WEB EXCLUSIVE: Boels plans expansion despite recession

Pierre Boels, managing director of the family-owned business, told IRN that the company's strategy was to continue with the expansion project started last year; "We're doing the exact opposite of our major competitors. We are opening stores - others are closing. We are not de-fleeting (but not buying either). We are transferring fleet to the new locations. That's our strategy."

So far this year the company has established a new rental operation in Poland - opening three depots in Warsaw - and has also added locations in Germany, the Netherlands, Austria and Germany, with plans for 17 new stores during 2009.

"We prefer to open greenfield locations and build our own buildings", said Mr Boels, "But now we can buy land cheaply, even buildings. We have opened in some cities where we have been looking for six or seven years.

"I know business will be difficult in the next two years, but if I wait until 2010 and then start to open depots, then we will have to wait again [for the returns]. We are just opening depots where we always wanted to be."

The company also has considerable scope to grow; "We have just 65 locations in Germany, we will need 200 to be mature", he said.

Mr Boels, who drew parallels between his strategy and that of US company Ahern Rentals, acknowledged that business was tough in the company's existing locations, with revenues typically down 5-10% for the year to date. He said Belgium was the market most affected.

The party and events sector is even worse hit, said Mr Boels, and is down around 15%. "That's something we know. In every recession party gets hit harder - we've brought costs down, but not closed depots", said Mr Boels. Around 35% of the party division employees are temporary staff, which allows the division to trim costs when demand falls. Party represents around 10% of the company's revenues.

The company has also cut its capital investment considerably - from €125 million last year to around €50 million in 2009. ("Five times what Ramirent is spending", joked Mr Boels.)

Mr Boels said he was unsure about business prospects for 2010 and is concerned about reports that over 10% of the Netherlands construction workforce could lose their jobs when major current projects are completed. "You can think that if construction goes down 10% then rental will also go down 10%. But that's not necessarily true - rental could be hit harder", he said.

He argued that Boels' diversified fleet was an advantage during recession. The company does not have the heavy reliance on aerials (no more than 6-7% of revenues) or earthmoving equipment that some major rental companies have; "We have a very wide range of equipment and a wide customer base. That makes us different - we have a lot of cash customers."

Mr Boels acknowledged, however, that price competition is tough; "We are doing exactly the same as our competitors. Our guys, if they want to shift iron from the depots, they can do it."