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| Matt Flannery |
Matt Flannery, president and CEO, United Rentals, Stamford, Conn., was introduced to the equipment rental industry in 1991 when he started working in sales for McClinch Equipment Services, Fairfield, Conn.
United Rentals acquired McClinch in February 1998. Flannery stayed with the company and worked his way up the ladder, serving in a wide variety of roles such as branch manager, regional manager, regional vice president and chief operating officer before being named president in March 2018 and president and CEO in May 2019.
His experience with United Rentals, he says, “is a good example of how we feel about our organization growing from within. This has obviously been a tremendous blessing and opportunity for me, but I do think it says a lot about our company and our industry in how we like to grow people as we develop our industry.”
Flannery earned his degree in finance from Hofstra University, Hempstead, N.Y., where he also played football. He also says he has done a lot of coaching and credits his time involved in sports as “a great teacher for life lessons and leadership.”
As United Rentals prepares to celebrate the 25th anniversary of the day it became a publicly traded company in December 1997, Rental Management spoke with Flannery about the evolution of what is now the world’s largest equipment rental company. An edited version of that conversation follows.
Rental Management: You were named president and CEO more than three years ago. How have you grown as a leader?
Flannery: In many ways, what I do now is the same as my first management job as a branch manager. You take care of your team, and they will help you succeed. The way you treat people and lead people is not much different from when I coached football. You coach your team up, support them and they do great things for you. It is a people-first mentality that we have in the organization. The biggest change for me has been much more on the strategic side, making bigger decisions than even when I was chief operating officer, and being a tiebreaker. Now, a key part of my job is about making sure we are getting our message out to all stakeholders and helping our company see around corners as we make decisions.
Rental Management: United Rentals is a company that started with no revenue 25 years ago to earning more than $11.4 billion in 2022. How do you sustain that growth moving forward?
Flannery: You make sure you do not take any dollar for granted. You have to earn every deal every day. You can’t forget the customer has to be the focus of everything you do. You think about what other opportunities we have to support our existing customers, in ways we don’t do today. You saw that with the General Finance Corp. acquisition last year that moved us into mobile storage. This is a great example of taking a business with a decent size platform and then supporting it to reach as many potential customers as we can. Our goal is to be a one-stop shop for our customers. The equipment rental industry has grown over the last 25 years, but there is much more growth ahead whether that involves manufacturing, municipal or government work, you see more sectors where there are new opportunities for rental.
Rental Management: Today, United Rentals has an estimated 17 percent market share in equipment rental. Over the years, many have predicted more consolidation and that whether it is in a few years, 10 years or more, eventually there will be one or two large companies controlling half the market. Is that how you see the future?
Flannery: Not exactly. I have a ton of respect and admiration for the local and regional companies because that is how I started my career. There will always be a place for the independents serving their communities. But I think there also will continue to be opportunities for consolidation that can increase efficiency and make equipment rental a viable alternative for work on major projects and major plants. That kind of consolidation has brought a lot of professionalism, information and advancements to the business. When you create scale, you can invest more in technology, safety, ESG [environmental, social and governance], sustainability and all the things that help drive the productivity and safety that the rental industry has always been about. It becomes easier and more advanced as you get the scale to invest more. It benefits customers and leads to growth overall. I think that will continue.
Rental Management: When a company like United Rentals grows like it has, what are the biggest challenges to overcome to get to that scale?
Flannery: People. Anybody with money can buy equipment, but it is the people who deploy it as we grow and focus on growing customer service. All employees — whether it is corporate employees who support the branch network or the line people who drive the trucks or fix equipment — play a big component. Growing to 22,000 employees has been a lot of work, but a good mix of organic growth and acquisitions works for us. When we do acquisitions, we get great people. That’s why we acquire companies. It’s not just equipment and facilities, but the people who are the underlying value and their relationships with customers.
Rental Management: Larger equipment rental companies such as United Rentals have placed an emphasis on growing specialty rental. Is the strategy to grow the industry by branching into new sectors instead of fighting for a finite market share?
Flannery: You have to start with the value you serve the customers. Specialty rental is about solving more problems. The customer is the base, but residually, it helps expand the size of the industry and you see some of our larger peers doing the same things we started many years ago. I think consolidation of vendors in something as complex with as many moving pieces as construction provides substantial benefits to customers. The more secure you can keep a job site with fewer people coming in and out and the more services you can provide, the more effective and productive the project will be. It’s a two-pronged approach. We’ll continue to grow our general rental business, but we see specialty and our general rental as part of one value proposition for the customer. It will continue to grow. I think we talk about the growth because the business is not as mature in all specialty segments. Mobile storage is a new specialty segment that we didn’t have two years ago and now it is growing gangbusters. We’re excited about that.
We will find those opportunities to solve more problems for our customers as time goes on.
Rental Management: The concept of renting equipment fits into the idea of a circular economy and sustainability. United Rentals is investing more in electric-powered equipment today as well. Is this more of an effort to meet the company’s sustainability goals or is there enough customer demand for this type of equipment?
Flannery: The drumbeat is continuing to get louder and louder, whether it is in the communities you work in, the customers you serve and even our employees. Everybody is worried about the future and sustainability is a big part of that. We are a distributor. The equipment manufacturers have the challenge of building the equipment that is the real change and that will continue to evolve. There is a lot of investment in this area. We will partner with all our vendors as they come out with new products and opportunities to get them to our customers. However, we also have customers saying they want to run a “green” worksite and asking what we can do to help them. The largest civil contractors, engineers and developers in the industry are the ones who will lead this because scale gives them the opportunity to invest, but that is the tip of iceberg. Eventually, this will flow downstream, and the industry will require it. We want to get ahead of it as a leader in the industry.
Rental Management: As the largest equipment rental company in the world, Michael Kneeland, when he was in your position as president and CEO, often said one of the company’s goals was to be a “good steward” of the industry as it continued to grow. Why is that part of the company’s strategy?
Flannery: Before United was formed, Mike and I worked for independent rental companies. We have seen how the evolution of the industry has been good for employees and customers by driving safety and productivity. I remember going to steel erectors trying to rent booms to them and they would say, “Get out of here, kid. We walk the beams.” I think about how safety legislation and how the use of our products and services has made that safer. As a leader, we share best practices through the American Rental Association (ARA) and through business exchanges with other rental companies on how to make this business safer — that is a responsibility we take seriously. And I give kudos to our peers and competitors as they are trying to do the same thing. I think the industry overall is becoming much more focused and professional about driving safety and productivity and, over the past few years, sustainability.
Rental Management: United Rentals also has invested heavily in technology. How has technology changed the way you do business and what have been the benefits of adopting new technologies?
Flannery: Technology and information allow rental companies and their customers to make smarter decisions. For example, we have a mobile app because we have GPS on most of our assets. A technician going to a job site can locate where the machine is, so that increases productivity. If you can garner information from each project and each customer relationship, you can start to see trends and patterns. You can use the information to help customers do their job better, which is our goal. We’re not the golfer. We are the caddy, giving our customers the tools they need to execute.
Rental Management: What do you see for the future of equipment rental?
Flannery: When people who previously owned equipment for whatever reason are introduced to renting, it is more than likely they will stick with rental. Renting equipment is a more efficient way for them to get work done. Renting doesn’t tie up their capital and their labor on things that rental companies can do better. The advancement of our industry has driven further penetration. We can make them more efficient and simultaneously make work sites more sustainable — rental is the original sharing model. All these things combined are reasons why rental penetration will continue to grow and why we will enter new segments. For example, rental companies bring new products in, and customers, such as municipalities, realize they don’t need to own all their own trucks for snowplow season. We have contracts where we do that for them. Manufacturing or car plants don’t need to have hundreds and hundreds of their own forklifts and carts running around. Rental companies can support that. I think penetration and growth will continue and I expect our next 25 years to be as great as the last 25.