This effort might have come from the top in the beginning, but Kendall says today, each department is stocked with leaders. "Fifteen years ago we didn't have an IT department, we didn't have a risk manager, no dedicated fleet manager. We didn't have division managers or division sales managers. We've built that entire structure and for all those people to do their jobs at the highest level, there has to be education that goes along with it."
Star Rental utilizes many training and education tools to bring leadership qualities out of its employees. One example, Kendall explained, is a leadership and mentoring program the company organized for its top employees. "We took our top 25 managers in the company and did a year and a half long program with a facilitator," he explains. "Rather than using some general format, we wanted something specific to Star Rentals so it applied to what our people do every day, every week and every month."
The group got together quarterly for intense workshops. "We got so much traction with that," he recalls. "Then we turned our focus to sales. We had to be more polished, more focused on what we were doing. Back in '06 and '07, there was so much business, you couldn't keep up with it. Now, we're trying to convince people our value proposition is better that everyone else's and this is why. That takes a higher level of selling."
On the horizon
The focus on education, training and employee empowerment has paid off, as evidenced by Star Rentals' success over the past two years. "2010 was the bottom for us," Kendall says. "We saw significant improvement in '11 and again in '12. Our job one has been getting ourselves back to performing to very good metrics.
"Right now, the industry is growing modestly, but construction backlogs are still not there yet. Still, all of the larger construction accounts are being driven to the rental channel because they want to keep their balance sheets intact. They don't want to take on expenditures they don't have to. So to that end, it's worked well. But, there's a fundamental lack of demand out there, compared to where it used to be."
One stumbling block on the road to recovery is the stubbornly slow rise in rental rates. "We're seeing continued growth in rates but it's still significantly off from where we were at our peak. There's still much work to be done there," Kendall says. "The scary thing is the escalating cost of equipment. As a result of that, there's got to be a dedicated focus on trying to get some rate improvement."
Kendall there's no magic bullet to the problem of getting rates back up to where they should be, since it's mostly a function of supply and demand. "I'll argue we're still operating in a market that's moderately oversupplied," he says. "There still needs to be some balance. Continued growth in the market will help."
Rental penetration is currently reported to be over 50 percent, suggesting the market has permanently shifted toward a rental mindset. When asked if this will last, Kendall is sceptical. "I think there will be somewhat of a fall back," he says. "You get a contractor who suddenly has a three- or four-year backlog... he can justify buying the equipment he needs. Maybe it won't fall all the way back, but I do think as the market continues to improve and stabilize, contractors will go back to buying more equipment."
Pride trumps challenges
According to Kendall, the biggest obstacle standing in the way of a full economic recovery is confidence. "People don't have the confidence they did five years ago," he says. "Not enough companies are building. Nobody's been able to generate any legitimate confidence."
In addition to the economy, Kendall is concerned about rising equipment costs, particularly as they relate to Tier 4 emissions regulations, as well as difficulty finding qualified mechanics and quality employees.
At the end of the day, however, Kendall says he's extremely satisfied with how Star Rentals has weathered the storm over the past few years. "I'm so proud of what we have accomplished in the last three to four years. Coming out of it like we have is a real accomplishment," he says. "Things probably looked a lot better in '06 from a measurement standpoint, but I would argue what we've done with our focus on education, taking care of our customers... it's huge. I take a lot of pride in it."