Rental Center: The sunny state of rental

THG Rental and Sales, Clearwater, Florida

For nearly five decades, THG Rental & Sales has survived and thrived in Clearwater, Florida. An eye on overhead and changing market needs has been key to its success.

THG Rental & Sales, Clearwater, Florida.

“I think we’re going to see another couple of years of good growth, so we’re positioning ourselves financially to take advantage of that,” says John Holcombe of THG Rental & Sales.

When THG Rental & Sales first opened, its rental equipment was made up of carpet cleaners, breaker hammers, small trenchers and power rakes; it was equipment that rented out for two hours at a time and could turn over as many as five times on a busy day. Today, its equipment inventory trends toward. larger equipment and professional tools for contractors, but still has some DIY-type customers.

While most of its customers are professional contractors, THG staff members still go over the finer points of equipment operation with customers before it leaves the rental lot.

John Holcombe started his career in the Air Force, working in hospital administration in the late ’60s. But then, his father, Norm, who hailed from Ontario, Canada and moved his family to Florida in the 1950s, called him with a proposition that changed the course of his life.

“I was in the Air Force in Germany in hospital administration. My father called me one day and said, ‘Can you come home? I got a proposition for you.’ I came home in August of 1973 and the very same weekend, the St. Petersburg Times came out with a huge article about the equipment rental business in the United States and how it was going to be the next big thing. It was Karma. We had property in Largo. We knew that we could build a building there and start the business,” Holcombe recounts.

“I got out of the military in December, 1973 and we opened our first store October 1, 1974. I went from being in hospital administration to not knowing what I was doing,” John recalls.

Humble beginning
With that, THG Equipment Rental & Sales was launched. “The original partners were made up of a local contractor, Tubolino, who made his money in storage units in the Tampa/St. Petersburg/Clearwater area; my father, Norm Holcombe, and Tony Goodnow, whose father invented the steel-toed work boot. Even then, it was a very capital-intensive business.

“My father and I ran the rental operation together. The deal was that I would work for three years with no vacations, seven days a week with one day off every 30 days. That lasted five and a half years. Only then were we able to change things around and I got some time off,” he says.

Today, the company is wholly owned by Holcombe and has been renamed The Holcombe Group (THG), which conveniently matches the acronym of the founding partners.

When THG Rental & Sales first opened, its rental equipment was made up of carpet cleaners, breaker hammers, small trenchers and power rakes; equipment that rented out for two hours at a time and could turn over as many as five times on a busy day.

“We were a small tool rental center. I remember how thrilled we were when we hit a $30,000 month in rentals. Today, that’s a typical weekend.”

The equipment rental fleet has changed over time. Today, the fleet trends toward larger equipment, but Holcombe draws the line at equipment that can’t be transported with a ¾-ton pickup. “If a ¾-ton pickup can’t tow it, we don’t own it. When we were hit by the recession in 1989, we reevaluated our fleet and decided to get out of the larger equipment,” he says.

Today, THG Rentals and Sales has 15 tow-behind aerial lifts, which are the most popular units in the fleet. “We have Nifty Lift units that range from 34- to 64-foot reach. They are our leading rental items today. The aerial lifts are followed by track hoes, track loaders and skid steers. We work closely with our local John Deere dealer on these models. They point their customers to us if it is a short-term rental, and if one of our customers is interested in more long-term lease, we refer them to the John Deere dealer.”

Stump grinders and related equipment are the third major group of rental equipment for the firm as well as pumps on a more seasonal basis. While they were at once more involved with generator rentals, they have found that businesses and residences in the area are increasingly purchasing units to be ready for hurricane-induced power outages. “Nearly everyone has a generator in Florida because of the hurricanes,” he says.

40 years of insight
Holcombe says their customers are primarily from Pinellas County. “Pinellas County has the highest population density of any county in Florida, and it’s still growing. I’ve known some of these people for 40 years and they still come in, or I’m taking care of their grandchildren now in some respects. I don’t know how we’re going to shoehorn any more people in here, but they seem to be doing it. It’s just amazing. People from up north are tired of the winters and the taxes in our state are lower than the taxes in the north. We’re gaining more people all the time.

“We’re finding that contractors are looking for equipment that can get into areas through narrow access. In the past, a John Deere 317 skid steer was what most contractors wanted. Today, with the narrower job access, more are asking for ASV R40-sized machines because of the tight access. We find many contractors prefer the ASV sit-down models over the stand-up units because they have trouble going over curbs and having tipping issues. We’re also seeing tremendous popularity with the John Deere 17G excavators. We can’t keep those on the lot.”

The rental center has a 7,000 square-foot main building and a 2,000 square-foot shop that sit on two acres. The company rents out part of the space to other tenants. Equipment inventory is valued at $2 million.

THG Rentals and Sales have weathered several recessions and Holcombe says owning their property has been a key to the business’ survival. “In 2006, there were 11 rental stores in the county before we went into the recession. Today, there are five and one of those specializes in scaffolding. Those who survived owned their buildings,” he says.

Holcombe says he remains friendly yet competitive with the other rental centers in the area. “One of the rental centers’ owner, who was a competitor of ours, put it best: ‘If you make every rental, it means you have too much equipment.’ Staying friendly with them opens up referrals, that over time, go both ways.”

Equipment utilization hovers in the 40 to 50 percent range and Holcombe finds the company can make it work. “We don’t do the fleet stuff. We leave that to the chains. Instead, our customer service is what is bringing our customers back. In addition to my wife, Mariette, and me, we have a staff of 10 full-time and four part-time employees. It’s hard to find good employees, but we are pleased with the employees who work here.

Equipment rentals are split between job site deliveries and customer pick-ups at the rental center. “We don’t gouge customers on delivery services, it’s a flat rate no matter where they are in Pinellas County and slightly higher if they are in Pasco or Hillsborough counties that are nearby,” he says.

Approximately 80 percent of THG’s customer base is small construction lawn and tree contractors; the remainder is local government and private homeowners. “We are seeing smaller contractors renting more than in the past because they are uncertain about the economy. They’re afraid to buy equipment unless they’re using it almost every day. Many of our customers are looking for used equipment but they’re renting because they don’t want to be burdened by having to take care of the equipment. I think the oldest piece of equipment in our yard is four years old. Our average equipment age is between two to two and a half years old. We try to maintain that. Customers know if they break down, they call us and we’ll bring another piece, or if we don’t have another piece, we’ll send a mechanic. That means a lot to our customers.”

While the vast majority of their rentals are one- or two-day contracts, THG has one fiberglass pool contractor who relies on THG to move the skid steer he rents from them from job to job. “He’s been a customer since 2008 and he gets a new skid steer from us every year to use,” Holcomb says.

A look to the future
With nearly five decades of equipment rental experience, Holcombe says there are few things that keep him awake at night. However, he is concerned about the push toward electric-powered equipment to meet government air-quality and noise requirements.

“How are we going to transition to that? We’re seeing electric skid steers. When we send them out on a job, how do we maintain them? How do we keep them charged? It’s not as simple or as fast as filling a tank. We’ve also had some bioenergy units and they have not worked out well. This technology is in its infancy.”

At 73, Holcombe plans on staying involved in the world of equipment rental for some time to come. His son, Jason, works in the business, and Holcombe is in the office every day, but also schedules some golf and boating time regularly in the Florida sunshine.

“I almost sold the business last year, but then my wife and I got COVID in December. I lost my sense of smell and I was tired, but that was the extent of it. I stayed home from December 1st to December 11th or 12th until I was told I could come back to work by the doctors. That’s when I figured it out. I’m not made for retiring,” he says.

“I think we’re going to see another couple of years of good growth, so we’re positioning ourselves financially to take advantage of that. We’re paying cash for most equipment purchases, but we are taking advantage of some of the finance deals. For example, John Deere has been offering zero percent financing and a couple of the others are offering terms along the same lines. So, if anything has an interest rate on it, it goes. That’s our philosophy right now. I think that in two years, we’re going to start to see some real changes. There’s pent up demand and there is supposed to be $1.6 trillion in cash sitting in people’s accounts that they’re spending. That’s good news now, but in two years, I am less optimistic.”

This article originally appeared in the May-June 2021 issue of Pro Contractor Rentals magazine. ©2021 Urbain Communications LLC. All rights reserved.

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