Project Profile: How One Firm Deals With the New Competition

July 1, 2000
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Competition for equipment rental dollars definitely has intensified in Arkansas, observes John Hugg, chairman of Hugg & Hall Equipment Company in Little Rock, AR.

In addition to its rental business, Hugg & Hall is a distributor for several national and international brands, including Hitachi, Volvo, Melroe/Bobcat, JLG Industries, Genie, and forklifts made by Toyota and Daewoo. With six stores covering the state, Hugg & Hall last year racked up more than $10 million in rental revenue, which represents a 22% increase over the previous year.

“We go head-to-head with the consolidators, the major rental companies,” states Hugg. In fact, Hugg & Hall competes with no fewer than four national rent-to-rent companies that have established Arkansas branches in recent years.

Has there been downward pressure on rental rates? “Yes, there has been and is,” says Hugg. “Before the consolidators came along we used to have a price list, and we could pretty well stick to it. Today, just about every deal is negotiated. Our telephone sales people are very motivated not to let people off the phone without getting an order.

“But I know the competition hasn’t been bad for us,” he adds. “It’s forced us to become a better company. We’re more focused, more efficient, and better organized. Our business has never been better.”

Hugg figures that being a distributor gives him certain strengths that a pure rent-to-rent store doesn’t have-equipment service, for one. “We’ve got 70 mechanics, and we have a much better service capability than most of the consolidators. We can make decisions quickly, and our six branches work very cohesively as a group. The branches all share equipment with each other when they need to.

“We’re in the parts and service business, and those businesses do more than just support our rental fleet; they are profit centers,” Hugg emphasizes. “Because of that, I think we’re better at equipment service than the big rental companies.

“All of this has been good for the contractor. Equipment service has gotten better in general, and our service has gotten better. The quality of rental equipment has gone up, and the average age of the machines has come down. The quality of our equipment has never been better. Our goal is to turn over all of our rental equipment in 18-42 months.”

Because the company sells and rents such a broad range of equipment, Hugg considers sales specialization to be important. And the sales forces is organized so that no one type of equipment gets short shrift. Of the six stores, two specialize in rental equipment. But all six stores can and do rent equipment. “We have specialized rental sales people, and they work at all six branches,” he says. The company has five outside salespeople and 12 inside salespeople just for rentals. “Five years ago, we didn’t have any outside rental salespeople.”

The company’s five other types of salespeople are earthmoving, light construction equipment, material-handling equipment, service sales, and parts sales. “We’ve tried having people sell combinations of equipment types, and it just doesn’t work,” Hugg remarks. “One type of equipment will take more of their attention, and they’ll focus on that. We feel like one of the keys to success is having specialists on the sales force.”