Ed Bobit: A Change of View ... Lessors Are "Nice Guys" Again
The man who sees both sides of a question is a man who see absolutely nothing.-Oscak Wilde.
Man is today a challenged animal. He has to respond, he has to respond successfully to the challenge, or he will be overwhelmed - like any other insufficiently adaptable animal.-H.G. Wells
You can't hold a man down without staying down with him.-Booker T. Washington
Few men have virtue to withstand the highest bidder.-George Washington
My usual MO is to take some reading home almost every night. My choice a couple of weeks ago was the March issue of NAFA's Fleer Executive. It contained a major report on benchmarking lessor services.
The NAFA Foundation administered the project that was sponsored by live of the major fleet management companies. Those who picked up the tab were ARI, Citi-Capital, Donlen, GE, and Lease Plan.
While neither you nor I will ever see the results or volunteered commentary that properly is proprietary to those who paid the bill, I was particularly interested in the results of the 282 responses from commercial fleet managers in U.S. and Canada.
Before we get serious about studying the results, you might have an interest in some reflections from a guy who's been around longer than most who recalls a different scenario within the industry.
We don't have to go back 40 years ago when there were a couple of dozen national and strong regional lessors fighting for business in a little more than a conceptual stage. They also had much different names like Geleo, McCullagh. US Fleet Leasing, Nations-Banc, Dresser. Heitz, and many more. Not unlike other markets in a booming era, they all became victims of buy-outs.
An odd thing happened in 1982 when Gelco (the forerunner to today's GE Fleet Services) installed my long-time friend, Pierce Walsh, as their on-site employee/fleet manager at IC Industries in Chicago. Admittedly an experiment, many people were surprised that it worked; for the account as well as the lessor.
You might say that that event was the embryo of "Total Fleet Management" as a concept. In 1985 it expanded with Avon and Mallinckrodt Chemical. PHH signed Eastman Kodak to the plan in 1986 and the race was on. Obviously, the lessors were enthusiastic and the fleet managers were not.
The ensuing foray between account and service provider crystallized in 1989 when a bold young lady fleet manager named Susan Richard sent a letter which was published by NAFA's Fleet Executive. A lessor had sold Greyhound Corporation (in Phoenix and later known as Dial) on the concept. Richard took umbrage when her management advised her that her three-person department was now down to one, and she was out of a job.
This was a tragic slice of life for the future of account fleet professionalism seen as not supportive of the future and with loss of responsibilities and eroding stature within their companies.
The furor reached a peak of sorts at NAFA's annual meeting in Houston and the agenda was highlighted with a no-holds barred open session of "The Future Role of Fleet Management." I happen to remember it well. A standing room only crowd overflowing a very large room. Panelists included fleet managers, fleet lessors, and even me. The dialogue was heated and emotional.
That was the turning point. It didn't happen overnight. Eventually the fleet managers realized that it was a losing battle when the economics for some companies simply compelled management to outsource.
Now, back to the survey. It's not surprising that the lessors (sorry, it's an old habit; I know they're fleet management companies) did well on the study. Oh, one could conclude that they could focus on License & Title Services and the old bugaboo, "Billing."
And, yes, there was one area where the grades were consistently low. Care to guess? "Remarketing" remains the lowest grading point across the board. With most being open-end leases and the depreciation costs borne directly by the account, is it any wonder why the pressure is on here? Maybe they are reading my editorials.