CRA president reacts to United/RSC merger
Dec. 23, 2011 - In an email to Canadian Rental Service, national Canadian Rental Association president, Wayne Beckett, called United Rental's merger with RSC Holdings "surprising," but predicted it may lead to an easing of labour shortages in such economically strong areas of the country as Alberta and Saskatchewan. He also expressed hopes the merger might strengthen rates.
By Patrick Flannery
"This certainly was a surprise announcement, not often do
deals of this magnitude go on without a leak of some type," Beckett noted. "I don’t see
where they have come out with a definite reason for the merger such as
debt problems, expanding into new markets or national economic issues.
They do say that it will be good for their shareholders, but they have to say
that or it just wouldn’t happen."
Beckett noted the merger will bring more focus on industrial accounts to United. "That being said, this merger
may have more to do with the Canadian economy than the American one.
Between the oil and gas industry in Alberta and Saskatchewan and the east coast,
the potash industry in Saskatchewan and the diamond mines in Saskatchewan this country
may well be where they focus their energy for industrial accounts," he said.
The effect on smaller operators is hard to predict, Beckett says. "As far as the independent stores go I don’t see too much change good or
bad," he says. "Since UR has a presence in all 10 provinces now they won’t likely
be opening any new branches any time soon. I suspect some RSC locations
will disappear although they haven’t said anything to that nature yet.
If this is the case there may be some relief with the labor shortages
that we are all dealing with now due to our strong economy." Subsequent to Beckett's writing, International Rental News reported that United forecasts closing about 100 locations where former United and RSC locations overlapped, amounting to five to 10 per cent of the combined company's total locations.
"Rental rate discounting continues to be a major concern for both
independents and multinationals," Beckett continued. "Some mergers bring on fears of less competitiveness
and therefore higher prices. Well, in this case that may not be a bad
Beckett hopes this merger will strengthen the industry the way other headline mergers have. "Over the years there have been many large mergers such as Disney/Pixar,
Sirius/Xm, Chrysler/Daimler, Exxon/Mobile and Case/IH," he notes. "All of these
seem to be going well, so let's hope that the United/RSC merger is good for
all of us in this great rental industry."