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2009-10

Leigh W Sparrow, Publisher
Leigh W Sparrow, Publisher

October 1, 2009 - So having non selectively cut rates and caused an even great problem, those rental companies that feel the greatest pressure of lower returns - those with massive debt, a hostile lender or tough shareholders – often start to panic. 

In recent months we have heard of a couple of issues one of which is the classic weak salesman’s approach, where a customer who has rented some equipment for the period of his job is encouraged to break that rental and return the equipment, replacing it with that of the protagonist for a lower price. In our last online poll the vast majority of you – almost 75 percent - thought that rental associations ought to outlaw such practices.

Most good companies say that their policy when they see a site using competitive equipment is to find out who the contractor is and then make contact with a view to wining future business. Or to step in should the incumbent rental company screw up. Nothing wrong with that of course, although the salesman will need to find out why he was unaware of the business in the first place.

We have also heard this year of at least a couple of occasions where a rental company or its sales staff have sat outside of a competitors yard and followed the equipment to site, one assumes to convert the customer or win future business, this seems underhand, but is it fair?

Talking about fair, many companies will of course say that running a business in harsh economic times is not a game of cricket. Does that mean though that anything goes?

Clearly not - in parts of Southern Europe the sabotaging of competitors cranes was a regular part of doing business in the 1980’s, I don’t think that anyone would condone such practices these days?

So perhaps for the desperate the only clear differential is whether the practice is legal or not? Although some lawyers will say that a case might be made against companies conspiring with competitors clients to break a rental contract.

The point is that strong competition is the lifeblood of a healthy, dynamic industry which should force ever high standards, not skulduggery. All of the best market based economies rely on a number of basic rules to ensure that they function positively over the long term to the advantage of customers.

This recession has shown signs that the rental market needs some basic rules or guidelines if it is to function properly through good times and bad. This might be something for national associations such as the UK’s CPA or perhaps it could be something that the new European Rental Association could get its teeth into?

As we have said before, the Australians have already implemented such rules, while in Europe the idea is dismissed on the basis of anti-trust/competition laws prohibiting it. However we think that there must be a way and that the case could be argued that such rules actually help to keep the market competitive rather than hinder it.

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