Recently, Ahern Rentals was seeking more time to restructure in the face of a hostile takeover threat from Gores Platinum Equity. This was an interesting development no matter what, but it’s especially noteworthy because it feels like the other shoe has dropped. For months since United announced its planned acquisition of RSC, the industry has been wondering which of the big nationals would be the next to consolidate. Even if Ahern avoids the Gores takeover, it’s obvious the current climate in the rental industry is creating fertile ground for further consolidation.
Not long ago, Dan Kaplan made a speech to rental professionals about the history of the industry and where he sees it going. One of the points he made is that smaller, independent rental companies — those with sales volume under $5 million — would be largely untouched in the next wave of consolidation, suggesting that a rich market will remain for what independents can bring to the table.
For those of us who can remember the last time the industry went through an intense period of consolidation, one of the downsides was the resulting market-wide drop in rental rates. National chains came into many markets and discounted their prices, making it very difficult for their independent brethren to compete. I like to think this won’t happen again — or at least to the level it did a decade ago — but the key to prevention is, quite simply, discipline.
Discipline came up a lot during my recent interview with Rick Dahl, owner of Metrolift, an independent aerial house in the Chicago area, which is the focus of our Profiles of Success feature in this issue (page 18). Dahl admits he has competitors who undercut prices in the market, but he knows he can’t respond in kind. To do so makes poor business sense and quite frankly, is damaging to the industry as a whole. Instead, Dahl chooses to promote the added value he can bring to his customers through his commitment to things like on-time delivery and service, immediate response to problems, and conscientiously correct billing, not to mention an emphasis on safety. You can’t put a price on these things, but in the long run, they create value and are what cements the relationship between an end user and his equipment rental source. I hope you enjoy reading about Dahl and Metrolift and can glean some ideas for best practices at your equipment rental business.