opportunities
also, for companies of all sizes, in a lot of niche
markets, different specialties. I think it will be a
more mainstream industry, as well. I think the big box
retailers will change the industry, too — Home Depot
wants to put in 1,000 rental stores. Lowe’s wants them
in a majority of the stores. People will put more into
the facilities and there will be a rationalization.
Service will get better because it’s going to have to.
And the consolidators that have been in turmoil, now
that the economy is slowing, they will get back and
focus on the basics — when you are growing that fast and
raising capital, you just can’t do it all. Each of the
majors will probably focus a little more on specialties.
We’ll lessen our focus on the larger heavy equipment and
do more of the lighter and general.
Neffle: I agree with everything I’ve heard.
Growth will continue to be strong. Retail-based rental
will grow. On the party rental end of it, regional
players will develop. It will be easy to nationalize the
structure and power systems rental, but the tabletop
rentals will continue to be local.
Miller: The competition I see ahead over the
next three years will be the independent owners who have
sold out and now their non-competes have expired and
they will be coming back into the industry. They have
seen how the big players do it and they also know how
the independent mind works, and they will be coming back
in — they will know both sides.
Klarin: I agree completely with Connie. I
know a lot of those people! I think consolidation will
continue at a slower rate over the next three years.
Richardson: It has been a very interesting
morning for me. We have exactly the same issues and
concerns across the water. Training is a key issue,
staff retention, the threat of the nationals is
ever-present — but they will be reduced in numbers this
year, I think. The Home Depot-type of rental experiment
was tried in the U.K. in the late ’80s and failed
miserably. It’s being tried again and I think it will
fail again — sorry about that, Phil.
Pedersen: Well, 42 months is not a very long
time to have a business, and these folks have not been
through a recession yet. We’ve been through a lot of
them. When you rent to a single customer base, and that
customer base is very recession-sensitive — construction
— they’re gone. If we have a major recession in the next
three to five years, those public companies are doomed.
I’ve warned all of my managers what could happen in a
recession. We are spending between $500,000 and $750,000
at this show — we want to be sure we have every drill,
chain saw and shovel that those folks don’t even want to
deal with. That business is cash that comes in the door
every day and you can put in the bank, make your payroll
and pay the rent. You can’t do that on a credit basis,
working with General Motors. Look at Daimler-Chrysler.
They’re laying off 26,000 people. If you have a contract
with those guys, you aren’t going to be renting
anything. I think if we get into a recession, we’ll see
a whole lot of stores available for purchase. We’re
opening stores as soon as we can get people trained and
ready. We opened a new store last year and we want to
open two or three new ones this year. There are voids in
many communities where they really do need rental
centers. The consolidators haven’t affected us really at
Anderson: Every year Rental Management does a
random-sample survey of readers, and one of the things
we have seen in the last four years is a polarization of
the size of the company. Where there used to be a
distribution across the spectrum, now the industry has
moved to the ends — very large companies and a very
large number of one and two locations. I think what may
be happening here is a return to the center, in terms of
the size of companies — because of the dynamic of the
non-competes that are expiring and the new people who
are catching the entrepreneurial spirit. They’ve learned
from a national company and now they want to put that
knowledge to use. They have a level of expertise and
experience and they also see niche possibilities to
exploit. I think a lot is likely to occur over the next
three to five years.
Fouts: Technology. E-mail and e-commerce are
becoming as commonplace as a fax machine in rental
companies, and I think that’s going to continue to
develop to levels we don’t even know about yet, and that
could all be in the next three years, very easily. And
in the marketing area, I think rental companies are
finally waking up to the need to market themselves — not
only to their customers but to the workforce out there.
I’m optimistic about the future — I think it’s going to
be great — and I kind of welcome back those people who
have been out there on non-competes and are now coming
Stansberry: We’re looking at survival of the
fittest over the next several years. I think the big
guys are going to go through another consolidation,
where maybe the top 20 become the top five. I think
there’s plenty of room for the mom-and-pop independent
that’s flying under their radar. And there’s plenty of
room for the independent guy in the construction and
industrial markets, too. But it’s survival of the
fittest, and just going in every day as you have and
answering the phone from the customer who saw your
Yellow Pages ad is not going to be enough.
Alm: One of the things I am always very
interested in watching is the financial development of
the industry, and as Larry says, a recession could be an
interesting thing to watch, in terms of the public
companies’ capital structures. If you’re heavily
leveraged and lose cash flow, you’re in trouble. I would
encourage everyone here — and all of our readers — to
keep raising questions that we can explore. The thing
about journalism is that you are always watching things
in a state of becoming and reporting on