A jewel of entrepreneurship

With the rental industry still in its infancy, the company was carving out a niche for itself in high reach equipment by adding scissorlifts and boom trucks to its inventory.

A Quebec rental company has achieved an unprecedented milestone in the Canadian rental industry as it celebrated its 100th anniversary in 2007. Simplex Tool and Equipment Rental was founded by Louis Henry Véronneau in 1907 and today it has evolved into the largest independent tool and equipment rental company in Quebec and eastern Canada.

Simplex is a real Quebec success story, a jewel of entrepreneurship that has cut across the generations, constantly renewing itself and shifting with the many changes in the market and the economy from the Great Depression in 1929 to the 1993 recession. It began with Louis Henry Véronneau, an inventor who, at the beginning of the century, designed a floor sander to ease the task of workers who used to sand floors on their hands and knees with nothing but sandpaper and elbow grease, explains André Véronneau, current president and CEO of Simplex and the great grandson of Louis Henry.

Prior to the Great Depression, Louis Henry’s son Roger joined the family business and at the end of the 1950s, the business was transferred to his son Guy, André’s father, and his two uncles Bernard and Jules who turned the
company into a full-time rental store, adding more tools to complement their inventory of floor machines.

“My father and his brothers were visionaries and they saw the potential in the rental business. They knew what to buy; what type of equipment would be ‘rentable’. They were the first to test the market for everybody else,” says André. “After that, the decision on what else to buy was simple; they just listened to their customers. If a customer asked for something they didn’t have, they would buy it and try it out,” he adds.

That was how the company acquired its first lift truck, but what started out as a short-term rental led the company to its primary foray in the rental industry.

With the rental industry still in its infancy, the company was carving out a niche for itself in high reach equipment and was adding scissorlifts and boom trucks to its inventory. “It was slow at first. Many contractors were new to the concept of renting and still had the ownership mentality,” says André, adding they were buying this equipment from other rental companies who at first did not find them profitable. “But customers were starting to realize they were gaining productivity with this equipment and renting gave more trades people a chance to discover this,” he says.

Simplex Location d’Outils/Simplex Tool and Equipment Rental celebrated its 100th anniversary in 2007.

Although he was already involved with the family business, André wanted to make his own name in the rental industry and opened a stand-alone rental store, Jalon Equipment Rental, with his brother in 1979. Interestingly, the new company was in competition with the family business, Simplex, but as André himself explains, “My father wanted us to first develop our business skills independently; he even lent us the money to help us get Jalon off the ground. It was an independent company and a friendly competitor to Simplex. My father helped finance it, saying I was going to get a good education in this business,” he says. “My brother and I had an independent mentality and we needed to prove we could do it on our own.”

However, all that changed when his father bought out his two brothers who were partners in the business in 1986 and passed on the family business to André, inviting him to take on the job of CEO while Simplex was being restructured. The independent rental company he started with his brother kept operating for seven more years before being amalgamated with Simplex. “When my father gave me the keys to the business, he gave me full powers while reminding me of one essential thing: I should be at the service of the company and not the other way around. The desire to offer our customers the best service has always been at the heart of Simplex corporate values, ever since it was founded in 1907,” he emphasizes.

A new direction
On his arrival at Simplex, André introduced a new style of management based on borrowing. “Whereas previously the company directors hesitated to take out loans, we took a gamble by borrowing massively in order to modernize and diversify our fleet of equipment,” says André, adding in the same breath, “I was used to an annual growth rate of 25 percent at Jalon and was quite ready to act in a decisive manner to develop Simplex.”

André Véronneau, current president and CEO of Simplex, is the great grandson of company founder Louis Henry.

The gamble seemed risky, but the change came just at a time when the tool rental business was growing by leaps and bounds. Under André, Simplex rapidly became one of the major players in the sector in Quebec and eastern Canada.

In the two decades from 1986 to 2006, Simplex multiplied its revenues by a factor of 10 to $65 million; its employee workforce now numbers 500. It is still growing and the number of branch locations, currently at 32, is expected to increase.

According to André, there are three factors involved in the company’s longevity. First is market sustainability as the equipment rental market has been growing steadily for more than 20 years. Now that the company’s position in aerial manlifts and hydraulic platforms has been solidified, Simplex is in the process of diversifying into the heavy equipment sector. Over the past two years, it has acquired dump trucks, front loaders, bucket loaders and other heavy equipment construction equipment.

The second element is investment, which has grown to an average of $22.5 million per year over the past three years, made possible by relations of confidence established over time with its financial institutions.

The final element is a loyal workforce that has developed a strong sense of belonging to the company. “Simplex is something of a love story between its personnel and management,” states André. “When an employee shows
ability, we are always ready to give them a more responsible role and autonomy. Human relations have played an extremely important role in the company’s history, with the most positive results.”

Being primarily intuitive, as he himself admits, André has been wise enough to surround himself with a competent team, most notably by engaging Yvon Arseneault in 1989 as vice-president of finance and administration. With Arseneault’s help, he was able to develop the Simplex network, beginning with the first branch location in Quebec City, which was quickly followed by many others.

“He brings a Cartesian rationalism to the decision-making process, whereas my approach is more or less based on passion,” admits André.

This unprecedented growth has also been attributed to the Véronneau family’s business acumen which comes from their sensitivity to their customers’ needs, allowing the company not just to follow, but to anticipate major market trends over time. Simplex today rents out everything from cordless drills to 40 tonne loaders, stepladders to 135 foot boom lifts, and vacuum cleaners to forklift trucks… including the floor sanders that started everything off!

Yvon Arseneault is vice-president of finance.

The gospel of quality
“The rental business is not just about price,” says Dany Gosselin, director of sales and marketing at Simplex. “We put a lot of emphasis on service and support. Eighty five percent of our customers come from the construction, industrial and service sectors. If they are coming to rent from us, it is because they need reliable equipment and they need it quickly. They are depending on us. The same principle applies to our other customers. That’s why we have developed a policy of four hours or less guaranteed delivery and that’s why all our tools and equipment are carefully inspected on their return. Moreover, we reinvest at least 15 to 20 percent of our sales turnover into renewing our inventory each year.”

“Service really is our strong point,” adds André. “It is what allows us to compete with the giants of the rental industry. We have been able to gain market share by buying up some of our competitors, as well as by opening new outlets.”

Though André credits luck for at least part of his company’s remarkable growth, whose sales and personnel have multiplied tenfold over the past 20 years, he recognizes that the values of Simplex’s founder have also contributed to the exceptional success of this ‘100 percent Quebec’ product, as he likes to call it.

“We give our employees all the autonomy they need to do their work and they feel free to express themselves fully. We consult them frequently and they have developed a strong sense of belonging. It can never be repeated often enough: for a service company like ours, the personnel make all the difference. For example, we employ 125 mechanics just to maintain our fleet of equipment.”

Louis Véronneau is vice-president of development.

Heavy equipment
As a sign of the dynamism and visionary character of Simplex’s management, over the past two years the company has begun to move into heavy construction equipment with the purchase of loaders, backhoes, dump trucks and rollers. “We took part in the heavy equipment exhibition called Expo Grands Travaux at Olympic Stadium in September 2006. This event confirmed to us the growing interest that contractors have in renting machinery,” recounts Louis Véronneau, joint owner and vice-president of development.

This approach, which emphasizes both listening to customer needs and real vision, is what assures Simplex’s continuing success. “In the years to come, we intend to expand our network to the whole of Quebec and beyond.
Our Ottawa branch has shown us we can also be successful outside the province. At the same time, we intend
to develop new product categories which will enable us to diversify our market,” he says. -end-

A look at the numbers
• Annual sales (2006/07): $70 million.
• Number of employees: 530/mechanics: 135.
• Locations: 33 in Quebec and Ontario.
• Number of transactions: 370,000 per year.
• Assets (tools and equipment): $130 million. -end-