When you need radio at the last second
Portable radio rental program helps dealers meet peak demands.
For the past three years, Deb Balsick has rented 110 portable, two-way radios to the Colorado State Fair to bolster the radio fleet that the fair already owns and uses during the rest of the year. Balsick works as a sales representative for Denver-based Legacy Communications at the company’s office in Pueblo, CO, which happens to be the home of the fair.
“The state fair has its own fleet of portables that we maintain, but when the annual event comes around, this fills the bill.” Balsick was referring to an equipment rental program offered by the Caprock Communications Wireless Division, which is based in Friendswood, TX. The program supports dealers without a large rental fleet of their own. Legacy Communications has a small rental fleet, and it calls on Caprock to help with the short-term rental of a large number of units at the fair.
Annual bid Balsick bids the rental contract with the fair each year. It helps that two years ago Mountain Communications, a company that later merged with Legacy, landed the state contract for mobile and portable radios. The fair places its purchase orders under the state contract and prefers the rentals to come from the same source.
John Grau, the Caprock division’s general manager, and Steve Self, the division’s rental coordinator, make it their business to help dealers to rent portable two-way radios to their customers.
“During the past several years, we’ve built a rental fleet of Kenwood and Motorola products. With Kenwood’s endorsement, we provide a sub-rental program to all Kenwood dealers,” Grau said.
Caprock began its rental program on a regional basis, and over the years the company expanded it to a national level. Of an estimated 1,300 Kenwood dealers, as many as 400 participate in Caprock’s rental program.
“We support short- and long-term projects for all dealers who don’t have the cash or ability to have a large rental fleet,” Grau said.
Kenwood supports the Caprock program with broadcast faxes, literature distribution and its marketing ability, Grau explained.
Some dealers own a fleet of portables for rentals and have the ability to finance the purchase of enough units to fill their needs. Others have been supported through local rental houses.
“We’re not the only rental company in the United States,” Grau said. “What we’ve done is reduce shipping time and prices and to try to keep up with the better rental program. Kenwood dealers should find it more advantageous because of our relationship and discount program through Kenwood. We provide the more popular lines of Kenwood radios.”
Grau explained that customers use rentals for various reasons.
“A customer may not have the money to purchase units outright when they’re needed. Sometimes a customer may want to try the units for a few days, but wouldn’t want to buy units and then return them. With rental, there’s no commitment to the purchase. The dealer has the opportunity to get a unit or two to try without being stuck with the purchase,” Grau said.
Shannon Goff, owner of Hurricane Electronics, Mobile, AL, has 250 rental units of his own.
“We use Caprock to subsidize our current fleet. We call on them during the peak construction time in the spring and five or six other times during the year,” he said.
Hurricane Electronics, in business since 1975, has five technicians and a service manager. The company does business in southern Alabama, the panhandle of Florida and the Mississippi coast. It offers UHF LTR airtime service, and numbers businesses and public safety agencies among its customers.
Construction lead time Goff explained that there is usually some lead time with construction sites that allows him to forecast rental demand. If he sees that he may be running low, he brings in units from Caprock to have them on the shelf.
“With rentals, you can’t ever turn away customers because it’s hard to get them back. Whenever they call, you have to have units,” he said.
Goff estimates that his profit margin on rentals is 30% to 35%. He attributes some of the profitability to having stock that is paid for. Some units are several years old, and he adds to the inventory from time to time.
He added that the rental business requires a lot of back-end work.
“Renting portables requires technical work to keep them repaired. Rental customers are tough on accessories,” he said.
Back at Legacy Communications, Balsick said that Caprock had taken an extra step to cut shipping costs.
“They built a bank-charger rack for the Kenwood units. Kenwood’s own six-slot unit was incredibly heavy, and we have to pay for shipping the equipment both ways. They fabricated a metal framework to hold individual chargers, and it cuts the freight by as much as two-thirds,” she said.
She praised Caprock’s customer service, too.
“If there’s something that doesn’t function right, they turn around replacements quickly. They never hesitate to drop-ship additional mics, batteries and antennas.”
Motorcycle rally In 2000, the fairgrounds hadn’t planned ahead for additional radios for a motorcycle rally, and the chief of security convinced officials that they needed more radios. Balsick called on Caprock with the short-notice request.
Balsick echoed Goff in saying that renting radios can be profitable, with a margin ranging from 15% to 40%, depending on the shipping costs and quantities.
“Normal 40% margins are not unheard of,” she said, “but we cut the state fair thinner. There are others vying for state fair business. We made some money and satisfied the customer, and they liked having someone in town with the ability to supply parts and pieces quickly. As the fair goes on, we routine all the radios and keep them running.
“Steve [Self] is here to support us, and we’re here to support the state fair. If something’s broken that’s not our fault, he takes care of it,” Balsick said.
The Caprock Wireless Division is part of Caprock Communications and includes an acquired systems integrator previously known as IWL Communications. Caprock Communications offers Internet services from analog dial-up to DS3 dedicated access, web hosting and messaging. Caprock Communications is building a 6,100-mile fiber network in the Southwest to connect cities and towns throughout Texas, Louisiana, Arkansas, Oklahoma, New Mexico and Arizona. The company can offer local and long-distance service with voice, video and two-way radio components.
On Oct. 3, 2000, McLeod USA, a telecommunications provider based in Cedar Rapids, IA, announced that it would buy CapRock Communications for $197 million in stock, adding four new states to its service area and expanding its fiber optic network. McLeodUSA said the combined company will provide voice and data transmission services in 25 states and advanced data services to all 50 states.
