20 rer / may / 2008 - Rental Equipment Register

1ooWhether or not this is a recession is also still being debated.But it hasn’t been a long time since the early partof this decade brought another tough economic cycle, andmany of the lessons rental companies learned back thenshould be fresh in peoples’ minds.Fleet management is a critical issue. Managing fleet isvital, and dozens of RER 100 companies have taken sharpercontrol of their fleets to cut costs and maximize ROI. Whilea few years ago, telematics systems for fleet tracking, theftprevention and remote diagnostics were viewed as expensivesolutions only applicable for large companies or foruse only with high-capital machinery, this year almost everyRER 100 company interviewed is either utilizing GPSor fleet-tracking solutions or is seriously considering them.Dispatching software is being utilized or considered bydozens of companies.Another aspect is not over-fleeting, especially on equipmentfor which demand is soft. “The industry overall hasdone a pretty good job, moving into this slower period, ofnot overbuying on the earthmoving side,” said Gerry Plescia,Hertz Equipment Rental Corp. (No 3). “From our perspective,it has made a big difference for us to have diversifiedthe business over the years.”Like so many other companies, HERC has built up on aerialequipment and emphasized commercial and industrial business.“The industrial/petrochemical part of our business, whichis the fastest-growing part, has helped us grow in 2007, in spiteof that slowing construction market,” said Plescia, articulatingviews expressed by many RER 100 executives this year.Some companies are already cutting costs by reducingheadcount. While laying off employees is not something theindustry wants to see, some companies are already eithernot replacing staff that leaves or have eliminated underperformingstaff.Many RER 100 companies are already walking the fineline between trying to cut costs and at the same time stayingaggressive and looking for expansion opportunities,knowing that economic downturns are often ripe with opportunitiesto gain market share by increasing sales staff,opening branches in relatively underserved areas, or acquiringsmaller companies whose owners are looking toget out of the industry.“We are trying to be careful with expenses, but we do notwant to cut to the point where we cannot still grow the businesswhen things turn around,” said Diamond’s Clawson.“We are trying to cut expenses by 1 percent of this year’ssales,” added Keith Olson of Colorado Machinery (No. 83).“We are buying one additional outlet, remodeling one andopening one new facility in preparation for the next upswingin 2009. It is going to be a tougher year, so we have tobe more aggressive than ever.”Aggressive, yet cautious, seems to be the approach ofRER 100 executives in 2008. The lessons of downturns pastincluded cut down expenses, don’t over-fleet, but try tograb market share when you can.While the subprime housing crisis caught many by surprise,and the effects of the housing slowdown and creditcrunch hit harder and with more far-reaching impact thanpeople anticipated, the current downturn is not a major surprisegiven the foresight many had in the rental business whoknew the boom years of 2004-2006 wouldn’t last forever. AsLarry Workman of Illini Hi Reach, No. 98, said, “If you did notborrow properly, or make excellent profits in the past three tofive years, you will be in a bad place for a while now. Unanticipatedfire drills are hard to pull off right now. You should havebeen ready for this period of downturn some time ago.”That’s why most rental companies now are taking thelong-term view. Plan ahead and look at what your companywill need in the long-term. The rewards will be there.We just don’t know when. rerrer / may / 2008 23