No doubt about it, these are exciting times for the rental industry. Perhaps more than ever, there is tremendous potential for growth as construction struggles toward recovery, prompting contractors to turn to rental more and more as a cost-efficient means of acquiring equipment.
Expectations are pretty high. Experts such as Frank Manfredi of Manfredi & Associates suggest the rental industry could surpass 2007 peak levels by 2014.
"It's hard to imagine that the economic turmoil the world is going through would be good for anyone, but it has been very good indeed for the equipment rental industry," Manfredi says. "The economic uncertainty and the limited visibility of only three to six months into the future is causing equipment users to rent rather than buy equipment for the little bit of activity going on out there."
As if that projection weren't interesting enough, we're still absorbing the news of United Rentals' planned acquisition of RSC Equipment Rental in a $4.2-billion transaction. The new United Rentals will become the largest rental chain in history with a market share of 13 to 14 percent and approximately 1,000 locations.
What will this mean to the industry at large? To start with, it won't dampen the expectations for growth. 2012, in particular, should be a good one for rental companies. "The merger will dramatically change the dynamics of the competitive environment, but not the trend of the market," Manfredi says.
One effect we might see is more consolidation, particularly among the largest chains. "The [United/RSC] merger/acquisition is a really big deal," Manfredi adds. "It may start others in the top 10 to consider mergers. Size will definitely matter."
The industry's dramatic period of consolidation in the late '90s was a dynamic and prosperous time. What the United/RSC merger will mean to rental now is still a big question mark, but it's clear the industry is poised for another renaissance. Hopefully, we learned some lessons during the first round of consolidations and can build on that experience. No matter how much potential for growth and prosperity there is, the same simple tenets remain true for sustainable success: treat your customers well and set your rates at a point that's fair to the customer and your bottom line.