Simplex got closer to customers by extending branch network
To understand why Simplex Equipment Rental is now in its fourth generation of family management, when few businesses make even one successful father-to-son transfer, just ask how André Véronneau, the company's president, got his start.
"I wanted to do something on my own before I joined," said Véronneau. "So rather than work for my dad, I set up my own shop."
Though just in his early 20s and barely out of university, Véronneau and his brother Louis opened a small tool and equipment rental business in Montreal's East End. It was a lot of work and the shop gradually built a loyal following. But the real upside came later.
That's because by the time their father, Guy, offered to merge the family business with his sons' outlet in 1990, the brothers were seasoned businessmen. As a result the transition into the bigger company was much easier.
"We grew up in this industry," said André Véronneau. "Many people think what we have done is special. But we just took it one step at a time."
Despite Véronneau's modesty, Simplex Equipment Rental's accomplishments are impressive. In just five years, the company, which was founded by his great-grandfather Louis Henry Véronneau in 1907, has grown from six branches and 125 employees, to 25 branches and more than 400 employees.
Sales reached $45 million last year, and André and Louis Véronneau, who co-own the business, expect another 10 per cent jump this year.
More than half the revenues come from renting forklifts, boom-lifts and scissors-lifts. The balance is split between a variety of small industrial and construction equipment rentals including compressors, drills, plumbing equipment and so on.
According to one long time customer, the Véronneaus' success is due in large part to their focus on service.
"Their prices are good and they have a wide range of products in stock. But what really makes them stand out is their branch network. They have stores all over Quebec," said Yvon White, tool manager at Groupe Gastier Inc. "We are running a construction project in Sept-Îles and they have a branch near there. So it was easy to do business with them."
André Véronneau credits his early experience running a rental shop with inspiring Simplex Equipment Rental's focus on service.
"I've stood behind a counter for many hours and handled all kinds of customer requests," Véronneau said. "So I know what my employees are going through."
In fact Véronneau spends a lot of time managing the hiring and training of front line employees, to make sure they fit into the Simplex Equipment corporate culture.
"You have to know how to listen to the client. But you also have to know when to use your own judgment," Véronneau said.
That's especially true regarding stocking decisions. Clients have a tendency to ask that dealers offer a wide range of products, but these requests don't always translate into rentals. The result can be a store filled with equipment that is gathering dust.
While Véronneau is by all accounts an exceptional manager, according to one industry expert, Simplex Equipment Rental is also riding a long-term industry upswing.
"Is "booming" a good word (to use in English) to describe it?" asked Jean-Marc Turcotte, past-president of the Association de Location du Québec. "There's no doubt about it we are having good times.
There are several factors driving the Quebec equipment rental market, which Turcotte estimates at between $200 million and $250 million.
For one, the Quebec construction industry has been working through the winter this year, when in the past they would take time off in extreme cold. This has led to more days worked in the calendar year.
Another factor is the explosion in home renovation work done as a hobby, a trend that is driving more women into rental shops.
"You have all kinds of TV shows where the husband and wives are doing these projects and they are always smiling," Turcotte said. "So couples look at each other and ask: "why can't we try that.""
Despite their success, company has no plans to change its winning formula, André Véronneau said. The brothers will continue to focus on expanding their Quebec distribution network by taking on three or four new locations each year, either by buying up independent operators or opening new stores.
Over the medium term, they are considering expanding into Ontario, where Simplex Equipment Rental already has one branch.
The other big question concerns the fifth generation of Véronneaus. The brothers have seven kids between them, with ages ranging from 14 to 26. Although none yet work in the business full-time, with the family's history, you'd think that some eventually will.
Sidebar: Is it better to buy or rent equipment?
One of the most important decisions that equipment users must make is whether to buy or rent. According to one expert the decision depends on a number of factors, the most important of which is the length of time the equipment will be used.
"If it's for the long term, you buy it. If it's for short term use you rent," said Yvon White, tool manager at Groupe Gastier Inc.
For example White recently had to obtain tube-bending machinery for a project the firm was working on at the Université de Montréal. The project was slated to last for two years, so White bought the machinery outright.
But the decision is not always so clear cut. "There's also a value factor involved," White said. "Take an item like a small drill. It's not worth it to rent that. So you just go out and buy it."
But renting also confers numerous advantages. It frees up capital and storage space and reduces depreciation charges at the end of the year. One factor that does not come into play according to White is interest rates.
"If we need a tool for a construction project, we are going to get it no matter what the interest rate is," he said.
Photo caption: According to André Véronneau, more construction companies are turning to equipment rental instead of purchases, because it frees up capital and provides more flexibility.
|© 2004 Peter Diekmeyer Communications Inc.|