Rent Smart: The big boys

Cat Rental Store
Number of locations: 430 in the United States and Canada, all operated by Caterpillar dealers

Cat dealers added 23 locations in 2005 and will continue to expand in 2006, although no specifics are available. The national average fleet age is 18 months. In addition to Cat equipment, the stores offer a number of allied products, including aerial access and concrete equipment, light towers, compressors, generators, dump trucks, water trucks, brooms welders and pumps. The stores choose from a list of allied brands including Genie, JLG, Wacker, Multiquip, Sullair, Miller and Godwin.

Cat is using two rental strategies, offering monthly or longer rent-to-rent through its dealers to more traditional customers. Cat Rental Stores focus on being a one-stop shop with a variety of rental solutions for daily, weekly and monthly rental customers.

Cat’s One Source program ties the rental services of Cat dealers together for contractors large enough to be national accounts. “This gives these accounts an ease of doing business,” says Chris Gustafson, Cat Rental Store division manager, rental and used equipment services, Caterpillar.

Cat Financial’s AccessAccount Web-based revolving charge account gives customers one account nationwide for rentals, parts and service. AccessAccount, which now has about 3,000 users, will be fully deployed around mid-2006, allowing contractors to receive one invoice each month. It offers instant credit decisions and line item details on all purchases.

Hertz Equipment Rental
Number of locations: 275 throughout North America

Although not giving details, Hertz says it will continue to expand throughout 2006, both with completely new branches as well as redesigns of old locations featuring the company’s General Rental program. That program, which debuted in 2005 as an effort to expand services to small and medium sized contractors in addition to homeowners, led to 20 additional locations as well as renovated branches. Under the General Rental initiative, the company offers lawn mowers, floor sanders and buffers, trenchers, paint sprayers, ladders, pumps and scaffolding. A few of the key openings include locations in Pacheco, California (grand opening); Reading, Ohio (grand reopening); Ventura, California; Dallas and Miami.

The company rents the gamut of equipment, including aerial work platforms, air compressors and air tools, earthmoving equipment, hand tools, safety equipment and pumps. Brands include JLG, Snorkel, Genie, Ingersoll Rand, Sullair, Wacker, Multiquip, Stone, Case, John Deere, Ditch Witch and DeWalt.

Number of locations: 269 across 26 states, including100 branches in Lowe’s stores, staffed and operated by NationsRent

In 2005, the company bought Jenco, an aerial equipment chain in the New Jersey/New York metro area. In addition it opened its 100th NationsRent at the Lowe’s store in Miami Lakes, Florida, and relocated three branches into new facilities. It also opened two full-service locations, one in Westbury, New York, and one in Theodore, Alabama (which is directed at Hurricane Katrina recovery efforts). This year the company will continue to study opportunities to add stores and make select acquisitions.

NationsRent also branched out into traditional equipment dealerships in 2005, including Case dealerships in Massachusetts, Rhode Island and Connecticut and the LBX (Link-Belt) dealership in Florida. The company was also named the Sullivan-Palatek dealer in Texas and Louisiana. “We’re excited about this venture because it gives us the opportunity to expand our product and service offerings through the representation of quality equipment lines,” says Jeff Putman, NationsRent chief executive officer.

The company’s fleet value is approximately $1 billion based on original cost. In 2005, NationsRent continued the $500 million fleet upgrade program it has pursued during the past three years. The average fleet age is about 41 months, down from the 49-month average at the end of 2004. The company has also implemented a single-server computer program for all its branches.

“As part of our continued revenue diversification and transition into a full-service supplier, we will also more fully develop our customer repair abilities,” Putman says. The company offers both new and used equipment for sale, either through retail store channels, a team of sales representatives or a dedicated national sales fleet manager, who markets and sells the firm’s equipment around the world.

In addition to rental equipment, “we want contractors to think of us when they need technical assistance, repair services and parts,” Putman says.

NES Rentals
Number of locations: 125, including 81 general rental locations, 30 traffic safety locations and 14 branches specializing in liquid and solid storage equipment

“We’re looking to expand in 2006 with several new stores in strategic locations,” says Mike Disser, vice president of marketing, “and there’s always the potential for other opportunities.”

The NES fleet has around 40,000 pieces of serialized equipment, and the company’s fleet size has remained relatively unchanged in the past three years. But since the firm had a number of divestitures – including its hoist business, Canadian operations and its Wisconsin traffic safety locations – the overall fleet size is slightly less.

Since NES’ fleet contains cranes, Disser points out the company’s average fleet age of 53 months is not a true apples-to-apples comparison with other rental fleets. “The cranes have a much longer life, therefore they add to the average age of the fleet,” he comments.

The fact that NES has spent nearly $200 million during the past two years to replenish its fleet is a more pertinent number, according to Disser. “And we plan to continue with that same level of capital expenditures in 2006,” he says.

In addition to cranes, NES has a large concentration of aerial work platforms. Other equipment includes telescopic handlers, forklifts, earthmoving, compaction, light construction and material handling machines, and 6,000 tanks and boxes in its liquid and solid storage division. Not counted is the inventory at the firm’s traffic safety branches, which accounts for 20 percent of the company’s business. Brands include Genie, Skyjack, JLG, Gradall, Terex, Case, Bobcat, Ingersoll Rand, Ditch Witch, Deere, Hyster and Yale.

RSC Equipment Rental
Number of locations: 467 in North America

RSC has plans for “accelerating our growth significantly in 2006 and beyond,” says Clay Allen, director of communications. Most of this expansion – about 25 new stores this year – will be near areas where RSC already has a presence.

Parent company Atlas Copco just announced it will sell RSC, which recently posted the best quarterly and full-year financial results in its history, with revenues of $1.56 billion for 2005. (Atlas Copco will retain the Prime Energy rental outlets, which provide oil-free air power for industrial users.)

RSC says it has a relatively young fleet, now averaging about 30 months. In addition to a substantial aerial lift fleet, the company also focuses on earthmoving equipment, compaction, concrete and masonry equipment and other construction segments. Some of the brands it carries include Deere, Case, JLG, Skyjack, Wacker, Ingersoll Rand, Gehl, Bobcat, Ditch Witch and of course Atlas Copco (which RSC will continue to carry after it parts from the company.) RSC’s sale of used equipment has just been enhanced by a recent agreement with Citi Capital for equipment financing.

For the past year RSC has focused on internal systems designed to make the rental process smoother for its customers. Part of this is using hand-held scanners much like those used at car rental facilities to quickly process returns and rapidly turn the equipment around. The company also is using GPS technology on delivery vehicles and a hub system in major metropolitan areas to eliminate delivery and pickup inefficiencies.

The company is taking a closer look at the flow of customers in and out of each store in order to reorganize for efficient flow. RSC is also standardizing service processes, prioritizing equipment based on what is needed first instead of what comes in first in order to improve equipment availability and meet customer needs.

Sunbelt Rentals
Number of locations: 207 branches in 28 states

Sunbelt acquired or opened 19 facilities in 2005, while divesting its 12 Northwest-based scaffolding specialty stores and consolidating two locations. It has two specialty divisions: pump and power, which has 16 locations; and scaffolding with 17 locations. “We got our start on the East Coast where we have a heavy concentration of locations, but much of our focus has been on expanding in California and Texas, or metro areas such as Chicago,” says Chuck Miller, operations vice president.

Sunbelt’s $1.2 billion fleet has seen 8 to 10 percent growth in the past year, with capital expenditures for the past 12 months in the $300 million range. The average age of the firm’s aerial work platform fleet is around 46 months; on the general construction equipment side, the average age is about 30 months.

“We’re known for being a broad-based rental company,” Miller says, “so we really rent everything from light to medium construction equipment, plus generators and pumps and other specialty lines to give our customer the full range of products.” Brands carried include JLG, Ingersoll Rand, Bobcat, Terex, Deere, Multiquip, Wacker and Electrolux.

“We try to stay with our established brands,” Miller comments. “That way we have a consistent fleet and model mix.”

Sunbelt has focused on a set of operational guarantees, including timely deliveries, availability, service and an after-hours emergency response. “Our availability guarantee is based on the belief that the customer should be able to count on basic product availability,” Miller says. “If we don’t have it, we need to take the responsibility to source it and get it to the customer when they need it.”

Sunbelt’s expansion plans center on markets where the company already has a footprint, including California, Arizona, parts of the Northwest, Texas and the Midwest. The company plans to add 10 to 15 new stores over the next 12 months, along with possible acquisitions, according to Miller.

United Rentals

Number of locations: More than 740 locations in 48 states, 10 Canadian provinces and Mexico
United began a used equipment initiative with eBay in December. “It’s another channel for our used equipment and all of our branches should be on board by the end of the first quarter,” says Michael Kneeland, executive vice president of operations. Kneeland says the eBay initiative is a matter of convenience for customers. “They can view the equipment 24/7,” he says. “It also helps our branch managers widen the audience for their used equipment, although we’ll still want to drive our sales through our retail sales force.”

United Rentals, which rents more than 600 different types of equipment with a total original cost of $3.96 billion, also upped the ante on its website. In addition to the usual branch locator, contractors can research equipment needs against the specs of specific pieces of equipment offered by the company. “Since we’ve launched it, we’ve seen a dramatic increase in the amount of hits,” Kneeland comments.

Also accessible from the company’s website is the URData Web service and E-Rentals. URData lets you access your account, view what you have on rent, the rate you’re paying and your rental history trends. You can also see if your check to United Rentals has been posted and how the payment was applied. On the E-Rentals portion of the site you can save your rental requests and view them at a later time.

United Rentals added 37 new locations in 2005, all cold starts. Company officials previously announced the goal of doubling the size of the company between 2004 and 2009. “We’re still underserved in some of the markets we’re in,” Kneeland says. “It makes sense for us to achieve a deeper penetration in those markets.”

Volvo Rents
Number of locations: 65 in North America, with another 45 locations under contract to open in the next three years

Volvo touts the unique aspect of its ownership – franchisees instead of company-owned or dealer-owned outlets – as giving it the ability to provide a great deal of flexibility to customers.

“Every store is slightly different, tailored to local market conditions and the competencies of the specific entrepreneur,” says Nick Mavrick, vice president of global strategy and marketing, Volvo Rents. “We allow leeway to take advantage of these factors. In fact, it’s one of the reasons we went the franchise route. The owner can make different rules for different customers. Customers appreciate that flexibility.”

The aim is “to provide our customers with an almost concierge level of service,” Mavrick says. Volvo Rents has more than 85,000 customers and has nearly doubled its customer base every year since the fall of 2002. Even more significant, says Mavrick, are the number of what Volvo counts as its most loyal customers, usually identified as those renting at least 15 times a year. “We’ve quadrupled their numbers each year since we opened in 2002,” he says.

Fleet sizes for most stores are between $3 million and $5 million. And since Volvo Rents is so young – celebrating its fourth year in 2006 – franchisees have a young fleet, averaging approximately 24 months old.

“The sweet spot for us is markets over $1 billion and growing more than 10 percent in construction spending,” Mavrick says. Still, the competencies of an individual owner also factor in. If an owner group has extensive local connections, they can establish a store in a smaller market, “and it still works well because of their reputation for customer excellence,” he says.

“If a contractor hears something like, ‘if I make an exception for you, I’ll have to make it for the next guy,’ he should leave because he has other options,” Mavrick says.