Norty Turner, head of Hertz rental in Europe and the Middle East, talks to Murray Pollok.
By Murray Pollok28 September 2010
Hertz Equipment Rental Co (HERC) is establishing rental businesses in markets including the Middle East and China to add to its North American and European businesses. Murray Pollok met Norty Turner, the American Hertz executive who is now running the HERC Europe and Middle East operations.
Norty Turner is two years into his stint as vice president and general manager of Hertz Equipment Rental Corp (HERC) in Europe. Sitting at his desk in the new HERC Europe office in Montigny le Bretonneux, west of Paris, the American looks composed and acclimatised.
He may well be settled into life in Paris - and he speaks French - but he hasn't ‘gone native' to the extent of joining the rest of France on its traditional month long August holiday. For Mr Turner, there was a much shorter family holiday early in the month before returning to his standard 12 hour working days.
The French summer holiday is just one of the cultural differences that he has had to adapt to since moving across the Atlantic. The 38-year-old remarks that August is one of HERC's busiest months in the US. It isn't in France.
Still, that easing off in the summer has allowed Mr Turner to turn his attention to some wider matters, not least the acquisition of an Italian power rental business, Rent One, announced the day before IRN's visit (see news this issue).
Rent One joins HERC Europe's existing Energy Services division, which rents power and temperature control equipment. HERC Europe already operates three Energy Services locations in Spain - where it no longer has general rental operations - and four in France.
Rent One thus becomes HERC's first ever equipment rental business in Italy, a market that has so far been resisted by other pan-European rental businesses like Loxam, Lavendon, Riwal and GAM.
This begs the question about HERC's strategy. Will Rent One form a bridgehead for the introduction of a general rental operation in the country? Are specialist divisions like energy services a key strategy for growing the business in Europe? (When IRN describes HERC as a generalist renter, Mr Turner is quick to point to the trenching, pump, energy and entertainment divisions operated by HERC in North America.)
Unfortunately, as an employee of a stock market listed company - and one that is under intense scrutiny from an army of analysts and investors - he answers these questions with a polite and apologetic ‘no comment', the first of several during the interview.
On the Rent One acquisition he allows himself the observation that "we evaluated a number of opportunities. This happened to be a very promising prospect." On the question of starting a general rental operation in Italy, he says "we will evaluate all the opportunities in front of us."
He is similarly cautious when responding to a question about the strategy on franchises. HERC already has franchise operations in Denmark and Norway (run by Petter Hagen) as well as in Portugal and Greece. "We're going to look at all the opportunities out there, and potential partners", says Mr Turner.
He says that the benefits of franchising are many; "a partner brings local contacts and local expertise and experience in operating in a given geography. That's certainly important. You can expand a given business model quickly through a franchise."
If he can't bring himself to actually say it, it does look like franchises remain a key plank in HERC's strategy, in part because of a drive to find more synergies between HERC and its much larger sister rental car business.
"Our current CEO, Mark Frissora, has certainly made it an initiative to find HERC and rental car synergies. I'm working closer with my rental car colleagues than I ever did before", says Mr Turner, who joined HERC in 1995 as a sales coordinator based in Augusta, Georgia.
This is illustrated also by the recent appointment of Bruno Kloeckner as HERC's new general manager for France. Mr Kloeckner was previously operations manager for Hertz's car rental operation in France. And, of course, Gerry Plescia, president of the whole HERC business, is another former car rental executive.
Synergies aren't limited to finding potential franchise partners among car rental operators, they are operational as well. Mr Turner cites the announcement in May that Hertz had signed a rental agreement to provide both cars and equipment for the 2010 MotoGP motorcycle world championship, which covers 18 races in 14 countries.
"We come up with new ways every day of how HERC and rental car can make synergies", says Mr Turner, "whether it be shared clients, network footprint, or evaluating existing franchises...We're looking at how to work together as a worldwide business."
If a new focus on synergies are one aspect of the Hertz plan, then there have been other ways in which HERC Europe has changed. Before 2006 HERC's European operation was managed in Europe, ultimately at Hertz's European HQ near London. But since that year Gerry Plescia has assumed overall control of HERC worldwide from Hertz's corporate HQ in New Jersey, US. Norty Turner himself is the first US executive to run HERC Europe since the Dan Kaplan era in the late 80s and early 90s.
This shift towards US head office control has coincided with a strategy to grow HERC outside its core North American and European markets. A Chinese rental business was established several years ago - centred in Shanghai and now with around three locations - and earlier this year HERC signed a joint venture in Saudi Arabia with Dayim Holdings, a company that has joint ventures with Securitas and Indian contractor Punj Lloyd. Jay Early, a long-time HERC manager who was a member of the Chinese team, has resettled in Saudi as general manager of the business.
The venture hasn't started renting yet and Mr Turner - who since January this year has added the Middle East and India to his areas of responsibility - won't give a start-up date, but he has visited the country four times in the past nine months and one would make an assumption that the opening is imminent.
"We see that the greater Saudi market aligns well with our strategy. There are construction and petrochemical opportunities there", he says.
India is also an area of potential, but Mr Turner will not give any timeline on a potential HERC business. "We are evaluating opportunities. We are encouraged in a myriad of markets - India included - about the folks who are interested in partnering with us."
Despite these international concerns, it is the French general rental business that forms the core of Mr Turner's responsibilities. With a network of 70 depots in France ("we are pleased with our footprint") and a business which Mr Turner says is in the top four of generalists in France (presumably alongside Loxam, Kiloutou and BM Location, although he doesn't name them), HERC Europe has had to deal with a French market that fell by 14% last year, according to the European Rental Association.
Mr Turner will not say how HERC fared over the past two years, only that recession brings opportunities for well managed businesses; "The main thing is your focus, and maintaining a few key principles: you focus on customers - how you can help them; you focus on your employees - help them develop their careers; and you focus on asset management.
"You focus on these three things no matter what economy you face. If you do that, and if you do it well, then things are not going to be so challenging. You become a more effective, efficient organisation." This amounts to Mr Turner's rental credo, inherited from mentors who include a long-time HERC branch manager Shelton Johnson, who still works for HERC in North Carolina.
It is difficult to assess just how HERC Europe has performed. The business worldwide has seen a recent improvement in its results, but it doesn't split out the figures for Europe. Overall, revenues were down just 4% in the second quarter of this year, but were up in June, year-on-year, which Mr Turner says "is encouraging to see".
Also encouraging, particularly for equipment suppliers, is the fact that Hertz is increasing dramatically its capital expenditure this year to US$150 million (compared to nearer $60 million in 2009) with a further hike to $200 million in 2011. Mr Turner offers no clues as to how much of this will be spent in Europe or on what products.
There is one French initiative that he will talk about, however, and that's a recent expansion into smaller tools and equipment - ‘outillage' in France. The HOP (Hertz Outillage Pro) programme was piloted in June 2009 at a branch in Saint Herblain, near Nantes, and has since been rolled out at 16 branches. This will have been noted in particular by Kiloutou, which is strong in the small equipment rental sector.
"It's a focus on a diverse fleet offering, having sufficient small and large equipment to meet 95% of customer needs", says Mr Turner. "The pilot was opened in June 2009 and we opened three more in the autumn of last year. We took a look at the results and decided to expand the project....I've been very happy with how the French team has launched it."
The programme is still being implemented. How many sites will it eventually cover? Mr Turner smiles, says he can't really answer that question, and makes his final apology of the day.